Challenges Facing the German Vape Market in 2024: Black Market & Taxation Impact on Growth
In Germany, the vaping industry is facing unprecedented challenges, with the proliferation of the black market and heavy tax burdens acting as dual pressures restricting its growth. The illegal transactions in the black market not only erode the market share of legitimate businesses but also expose consumers to low-quality, unsafe products, posing a public health threat.
At the same time, the high taxes have caused the prices of legal vaping products to skyrocket, further weakening the competitiveness of the legitimate market. In this context, the future of the German vaping industry is uncertain. This article will explore the current state of the German vaping industry and analyze the impact of the black market and tax burdens on the sector.
I. The Decline of Germany's "Third Largest" Market in the First Half of 2024
According to data from the General Administration of Customs of China, in the first half of 2024, China's exports of vaping products to Germany amounted to approximately $34.01 million, a 19.54% decrease compared to $42.27 million during the same period last year. As a result, Germany dropped from being the third-largest destination for Chinese vaping exports to the fourth.
This change reflects a weakening demand for Chinese vaping products in the German market, possibly due to increased local market competition and regulatory policy changes. Faced with declining export figures, vaping manufacturers need to pay more attention to market trends, adjust strategies to meet challenges, adapt to changes in the German market, and seek new growth points and competitive advantages. Want to learn more about vapes? Flum Vape Mello Disposable is your best choice!
II. The Roller Coaster Ride of Germany’s Vaping Market in the Second Half of 2024
According to data, Germany’s vaping market ranked fourth among China’s export destinations in the second half of 2024. Only in August and November did it briefly rise to third place. In August, the global vaping market experienced a downturn, with many of China’s top ten export destinations showing declines in export volumes.
However, according to the latest data from November, China's exports of vaping products to Germany amounted to $64.97 million, a 14.58% month-on-month increase and a 43.44% year-on-year increase, marking a significant market recovery.
From the data above, we can see that the German vaping market was generally sluggish in the second half of 2024. However, the market demand recovery at the end of the year may bring a turning point and help alleviate the previous downturn. This potential recovery trend is worth close attention from vaping export companies, allowing them to adjust strategies and seize opportunities for market revival.
III. Tax Policies Putting Heavy Pressure on Industry Development
Changes in tax policies have acted like heavy shackles, tightly restricting the development of Germany’s vaping industry. Since July 1, 2022, Germany has been imposing an additional tobacco tax on vaping products, with a rate of €0.16 per milliliter of e-liquid (including nicotine-free e-liquids) and gradually increasing each year. By 2026, this tax rate will double, and the tax rate on heated tobacco will align with traditional cigarettes. This could potentially lead to a price increase of nearly 40% for vaping products, and the sharp rise in prices may force consumers to turn to the black market.
Additionally, in the coming years, the tax burden may further increase. According to Germany’s four-phase tax plan, the vaping tax will rise three times before 2026, reaching €0.32 per milliliter.
Furthermore, the German Association of New Tobacco Products has stated that, starting in January 2025, the e-liquid tax will rise to €0.26 per milliliter. From January to November 2024, Germany’s total e-liquid tax reached 1.156 million liters, with the number of tax label applications increasing by 1.4% compared to the same period last year.
With such high taxes being imposed, many legitimate businesses are struggling under the weight, facing enormous operational pressure. This further squeezes the industry’s profit margins and hinders normal development. Currently, there are disposable vapes on the market with substandard nicotine content, and introducing strict regulations may lead to even more illegal products flooding the market.
IV. Policy Tightening: Many German States Support Disposable Vape Ban
In terms of policy, Germany’s regulation of vaping is becoming increasingly strict. Many state representatives support amending the "Electrical and Electronic Equipment Act" to restrict the use of disposable vapes. This ban is supported by the Federal Association for Waste Management, Water, and Recycling, as well as health associations and non-governmental organizations. Disposable vapes quickly become waste after use, contributing to environmental pollution and even accidents, which is a key reason behind the push for a ban. Currently, the proposal for a nationwide ban on disposable vapes must be debated in the German Bundestag and pass by a majority vote.
