Over seven out of every ten vapes sold worldwide now come from the illicit market. Worth an astounding $47 billion USD annually, the global black market for vaping products accounts for 76% of all vapes sold, dwarfing the legal trade and proving restrictions largely ineffective. Shot on location at GFN 2026 in Warsaw, Poland, Shane MacGuill of Euromonitor International explains how taxes, restrictions, product bans, and regulatory barriers are driving consumers into illicit markets around the world.
Featuring:
SHANE MACGUILL
Global Lead, Nicotine & Cannabis
Euromonitor International
euromonitor.com
@ShaneMacGuill
Transcription:
00:02 - 00:09
[Brent Stafford]
Shane, tell everybody about Euromonitor International. What is it?
00:10 - 01:00
[Shane MacGuill]
Euromonitor International, we're a strategic market research agency, so produce data on about 30 FMCG, so CPG industries. Despite the name, we're a global organization, so have about 16 offices, do annual research in about 100 markets, have the capacity to do bespoke or customized research in virtually any market in the world except the ones the bank our banks tell us we can't research in, and we're producing annual data on market landscape, size, share, distribution, and then also producing customised bespoke research for our clients in areas where the syndicated data set doesn't provide all the answers, they need to go deeper, emerging areas, etc. And the brand is really highly respected.
01:01 - 01:11
[Brent Stafford]
Yes, thank you. Well, we do our best, yeah. Let's dive into what I think is going to blow people's minds. Tell us about the Passport 2025 report.
01:11 - 02:23
[Shane MacGuill]
Yeah, so if I can start maybe in 2000 rather than 2025 briefly, we've been researching the tobacco and nicotine industry for about 25 years across those 100 markets. Most of the research that we do is on legal categories and we started researching the evapour market about 2014 within the syndicated data set we have. And again, focusing on what you could define as legal at that point in time. And in the intervening periods between then and in that decade or so, it just became increasingly obvious that when we were focusing on legal sales only within the evapour space, we just weren't capturing the whole picture. And we were getting pushed by our clients and by our stakeholders to look at the illicit space So that's something that we added in 2025, a view of the illicit evapour market across those 100 markets. And, you know, we were expecting it to be large. That's why we added it to the research spec. But really, the results, I think, were quite staggering in terms of the share of illicit consumption in the evapour space. And like you say, I think it's something that takes everyone by surprise, really, when they see the figure, even those who are familiar with the category and familiar with the trends and the patterns in the market in terms of illicit consumption.
02:23 - 02:33
[Brent Stafford]
Looking at the report, the number is USD$47Bn is the illicit portion of the global evapour market?
02:33 - 03:15
[Shane MacGuill]
Yes, so depending on exactly how you cut the pricing or make assumptions about pricing, the total evapour market we think is about USD$60Bn to USD$65Bn globally, and of that the illicit portion is about USD$45Bn to USD$50Bn, so somewhere between 70% and 75% of all evapour consumption globally. is in the illicit or non-compliant space, which is obviously, I mean, it's a very significant figure. There are very few other, if any, FMCG categories that have that problem or that pattern globally, so it really makes the evapour category unique amongst FMCG. Well, FMCG categories even within the nicotine space, but certainly more broadly as well across the landscape.
03:16 - 03:18
[Brent Stafford]
How quickly has that grown?
03:18 - 04:33
[Shane MacGuill]
Well, it's grown, I mean, and this is where we get into the function of, or the drivers of illicit or non-compliant. I mean, it's grown very quickly as regulators have started putting regulation in place, because obviously almost by definition, you can't have illicit or non-compliant consumption without regulation. And when the category was first emerging, In the sort of late 2000s and early 2010s, there were some markets who were very quick to come in and prohibit or try to prohibit, but generally speaking, there was a more laissez-faire approach from regulators. As regulators have come in and started trying to restrict, as they've come in and started putting excise on the category, etc., that's what's prompted that shift into the illicit or non-compliance space. And as a result, it's grown rather quickly since then. The data we have in the illicit space goes back to 2023 only because it's very difficult to go further back and retroactively construct a data point from that point in 2025 but you can see that it's grown very rapidly once regulation comes in and starts putting in place those kind of categorizations or features of products or you know registration frameworks or things that brands need to do to be compliant once that starts happening that the non-compliant consumption grows very quickly then.
04:35 - 04:48
[Brent Stafford]
So when you talk about this research How surprised are people to find out that 75%, 76% of the entire worldwide e-vapor market is illicit?
04:48 - 10:17
[Shane MacGuill]
It's a data point. I mean, you know, I've been with Euromonitor nearly 15 years now. I've very rarely seen anyone react as strongly or as viscerally to a data point. It's one that people are really shocked by in many cases. I presented some of this data for the first time in Geneva at the World Hab Expo last year, and there was gasps in the In the audience, when I flash that data point up on the screen, which again, I've never really come across in the time that I've been researching or presenting research. It's a strong reaction, as I said, even amongst people who think they know the industry and think they know what's happening. Once they see the kind of research in black and white, it has been something that's shocked people. Where does the data come from, if you can give us an idea? