Globally, legal e-vapour products are set to grow by approximately 7% in volume in 2024, a notably slower pace than in previous years and trailing behind nicotine pouches and heated tobacco. However, this growth figure only scratches the surface of the e-vapour market, as non-compliant and illicit products continue to surge in popularity worldwide.
The e-vapour landscape is often underestimated or misunderstood due to the challenges of measuring the illegal global market. This lack of clarity leads regulators and companies to make decisions with incomplete information, addressing only parts of the issue.
Global landscape of e-vapour regulations
In the meantime, the varying regulations on e-vapour products worldwide have led to significant inconsistencies in the legal market for these products. Many consumers are often unaware of what is legal in their countries. We have created a simple framework to categorise markets into three distinct types: (1) Markets with no specific regulation on e-vapour where all products are legal; (2) Markets where there is a total ban of e-vapour products where all products are illicit; (3) Markets with specific regulations on e-vapour products where the non-compliant products are considered illicit products.
In that third bucket that now constitutes the majority of markets, the specific regulations on e-vapour can be very diverse from one country to another, and they will, in many regards, inform the exact nature of the non-compliant market. Countries have concentrated on creating brand and product registries similar to the PMTA process in the US, regulating aspects such as size, nicotine concentration, and flavour of products like the TPD in the EU or imposing more restrictive tax codes to render products less affordable. Even in the EU there are variations regarding additional flavour or channel restrictions, meaning that a product containing a specific flavour or purchased through an e-commerce platform could be legal in one part of the region but illegal in another.
Products continue to push the limits of compliance
The most emblematic example of the current landscape in e-vapour products comes from the US, where the FDA required companies to register products for market authorisation in a process known as PMTA (Premarket Tobacco Product Application). The process was lengthy and onerous for companies. Despite over 26 million applications submitted, only a handful of companies had their products approved, resulting in numerous products becoming non-compliant without a specific mechanism to ensure the measure's enforcement. The US market remains highly competitive and fragmented, featuring brands that, despite lacking PMTA approval, dominate in market value shares. On top of the FDA registry, there is also a mismatch of state and local regulations that companies and consumers need to navigate; for example, specific municipalities that have imposed total bans on e-vapour products. Our current estimates indicate that up to 80% of the e-vapour volume is non-compliant/illicit, with the main driver being the availability of products and product characteristics like flavour that would otherwise not be allowed in the market.
The illicit market for e-vapour is becoming increasingly widespread across the globe
Preliminary research indicates that illicit sales of e-vapour products can be as high as 80% in some markets, putting the illicit penetration considerably higher than in the cigarette market
Source: Euromonitor International
With diverse drivers for their growth, illicit products continue to flourish around the globe; in the majority of countries, the very restrictive limitations imposed by regulations mean that consumers still purchase illicit products due to features such as size, flavours, nicotine concentration, or others, often driven by convenience, preference, or value.
When the next edition of our Passport Tobacco database is released in May 2025, we will publish a new metric for illicit volume by subcategory and percentage penetration for each market. This will give us a full view of the industry and allow a better strategic vision for the industry and regulators. In the next couple of months, we will also publish a more detailed regional analysis of the landscape of the illicit e-vapour market in Latin America, Middle East and Africa, and other regions.
As legal e-vapour products face slower growth, the significant share of non-compliant items underscores the need for a greater understanding of the complexities of the illicit market. Companies must navigate diverse and often contradictory regulations, leading to innovative product developments that push compliance boundaries. This dynamic landscape poses challenges and highlights the importance of understanding consumer behaviour and preferences. Addressing the illicit market will require collaboration among regulators, manufacturers, and stakeholders to create a clearer and more coherent environment that balances consumer choice with public health priorities.
For in-depth analysis of the tobacco market, read our report, World Market for Tobacco.
If you are interested in Euromonitor’s illicit e-vapour research, you can contact your Passport account manager, or Erwin Henriquez.