Tobacco Asia

22 tobaccoasia Issue 4, 2026 July / August dominant position in global vape manufacturing, which enables both legitimate and illicit supply chains. Tamarind Intelligence's Barnaby Page added an important nuance, emphasizing that the distinction between legal and illicit products is often context- dependent. A product that is fully compliant in one market may become illicit when exported to another with different regulations. This illustrates the complexity of cross- border regulatory compliance. Japan: a market where illicit vaping remains marginal In contrast to many other major economies, Japan stands out as a market where illicit vaping is not a major concern. According to Erwin Henriquez, the key differentiating factor is the high penetration of heated tobacco products (HTP) in this Far East na- tion, which have effectively occupied the role that e-vapor products play elsewhere in the world. Henriquez explained that although there is a niche demand for vaping prod- ucts in Japan, it has "never reached the mainstream since there is already a safe and reliable alternative to cigarettes." This widespread adoption of HTP reduces both the demand for vaping devices and the incentive for illicit supply chains to develop at scale. Barnaby Page complemented Erwin Henriquez's view by pointing to broader socio-economic and cultural factors. Relatively high incomes reduce price sensitivity that often drives consumers elsewhere toward illicit products. Strong social norms and a preference for conformity may further discourage participation in informal or illegal markets. Additionally, Page said, the comparatively low price of conventional cigarettes reduced the financial pressure on consumers to seek out cheaper, illicit alter- natives. Taken together, these factors create a market environment in which both de- mand for illicit vaping products and the incentives to supply them remain limited—an outcome that contrasts sharply with many other regions. Consumer behavior and market substitution Underlying the growth of illicit vaping markets is a fundamental economic principle: con- sumers respond to price and availability. When legal products become more expensive or less accessible due to regulation, many consumers turn to cheaper, illicit alternatives. In some cases, alternative nicotine products can mitigate this effect, as seen in Japan. In others, such as the United Kingdom, the removal of a popular product category has led to substitution effects that include both legal alternatives and illicit sourcing. Regulatory gaps and unintended consequences The global rise of illicit vaping products highlights the unintended consequences of regulatory policies. While measures such as flavor bans, tax hikes, and product restric- tions are often implemented with public health objectives in mind, they can also create incentives for illicit trade if not carefully calibrated. South Korea provides a cautionary example for this. The country's regulatory loopholes around synthetic nicotine con- tributed to a high level of non-compliance once addressed. This illustrates how both the presence and the closure of regulatory gaps can influence illicit market dynamics. But perhaps the most striking finding from Euromonitor International's diligent re- search into the topic of illicit vaping is that over 75% of global e-vapor trade volume turnover is driven by illicit markets. It is an incredible number! Yet this striking figure underscores unmistakably the scale of the challenge and it suggests that the illicit trade is not a merely marginal phenomenon but a defining feature of the global vaping sector. Toward a more balanced approach Addressing the global prevalence of illicit vaping products will require a nuanced and balanced approach. As the experiences of markets such as the United Kingdom and Japan demonstrate, outcomes depend heav- ily on the interaction between regulation, enforcement, consumer behavior, and the availability of alternatives. Both Euromoni- tor International and Tamarind Intelligence highlighted during their respective inter- views with Tobacco Asia the importance of understanding local market dynamics and the limitations of available data. Policymak- ers must navigate these complexities while remaining mindful of the unintended con- sequences of their actions. Ultimately, the global illicit vaping market reflects deeper tensions between regulation and demand, control and ac- cess, legality and practicality. Striking the right balance will determine whether future policy interventions are going to succeed in curbing illicit trade—or inadvertently con- tribute to its continued expansion. Customs officers discovering illegal vaping devices during a warehouse raid. Credit: Microsoft Copilot Source: Euromonitor International *Markets in which total vaping bans are enforced are always ignored in data evaluations on the prevalence of illicit vapes. Naturally, if field research discovered even one single vaping device in any of those markets, it would automatically push their prevalence rate to 100%, skewing the overall research results. The Top 5 Rank Market* % vol. 1 Israel 98.51% 2 Ukraine 96.59% 3 United Arab Emirates 95.55% 4 China 95.09% 5 Panama 94.70%

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