UK Market Under Disposable Vape Ban Rumors: Fewer Opportunities for Small Brands, Open-System Produc

  What is the current situation of the UK market under rumors of a disposable e-cigarette ban?

【Two Above Original】On December 25, 2023, the UK will celebrate Christmas. As the most popular holiday of the year, UK supermarkets will hold discount promotions before Christmas, and consumers will stock up in large quantities. Therefore, November, close to Christmas, is also the most anticipated sales season for cross-border traders, and the e-cigarette trade is no exception.

However, according to trade data from the General Administration of Customs of the People's Republic of China, in November 2023, China's e-cigarette exports to the UK decreased by 20.89% month-on-month and 24.06% year-on-year, amounting to only $95.24 million, hitting a new low since March. Some practitioners in the UK e-cigarette market have also reported that this Christmas, the UK e-cigarette market appears particularly quiet.

 China's e-cigarette export data to the UK in November 2023 | Source: General Administration of Customs of the People's Republic of China

The reasons for this are believed by some practitioners to be directly related to the rumors of a disposable e-cigarette ban. In September 2023, the French government announced a ban on disposable e-cigarettes, and subsequently, UK politicians and social organizations began frequently proposing stricter disposable e-cigarette legislation, even calling for a ban similar to France. On October 12, the UK government also released a public consultation that included the option of completely banning the sale of disposable e-cigarettes.

Therefore, since September, the UK e-cigarette market has been shrouded in rumors of a disposable e-cigarette ban.

Distributors are conservative in stocking, reducing opportunities for small brands

The rumors of a disposable e-cigarette ban have directly impacted the business strategies of UK distributors. Zhang Qiang (a pseudonym), who has been engaged in the e-cigarette business in the UK for many years, stated that after the rumors spread in the UK market, local distributors have shown concerns about the potential ban on disposable e-cigarettes, leading everyone to become more cautious and conservative.

Specifically, to avoid inventory backlog, distributors prefer to choose well-known brands that are popular with consumers, such as ELFBAR, Lost Mary, and SKE Crystal (these three brands are collectively referred to as the "three big samples" in the UK e-cigarette industry due to their absolute leading position in the market).

 Shelves of an e-cigarette retail store in the UK | Source: Interviewee

In contrast, since cultivating new brands takes time, and distributors are worried that the government may issue a ban in a few months, their acceptance of new brands and products has decreased. Zhang Qiang mentioned that a new brand needs at least six months to achieve success in the UK market.

Additionally, besides preferring to choose the "three big samples" when stocking, distributors are also inclined to select discounted low-priced products to control costs and stimulate market vitality.

For example, to attract retailers to stock up, leading UK wholesaler Booker publicly stated last December that it would reduce wholesale prices for over 40 products, including ELFBAR, Ske Crystal, Lost Mary, and Found Mary, to assist retailers in achieving profits of up to 49%.

Pod systems are not gaining traction, open-system products and e-liquids are on the rise

However, Zhang Qiang pointed out that although the activity in the disposable e-cigarette market has decreased, market demand has not diminished; instead, it has been filled by other categories, such as pod systems and open-system products.

Moreover, disposable e-cigarettes in the UK have been facing environmental pressures, and now with rumors of a ban, distributors are actively seeking opportunities in pod systems and open-system products. Several well-known disposable e-cigarette brands, such as ELFBAR, Lost Mary, and SKE Crystal, have also launched pod systems in 2023 and are promoting them heavily.

On a well-known e-cigarette online site in the UK, the pod product SKE Crystal Plus is currently on promotion, with a price of £7.99 for a device that includes a pod, an empty device, and two pods.

 SKE Crystal promoting pod products in the UK online store | Source: Vape UK

However, according to Zhang Qiang's observations in the UK market, despite brands and distributors promoting them, overall, pod systems have not seen significant growth.

In contrast, open-system products have received positive market feedback in the UK. Zhang Qiang stated that compared to before, open-system products have begun to emerge, especially OXVA's open-system e-cigarettes, which are quite popular in the UK.

Zhang Qiang believes that the rise of open-system products is related to the aforementioned reasons, as open-system products are generally more affordable than disposable products.

At the same time, Zhang Qiang revealed that the e-liquid brand under ELUX is also performing exceptionally well. It is estimated that this e-liquid sells 3 million bottles (10ml capacity) per month in the UK. According to Two Above, ELUX's e-liquid brand, Elux Legend Nic Salt, was launched in the UK in May 2023 and is currently priced at £3.99 per bottle in UK online stores.

 ELUX e-liquid products | Source: Vape UK

Additionally, in 2023, several well-known brands have launched their own e-liquid brands in the UK, such as blu, ELFBAR, KIWI, etc.

The "black market" is unaffected by rumors, sales of high-capacity products are rising

It is worth noting that the above situation mainly affects the compliant market. A source who has been engaged in the UK e-cigarette trade for a long time revealed that the rumors of a disposable e-cigarette ban have limited impact on the illegal e-cigarette market, which is dominated by high-capacity products (products with an e-liquid content of over 2ml).

The source further pointed out that due to the low number of puffs from compliant market e-cigarettes and the relative convenience of purchasing high-capacity products, sales of high-capacity products are increasing. Currently, the most popular high-capacity e-cigarette brand in the UK is HAYATI.

At the same time, due to the high enforcement costs in the UK, the regulation of the illegal e-cigarette market is relatively weak, further exacerbating the competitive and developmental limitations of the compliant market.

Additionally, since June, the UK has strengthened inspections of high-capacity products at airports, which has forced many freight forwarding companies to stop their operations. However, a source in the UK e-cigarette logistics industry recently stated that this enforcement action has recently relaxed.

UK Legislative Process

Currently, the disposable e-cigarette ban in the UK is still in the stage of calls from some local governments, social organizations, and public consultations, and has not been formally proposed for discussion, so the ban remains an uncertain rumor.

Establishing a new law in the UK typically requires eight steps, including the proposal stage, second reading stage, committee stage, report stage, debate stage, consideration by the other house, negotiation and amendment, and finally royal assent. The time for the entire legislative process varies depending on the agenda, political climate, and complexity of the bill. Some urgent bills may pass in a shorter time, while more complex or controversial bills may take longer.

Currently, the government has not publicly stated its position on the disposable e-cigarette ban, making it difficult to predict the final outcome. However, it is understood that the UK plans to introduce a new tax in the e-cigarette sector. The new tax plan will be announced by Chancellor Jeremy Hunt at the budget meeting on March 6. According to this plan, the cost of e-cigarette e-liquids is expected to rise by at least a quarter, which may lead to an increase in the prices of disposable e-cigarette products.

Two Above will continue to follow the latest developments in the UK disposable e-cigarette policy, so stay tuned.

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