Interview with Puffmi: Russian Market Faces Dual Challenges of Regulation and Grey Imports

  PUFFmi’s Russia regional sales manager Yin Songyu mentioned two major challenges for the Russian market in the future. On one hand, the formal import market will implement a e-liquid tax in January 2024, and with VAT pressure added, costs will rise significantly. On the other hand, the grey import market remains huge, accounting for 80% to 90% of the market, leaving the future uncertain for brands and distributors.

Quick report: On December 16, at the Russian vaping expo VAPE CLUB SHOW 2023, Two Supremes interviewed puffmi’s Russia regional sales manager Yin Songyu to discuss Puffmi’s rise in the Russian market and the challenges it currently faces.

According to Yin Songyu, Puffmi officially entered the Russian market around December 2022, and its 4500-puff disposable products achieved good sales in the Moscow region.

 |Image source: Two Supremes

Yin Songyu said this success was due to the standout features of their products and the clever use of market strategy.

However, the Russian market is far from smooth.

Yin Songyu pointed out that the current market faces two major challenges, first being regulatory pressure on the formal import market. In January 2024, Russia’s new e-liquid tax will officially take effect at 42 rubles per milliliter, plus 20% VAT. In other words, the total of the product value + customs duties + e-liquid tax will then be multiplied by 20%, causing costs to rise sharply. At the same time, a new import permit system will be introduced in March or April next year, making it even harder to operate in the formal market.

Another challenge is that Russia’s grey import market still has enormous capacity, accounting for 80% to 90% of the market share. Yin Songyu said that for brands and distributors, the future remains uncertain. Many brands are waiting for leading companies to make the first move, while also exploring strategies to expand their channels in the Russian market.

Yin Songyu expects the market to gradually stabilize from March to May next year, and small and medium-sized companies will also find solutions. The implementation of regulations will increase the share of the formal market and reduce the grey market share, but retailers need to balance both sides to avoid high costs and rising retail prices. During this adjustment period, SMEs will gradually adapt and find new paths for development.

He also said that Puffmi is making technical preparations for lower-puff products to respond to future regulations in Russia.

Related reading:    【1】 Interview with SOAK: Policy direction is hard to predict; brand-developed e-liquid to be launched next March   【2】 Dialogue with SKE and YOVO: Regulations should be met head-on; questions remain about the market’s future prospects   【3】 Exclusive interview with WIPO: High-puff products dominate Russia’s vaping market; the formal import route faces heavy pressure   【4】 Does a screen on a vaping device make it the entry ticket to the Russian market? Brands say: without a screen, it won’t sell   【5】 Russia vaping expo opens: ELFBAR, HQD, INFLAVA and other brands shine   【6】 Russia vaping expo is about to open: highlights from ELFBAR, HQD, IGNITE and more at a glance

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