Recent data released by German industry associations and customs authorities shows that the German e-cigarette and nicotine product market faces significant risks from illegal trade. According to a joint assessment by industry organizations and law enforcement agencies, approximately 40% of e-cigarette products on the market are currently illegal. If authorities further ban menthol and cooling ingredients in e-cigarette liquids, this proportion could surge to 80% within the next few years. This conclusion immediately sparked widespread attention and discussion in German media and industry circles.
At a joint press conference held in Berlin in mid-March, the German Federal Association for Tobacco Products and New Products (BVTE) and the German Customs and Finance Workers’ Union (BDZ) released the latest research data and enforcement experience. They pointed out that in the field of e-cigarettes, e-liquids, and new nicotine consumer products such as nicotine pouches, the actual size of the illegal market is far higher than the officially reported seizure figures due to the imperfect regulatory and statistical system. Currently available customs annual reports primarily record the number of seizures, but they cannot directly reflect the true scale of the entire black market circulation; the actual situation may only be the “tip of the iceberg.”
High Proportion of Illegal Products
BVTE cites multiple studies conducted jointly by IPSOS, Kanthak, and the Berlin Tobacco Research Institute, stating that approximately 40% of e-cigarette products on the German market are illegal. These products typically have not paid relevant taxes and fees, contain nicotine exceeding legal limits, and their appearance and packaging often do not comply with the Tobacco Products Act. During seizures, law enforcement officers have found that a large portion of these e-cigarettes and e-liquids originate from overseas smuggling channels and enter the German market through online orders, small parcel mail, and passenger transport.
At a press conference, BDZ Federal President Thomas Liebel emphasized that the current law enforcement system suffers from significant resource and technical deficiencies in addressing this situation. He pointed out that compared to the transparent process of legal imports, the distribution channels of illegal products are more covert, and the cost of monitoring them is higher, while law enforcement agencies can only respond through random checks and targeted inspections, making it difficult to create a sufficient deterrent. Banning Menthol Flavors Could Lead to a Surge in the Black Market
During the conference, industry associations specifically raised a concerning issue: the German government is considering banning menthol and cooling ingredients (primarily used to enhance flavor) in e-cigarette liquids. According to industry research, approximately 80% of e-cigarette liquids use menthol or similar ingredients to adjust flavor. If this regulation is implemented nationwide, many consumers may turn to illegal channels to obtain the e-cigarettes they need, potentially pushing the current 40% illicit market share to around 80% of the potential black market share.
BVTE Managing Director Jan Mücke pointed out at the press conference that if regulatory measures merely expand the scope of the ban without strengthening the enforcement of existing regulations, the result could very well “fuel the illicit trade and give organized crime more room to operate.” He said the government should focus on effectively enforcing the existing e-cigarette ban, rather than constantly discussing new bans, as poor enforcement of the latter will only create a regulatory vacuum.
This view has been repeatedly cited in German and international media. Media reports indicate that the black market for e-cigarettes and nicotine products in Germany is experiencing rapid growth. If future policies do not incorporate restrictive measures, this illegal market could expand further, increasing the difficulty of regulation.
Online Channels Fuel Illegal Trade
Industry associations and law enforcement agencies have jointly pointed out that the growth of illegal trade has significantly shifted to online and postal channels. With the growth of e-commerce and global cross-border mail services, an increasing number of products that fail to pay taxes and do not meet safety standards are entering German consumers’ hands via small parcels. It is projected that by 2030, the number of parcels sent within Germany will exceed 5 billion. Within such a massive postal system, even if regulators increase the frequency of inspections of new product categories, the actual proportion that can be inspected will remain very limited.
Furthermore, enforcement has exposed several risks. For example, many illegal e-cigarettes contain built-in lithium batteries. These batteries pose safety hazards during storage and handling, and the disposal costs are high, often borne by taxpayers. The Munich Customs Investigation Bureau incurred approximately €750,000 in storage and destruction costs for a single e-cigarette seizure case.
This situation is detrimental to both the retail market and regulatory bodies. In the illegal market, not only is there a lack of age verification mechanisms, but consumers also lack transparent information about product ingredients, and they cannot seek redress through normal legal channels should quality issues arise.
Nicotine pouches are also affected.
Besides e-cigarettes and e-liquids, new oral nicotine products such as nicotine pouches have also been affected. Industry associations point out that demand for nicotine pouches in the German market is constantly growing, but because regulations for this type of product are not yet fully integrated into a clear regulatory system, market demand is mainly met through illegal or gray-market channels. The current regulatory status results in a loss of approximately €100 million annually in tobacco tax and VAT revenue, while simultaneously rendering domestic value creation and market regulation ineffective.
Industry organizations emphasize that in the black market for nicotine pouches and e-cigarettes, basic regulatory measures such as age verification, product standards, or ingredient labeling are absent, leaving consumer rights and safety unprotected. This market structure not only harms the interests of legitimate businesses but is also considered to be undermining the national tax system and regulatory authority.
Legitimate Manufacturers Face Challenges
Against this backdrop of macro-regulation, legitimate e-cigarette supply chains and manufacturers in Germany and globally are also under pressure. Manufacturers and brands need to invest more resources to ensure products comply with stringent regulatory frameworks, while simultaneously improving supply chain transparency and product traceability. For manufacturing plants reliant on overseas partnerships and global sales, compliant and standardized production has become a core element of market competition.
For example, some e-cigarette contract manufacturers, such as the VEEHOO brand factory backed by a mature industrial system, assist brand clients in incorporating the regulatory requirements of different countries or regions into the product design stage by offering various cooperation models, including OEM (Original Equipment Manufacturer) and ODM (Original Design Manufacturer) services, when facing stringent international market regulations. While this type of production cooperation model is not the focus of news, it reflects the adaptability of the industry supply chain in responding to regulatory changes. Compliant design and production support helps brands mitigate potential market risks in advance, while also maintaining a stable supply of products through legal channels.
However, facing the real challenge of an expanding illicit market, legitimate companies still need to confront competitive pressure from gray market trading and the contradiction between consumer expectations and the regulatory environment.
Balancing Regulation and Enforcement
The current situation in Germany highlights the dilemma policymakers face in balancing the control of legal markets with the challenge of combating illicit trade. On the one hand, the government aims to ensure public safety and the protection of minors through regulatory measures; on the other hand, overly stringent or unenforceable bans may not achieve the desired effect, instead overwhelming regulatory resources.
At the press conference, BVTE and BDZ emphasized that their goal is not to downplay the importance of the nicotine product market, but to establish a regulatory, enforceable framework that truly achieves national enforcement, protection of minors and consumers, and tax compliance. They believe that simply addressing the problem with more bans cannot replace the effectiveness of a fundamental regulatory system.
This viewpoint is frequently echoed in global discussions on tobacco and nicotine product regulation: policymakers are constantly trying to find a balance between protecting public interests and preventing the expansion of illicit trade.
Future Trends
The current situation in Germany serves as a reminder that without corresponding enforcement and regulatory resources, a single ban is unlikely to fundamentally curb illicit trade. Faced with cross-border internet trade and complex distribution channels, cooperation, resource integration, and enforcement innovation at the national and EU levels are likely to become crucial components of future policies.
With the rapid development of digital trade and the continuous adjustment of global supply chains, Germany’s experience may offer valuable lessons for other countries addressing similar issues: finding a balance between encouraging legitimate industry development, protecting consumer rights, and maintaining effective regulation is a common challenge for policymakers and all sectors of industry.
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