In addition, the Federal Drug Commissioner in Germany insists on banning nicotine pouches and calls for stricter enforcement. These policy measures undoubtedly add uncertainty to the development of the vaping industry. On one hand, strict regulation helps standardize the market and reduce the circulation of illegal products. On the other hand, it may restrict the operations of some legitimate businesses, further shrinking the market size.
V. Exhibitors Declining, Germany’s 2025 Vape Expo Canceled Due to Regulatory Changes
Once an important platform for exchange in Europe’s vaping industry, the “Hall of Vape” expo has been canceled for 2025 due to a reduction in exhibitors, changes in legal regulations, and a decrease in attendance.
The cancellation of the expo deprives vaping businesses of an important platform for showcasing products, sharing experiences, and expanding markets, significantly hindering the flow of information and collaborative development in the industry. This event reflects the difficulties faced by Germany’s vaping industry and signals that the sector may need to explore new development paths.
VI. Black Market Rampant, Legal Businesses Struggling for Survival
The black market for vaping products in Germany has become increasingly severe, with significant impacts on legal businesses. Recently, customs officers in Krefeld, Germany, seized about 650,000 illegal vapes at the Neuss Port. This case shocked the industry and is the largest of its kind in Germany to date. These illegal disposable vapes have inhalation counts far exceeding the 600-puff limit set by German regulations, reaching thousands of puffs, and are sold at extremely low prices—around €10 for 8,000 puffs. Looking for more similar vapes? Flum UT Bar Pro 25000 customizes the perfect experience for you!
Such attractive price advantages have drawn many consumers, and despite businesses' efforts to promote the risks, they cannot stop consumers from chasing cheap products.
Furthermore, black market trading in illegal vapes has increasingly been linked to organized crime. For example, a family crime raid in Berlin caused a tax loss of around €500,000, while the Neuss case led to a tax shortfall of several million euros. In this situation, legal businesses are caught in a dilemma, and the safety of society is also threatened.
VII. Market Potential Remains, Germany’s Vaping Usage Rate Increased by 38% in Seven Years
Germany currently has about 2.45 million vape users. Despite the many challenges, there is still some growth potential in its vaping market. A study from Düsseldorf University Hospital showed that between 2016 and 2023, the vaping usage rate increased by 38%, with about 2.2% of the population using vapes, while the percentage of traditional tobacco smokers remained at 30%. Currently, disposable vapes have become the most commonly used type, especially among young women.
This trend suggests that despite market suppression, there is still a growing consumer base for vaping in Germany, and demand remains strong.
VIII. Future Impact
Under the dual pressure of the black market and taxes, Germany’s vaping industry is undergoing unprecedented challenges. The black market’s illegal trade not only erodes the market share of legal businesses but also exposes consumers to low-quality, unsafe products, posing a public health risk.
At the same time, tax increases have raised the prices of legal vaping products, further weakening the competitiveness of the legitimate market. This dual pressure could make it difficult for legal businesses to operate, reducing innovation and investment, and may push some consumers toward the black market, increasing health risks and regulatory challenges.
In the long term, if the government cannot effectively address these challenges, Germany’s vaping industry may face contraction, with the development of innovative and compliant products being suppressed, and the illegal market likely to continue expanding, causing serious harm to the sustainable development of the entire industry.
However, if the German government can take effective measures to strengthen regulation of the black market and reduce the circulation of illegal products, while reasonably adjusting tax policies to ease the burden on businesses, Germany’s vaping industry may be able to turn the corner.
Furthermore, as consumer attention to health continues to rise, vaping, as a substitute for traditional tobacco, could see increased market demand. If businesses can seize this opportunity, increase research and development investment, improve product quality, and launch products that better meet consumer needs, Germany’s vaping industry may be able to break through its current difficulties and enter a new phase of development.