Current Policies in Major E-cigarette Markets
Jul 07, 2024
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China's Export Regulations
The Electronic Cigarette Management Measures and the Guidelines for Promoting the Construction of Quality Assurance Systems for Export Electronic Cigarette Products issued by the State Tobacco Monopoly Administration set forth the following regulations for e-cigarette exports:
1. Companies must ensure that their export products comply with the laws, regulations, and standards of the destination country (or region). If the destination country (or region) does not have relevant laws, regulations, or standards, the products must comply with Chinese laws, regulations, and standards.
2. The packaging of export e-cigarette products, including boxes and cartons, must be labeled with the tobacco monopoly production enterprise license number, product name, production batch number, and production date. For contract-manufactured export e-cigarette products, the packaging must be labeled with the tobacco monopoly production enterprise license number of the entrusted e-cigarette production company.
3. The domestic and international logistics and transportation of export e-cigarette products must comply with relevant safety requirements to ensure traceability throughout the process.
4. Companies must truthfully declare their export e-cigarette products to customs in accordance with the law and must record relevant information on the national unified e-cigarette transaction management platform within 30 days of customs clearance.
5. If e-cigarettes contain lithium batteries, lithium metal batteries, or lithium alloy batteries with a lithium content greater than 1 gram, or if they contain lithium-ion batteries with a watt-hour rating exceeding 20W·h, they are classified as dangerous goods. In such cases, a performance and usage evaluation must be conducted according to Article 17 of the Import and Export Commodity Inspection Law of the People's Republic of China.
Major E-cigarette Markets
China produces more than 95% of the world's e-cigarettes.
Global E-cigarette Market Share:
* United States: 32%
* United Kingdom: 13.3%
* China: 9.2%
* France: 5.6%
* Germany: 2.3%
* Indonesia: 1.4%
* Japan: 0.9%
* South Korea: 0.4%
* Australia: 0.3%
In 2023, China's total e-cigarette export value reached RMB 79.1 billion, an increase of RMB 12.125 billion compared to 2022.
Among these, the United States ranked first with an export value of RMB 21.9 billion, accounting for approximately 36.5% of the total annual export value in 2023. The United Kingdom followed with an export value of RMB 10.04 billion, accounting for about 16.71%. Germany and South Korea were next, with export values of RMB 5.601 billion and RMB 5.033 billion, accounting for 9.33% and 8.38%, respectively.
China's Export Market Share by Destination:
* United States: RMB 21.925 billion (36.5%)
* United Kingdom: RMB 10.04 billion (16.71%)
* Germany: RMB 5.601 billion (9.3%)
* South Korea: RMB 5.033 billion (8.38%)
* Russia: RMB 3.678 billion (6.12%)
* Japan: RMB 2.801 billion (4.66%)
* Canada: RMB 2.148 billion (3.58%)
* Australia: RMB 2.049 billion (3.41%)
* Croatia: RMB 1.496 billion (2.36%)
* UAE: RMB 1.413 billion (2.36%)
United States
1. FDA Registration: E-cigarette manufacturers and importers must register their establishments with the U.S. Food and Drug Administration (FDA) and list their products with the FDA.
2. Premarket Tobacco Application (PMTA): Products must obtain FDA premarket authorization through the PMTA process to be legally marketed in the United States.
3. Labeling and Packaging Compliance: E-cigarette products must comply with FDA labeling requirements, including health warnings and ingredient lists.
4. Good Manufacturing Practices (GMP): Manufacturers must follow GMP to ensure product quality and safety.
5. Since the fall of 2021, the FDA has issued market authorization orders and marketing denial orders for e-cigarettes. As of June 2024, all authorized products are tobacco-flavored.
6. Strict flavor regulations typically lead to the proliferation of black markets. In the U.S., non-compliant disposable products, especially fruit-flavored ones, continue to thrive, suppressing the market for relatively compliant refillable products. Coupled with inadequate FDA enforcement, the regulations have not been effective.
On June 21, 2024, the FDA approved the sale of four menthol-flavored e-cigarettes under the NJOY brand, marking the first time the agency has granted sales authorization for non-tobacco-flavored e-cigarettes in over two years. This is seen as a relaxation of e-cigarette regulations in response to the lack of effectiveness over the past two years. The approval of menthol-flavored e-cigarettes is significant for the industry, as it signals recognition of the product's safety and harm reduction, clarifies the regulatory direction, and shifts the focus to non-compliant products. With the PMTA review standards becoming clearer and approval processes potentially accelerating, enforcement may intensify, leading to the quicker elimination of non-compliant products and a return to healthy market competition.
