Practitioners told the two supreme people that the unified tax policy has had a huge impact on the open vape market in South Korea. Monthly tobacco consumption in South Korea could drop sharply from 50 tons to 20 tons. Currently, there is a third alternative on the market which is neither synthetic nicotine nor natural tobacco tar.
South Korean practitioners: tax on synthetic nicotine will hit the open market
South Korean media recently reported that the South Korean National Assembly is advancing synthetic nicotine control legislation and plans to impose a new tax on vape brands (South Korea plans to include synthetic nicotine in cigarettes to control the price of e-cigarette brands or significantly increase). To gain insight into the impact of this policy change on the Korean vape market, two supreme 2Firsts reached out to practitioners in the Korean vape market for more information.
Previously, according to the working method of Korean cigarettes, only products using cigarette leaves and natural tobacco tar as raw materials were identified as cigarettes. As a result, Korea taxes natural tobacco tar, but not synthetic nicotine, resulting in up to 90% of the Korean vape market using synthetic nicotine as a tax avoidance method. “Synthetic nicotine has a high percentage in the Korean market, accounting for about half of the market share. However, many natural tobacco tar products will be dressed up as synthetic nicotine, which has raised concerns in Congress.” The practitioner mentioned.
Monthly consumption of cigarette oil is expected to plummet by 60 percent
As regulation of the vape industry in South Korea becomes more stringent, industry insiders have revealed to two supreme 2Firsts that if the South Korean government officially taxes synthetic nicotine commodities, the monthly tobacco consumption in the South Korean market could be reduced from 50 tons to 20 tons (a 60% reduction). At the same time, the unified tax policy has had a huge impact on the open vape market in South Korea. “The cost of canned tobacco oil has risen dramatically due to tax increases. It is estimated that a 30 ml bottle of tobacco oil has to pay a 100 yuan tax, which makes vape brands gradually become a “luxury” and many consumers become traditional tobacco supplements.”
When talking about how the Korean vape industry is adapting to the government’s new tax policy, practitioners introduced the two supreme 2Firsts: “Currently, there are third alternatives on the Korean market that are neither synthetic nicotine nor synthetic natural tobacco tar. The main components of this alternative are methyl (hydroxyl) and caffeine.”
The practitioner also shared the current state of the vape market in South Korea with two supreme 2Firsts. “The proportion of disposable vapes in the Korean market is rising rapidly. Currently, they account for about 20 percent of the market, while the market share of open vapes is between 40 and 50 percent.” He also mentioned that although the sales situation in the home market of South Korea is still stable, the influx of a large number of domestic merchants and the backlog of goods has led to a huge inventory. Even if imports were stopped, those stocks would be enough to support a year’s worth of sales.
