Korean Practitioner: Synthetic Nicotine Tax Will Impact Open Market, Expected Monthly Consumption Of E-liquid To Plummet By 60%

Korean practitioner: Synthetic nicotine tax will impact open market, expected monthly consumption of e-liquid to plummet by 60%

Practitioners have told two top two firsts that the unified tax policy has had a huge impact on the open electronic cigarette market in South Korea. The monthly consumption of e-liquid in South Korea may drop sharply from 50 tons to 20 tons. Currently, there is a third alternative in the market that is neither synthetic nor natural nicotine.

Recently, South Korean media reported that the South Korean parliament is pushing for legislation to regulate synthetic nicotine and plans to impose new taxes on electronic cigarette products (South Korea plans to include synthetic nicotine in tobacco regulation and may significantly increase the price of electronic cigarette products). In order to gain a deeper understanding of the impact of this policy change on the Korean e-cigarette market, Two Up First contacted practitioners in the Korean e-cigarette market to obtain more information.

Previously, according to the South Korean Tobacco Industry Act, products that only use tobacco leaves and natural nicotine as raw materials were recognized as tobacco. Therefore, South Korea taxed natural nicotine but did not tax synthetic nicotine, resulting in up to 90% of products in the South Korean e-cigarette market using synthetic nicotine as a means of tax avoidance. The proportion of synthetic nicotine in the South Korean market is already quite high, accounting for about half of the market share. However, many natural nicotine products disguise themselves as synthetic nicotine, which has attracted the attention of Congress, "the practitioner mentioned.

With the increasingly strict regulation of the electronic cigarette industry by the South Korean government, industry insiders have revealed to two top companies that if the South Korean government officially taxes synthetic nicotine products, the monthly consumption of e-liquid in the South Korean market may plummet from 50 tons to 20 tons (a 60% decrease). At the same time, the unified tax policy has had a huge impact on the open electronic cigarette market in South Korea. Due to the increase in taxes, the cost of bottled e-liquid has significantly increased, and one 30ml bottle of e-liquid may have to pay a tax of 100 yuan, which has gradually made electronic cigarette products a 'luxury item', and many consumers have turned to traditional cigarettes as a result, "the practitioner added.

When it comes to how the South Korean e-cigarette industry is adapting to the government's new tax policy, practitioners explain to Two First First: "Currently, there is a third alternative in the South Korean market that is neither synthetic nor natural nicotine. The main ingredients of this alternative are methyl and caffeine

The practitioner also shared the current situation of the Korean e-cigarette market with two top 2Firsts. "The proportion of disposable e-cigarettes in the Korean market is rapidly increasing, currently accounting for about 20% of the market, while the market share of open e-cigarettes is between 40% and 50%." He also mentioned that although the sales situation in the Korean domestic market is relatively stable, the influx of domestic merchants and the backlog of goods have caused a huge inventory, which is enough to support one year of sales even if imports are stopped.