As the world's largest market, the U.S. regulatory stance serves as a barometer for global e-cigarette regulation, potentially influencing regulatory outcomes in the European Union. The compliance of menthol products reduces concerns about the global "tobacco-ization" of e-cigarettes and is a positive development for companies committed to compliance.
United Kingdom
1. According to Chinese customs data, in 2023, China's e-cigarette exports to the UK reached $1.417 billion, an increase of 17.99% compared to 2022. In December 2023 alone, China's e-cigarette exports to the UK reached about $149 million, a month-on-month increase of 56.31% and a year-on-year increase of 35.06%.
Chinese disposable e-cigarette brands Elf Bar and Lost Mary dominate more than two-thirds of the UK's disposable e-cigarette market. Two of China's top e-cigarette companies, Sigelei and SMOK, are also leaders in the UK market, continually gaining market share through disposable e-cigarettes. Sigelei's brands SKE and Sikary are among the top brands in the UK market.
2. In the UK, disposable e-cigarettes are very popular among young people due to their high nicotine content, diverse flavors, and affordability, but they are highly addictive. Compared to 2021 and 2022, disposable e-cigarettes became even more popular in 2023. In 2021 and 2022, the usage rates of disposable e-cigarettes in the UK were 2.3% and 15%, respectively, but in 2023, it is estimated to have reached 31%. Among 18- to 24-year-olds, the use of disposable e-cigarettes increased rapidly, with 57% of e-cigarette users in this age group primarily using disposable e-cigarettes. Data shows that in 2023, 5 million disposable e-cigarettes were discarded weekly in the UK, a fourfold increase from the end of 2022, with annual recycling costs reaching £200 million. Over the past two years, the proportion of minors aged 11 to 17 using disposable e-cigarettes in the UK has nearly increased ninefold, with 9% of those aged 11 to 15 having tried e-cigarettes.
3. In January 2024, the UK announced plans to promote legislation to completely ban disposable e-cigarettes, impose heavy penalties on retailers who illegally sell e-cigarettes to minors, and address the issue of youth addiction to e-cigarettes. The new "smoking ban" will include flavor restrictions, simple packaging requirements, and adjustments to how e-cigarettes are displayed to reduce their appeal to minors. The bill is now under review in the House of Commons.
However, the UK government's ban does not include refillable e-cigarettes, e-liquids, or other smoking cessation tools such as nicotine patches and smoking cessation medications.
China
1. A retail license for the tobacco monopoly for e-cigarettes is required.
2. E-cigarette sales outlets must not be located near ordinary primary and secondary schools, special education schools, secondary vocational schools, specialized schools, or kindergartens.
3. Transactions must be conducted through the e-cigarette transaction management platform.
4. It is forbidden to hold exhibitions, forums, expositions, or other events promoting e-cigarette products.
5. The sale of e-cigarette products through vending machines or other self-service methods is prohibited.
6. Exclusive sales of listed e-cigarette products are not allowed.
7. Online sales are prohibited.
8. The mailing and transportation of e-cigarette products, vaping substances, and nicotine for e-cigarettes are subject to quantity limits, which must not exceed the limits set by relevant government departments.
9. The sale of flavored e-cigarettes other than tobacco-flavored ones and e-cigarettes that allow self-addition of vaping substances is prohibited.
10. E-cigarette products not sold in China and intended only for export are prohibited.
11. The sale of heat-not-burn (HNB) products is prohibited. Heated tobacco is managed as cigarettes.
Australia
1. Australia is one of the countries with the lowest smoking rates among the Organization for Economic Cooperation and Development (OECD), but the use of e-cigarettes is growing rapidly, especially among young people. According to Australian government data, about one in five people aged 18 to 24 use e-cigarettes, and approximately one in seven people aged 14 to 17 use e-cigarettes.
2. The Therapeutic Goods and Other Legislation Amendment (E-cigarette Reform) Bill 2024 (the Bill) came into effect on July 1, 2024. The new legislation introduces a single, consistent framework applicable nationwide for regulating the import, domestic manufacture, supply, commercial possession, and advertising of all e-cigarettes, including e-cigarette devices, accessories, and substances.
3. Starting from October 1, 2024: Australian pharmacies will provide therapeutic e-cigarettes with a nicotine concentration of 20 mg/ml or lower to patients aged 18 or older, and pharmacists will assess their clinical suitability without requiring a prescription.
