Brussels – The European e-cigarette market is increasingly influenced by irregular supply channels. This is the finding of a new study by Fraunhofer Institute for Integrated Circuits IIS, which analyses the size and dynamics of the parallel market for e-cigarettes in Europe. “For the first time, we have managed to map the black market for e-cigarettes in Europe, based on commercial and supply chain analysis, customs statistics and market segmentation,” says Uwe Veres-Homm, head of risk analysis and localisation at Fraunhofer IIS. This market is estimated at around 6.6 billion euros, with growth projected to reach 10.8 billion by 2030.
According to the study, around 48 per cent of the European e-cigarette market comes from irregular sources, including the grey market, illicit trade, and private imports of non-compliant or untaxed products. Of these, 35 per cent can be clearly attributed to illicit trade; around 13 per cent are private imports of non-approved or untaxed products. Overall, the irregular e-cigarette market in Europe is growing at an estimated rate of around 8.6 per cent per year. “90 per cent of irregular products destined for the European market come from China,” Uwe Veres-Homm explains, with the city of Shenzhen representing the sector’s main global production hub (accounting for 70 per cent of production).
The spread of this black market results in significant tax losses for Member States and the European Union, as well as creating significant unfair competition for retailers and manufacturers who operate in compliance with the regulations. One example is Germany, where the estimated tax loss for 2024 was around 119 million euros.
The report also highlights the role of international supply chains. E-cigarettes manufactured in China often arrive in Europe via small shipments, which are difficult to monitor systematically. Within the EU, Germany, the Netherlands, and Belgium are major logistics hubs for distributing these products across the European market. According to the European Commission, around 12 million parcels of e-cigarettes arrive in the European Union every day, a volume that makes the systematic monitoring of shipments extremely complex. “These goods evade quality and consumer protection controls and are extremely profitable for manufacturers, said Horst Manner-Romberg, managing director of MRU Beratungs- und Verlagsgesellschaft mbH, which collaborated with Fraunhofer IIS. Price differences within the EU’s internal market also create incentives for smuggling and re-imports from neighbouring countries, putting legal suppliers under enormous pressure.”
The trade in e-cigarettes from irregular sources also raises safety and consumer protection concerns, as these products can (and do) circumvent the quality controls, labelling requirements, and authorisation procedures laid down by European legislation. The study suggests three measures that can be adopted regardless of political majorities. Firstly, uniform product definitions and classifications: many distortions stem from the fact that identical products are registered, classified, and taxed differently across EU Member States. Secondly, digital traceability and a central data platform: supply chain transparency technologies, such as blockchain-based serialisation or AI-supported risk assessment, can help distinguish legal from illegal goods flows. It is important that this data is fed into a central international platform that links production, import, consumption, and, above all, regulatory violations, thereby enabling holistic market surveillance. Finally, cooperation with countries of origin.
English version by the Translation Service of Withub
