With two years still to run before the European Tobacco Products Directive (TPD) comes into practical force, there are hints already that regulation will bring about a consolidation in major e-cigarette markets.
The TPD officially came into effect this week, but member states have until 20th May 2016 to enact its requirements in their domestic legislation, and until that point its provisions will not be enforced on the e-cigarette industry.
However, there are indications that both the looming TPD requirements and other legislation introduced by national governments to fill the regulatory gap between now and 2016 are likely to have an effect on the sector much sooner.
In Spain, for example, the president of the national e-cigarette users’ group the Asociación Nacional Española de Vapeadores (ANEV) has warned that sales are down as much as 70% from last year and that a large number of stores could close.
Pedro Cátedra, who is also a director of one of the country’s major e-cig suppliers, Puff, blames media health scares as well as Law 3/2014, which came into effect toward the end of month and restricts vaping in public places, sets age limits for purchase, and controls the advertising of e-cigarettes. Cátedra welcomes the quality and safety requirements of the TPD, but believes that the recent Spanish law treats e-cigarettes too much like tobacco.
His narrative of declining sales is backed up by ECigIntelligence research earlier this year for our special report on the TPD, which suggested per-store sales in Spain had moved from around €5000-15,000 ($7000-21,000) or more per month during the summer of 2013 to less than €5000 per month this spring.
In Britain, meanwhile, a forecast of similarly dramatic upheaval came in an interview given to The Financial Times by Jacob Fuller, chief executive of the UK operation of Lorillard’s Blu and formerly head of Skycig, which Lorillard acquired last year.
Fuller predicted that tighter regulatory requirements would reduce the number of suppliers operating in the British market from “hundreds” to between six and ten.
“Regulation will weed out the ones that aren’t able to maintain the standards that are needed,” he was quoted as saying.
Our report on the TPD, entitled E-Cigarettes in Europe: Regulatory and Market Impacts of the EU Tobacco Products Directive, is available exclusively from ECigIntelligence at £895 (€1080, $1500).
What This Means: All this is anecdotal or speculative: the monster is not yet in the bedroom. But it seems inevitable that a heavier regulatory burden will see some e-cig firms exit the business. The question for the sector as a whole, though, is how regulation will affect overall market size – and that could very well go either way, especially remembering that for every restriction applied to e-cigarettes even more are being heaped on tobacco, increasing the attractiveness of the vaping option for many consumers.
– Barnaby Page ECigIntelligence staff