Under state and territory laws, patients under 18 and/or therapeutic e-cigarettes with a nicotine concentration exceeding 20 mg/ml can still be obtained through a prescription from a doctor or nurse practitioner. Some jurisdictions prohibit providing any e-cigarettes to people under 18.
4. Following the U.S. FDA's approval of menthol-flavored e-cigarettes, the Australian government announced on June 24, 2024, that it would relax its e-cigarette ban, allowing adults to purchase e-cigarettes without a doctor's prescription. However, they can only be sold in pharmacies and must be discussed with a pharmacist, with the flavors limited to tobacco, menthol, and mint.
The new policy still requires approval from the local Senate.
New Zealand
Starting December 21, 2023, New Zealand banned the sale of disposable e-cigarettes unless they meet new regulations, including limits on nicotine content, equipping with removable batteries, meeting child safety features, and displaying new labels. From March 2024, these regulations will extend to all e-cigarette products.
Netherlands
1. The Netherlands implemented a ban on flavored e-cigarettes, allowing only tobacco flavors starting in January 2024.
2. Data shows that one in five young people in the Netherlands (aged 12 to 25) have used e-cigarettes in the past year.
Belgium
1. Starting January 1, 2024, Belgium imposed a new tax on e-cigarette liquids, charging 15 euro cents per milliliter. The aim of the new tax policy is to prevent teenagers aged 15 to 24, especially those who have never smoked, from trying e-cigarettes.
2.In March 2024, Belgium reported that it had received approval from the European Union to ban disposable products. The minister announced that disposable e-cigarettes would be banned starting January 1, 2025.
Canada
In June 2021, the federal government proposed a ban on flavors other than tobacco, menthol, and mint, which was implemented by the end of 2022. Six provinces or territories in Canada have already adopted legislation or regulations to prohibit the sale of any e-liquid flavors other than tobacco (Nova Scotia, Prince Edward Island, New Brunswick, Northwest Territories, Nunavut, and Quebec).
Japan
1. In Japan, the sale of e-cigarettes (vaping devices) was banned in 2010. In 2013, Japan Tobacco was the first to launch Ploom, a heated tobacco product, but it failed to gain market acceptance. In 2014, IQOS was introduced in Nagoya, Japan, and achieved great success, leading to nationwide promotion in April 2016. Later, British American Tobacco test-marketed Glo in Sendai at the end of 2016 and promoted it nationwide in 2017. Japan Tobacco launched Ploom Tech in 2018 and expanded its promotion, leading to the gradual prosperity of Japan's HNB (Heat-Not-Burn) market.
2.Regarding regulation, HNB products are currently controlled under the Tobacco Business Law. A license from the Ministry of Finance is required to sell them in Japan. Vaping devices are regulated as medical devices under the Pharmaceutical Affairs Law, and the cartridges are controlled as drugs. So far, no vaping device has been approved in Japan.
South Korea
1. According to current South Korean laws, synthetic nicotine is not classified as tobacco. Therefore, e-cigarettes containing synthetic nicotine are not subject to tobacco legislation and do not need to carry health warning labels on their packaging, nor are they taxed under tobacco standards. Selling these to minors is not legally penalized.
2. In 2023, e-cigarettes accounted for 16.9% of South Korea's tobacco-related sales.
Russia
Starting from March 1, 2024, Russia banned the sale of flavored e-cigarette products.
The banned flavors list includes:
* Sweeteners like honey and stevia
* Fruit flavors
* Various spices and their derivatives (e.g., vanilla, spices, ginger, cinnamon)
* Other substances like caffeine, guarana, taurine, vitamins C and E.
France
Research shows that "the daily use rate of e-cigarettes among 17-year-olds in France doubled between 2017 and 2022, reaching 6.2%." In 2023, "15% of French teenagers aged 13 to 16 have used disposable e-cigarettes, with 47% of young users starting nicotine use with disposable e-cigarette products."
Globally, more than 30 countries restrict the sale of e-cigarettes as consumer products. In countries where e-cigarettes are allowed to be sold, seven have implemented national bans on flavored e-cigarettes other than tobacco (Finland, Hungary, the Netherlands, Ukraine, Lithuania, China, and Latvia). Three countries have banned flavors other than tobacco and menthol (Denmark, Estonia, and Slovenia). In addition, two countries (Canada and the United States) have implemented sub-national (state-level) restrictions.
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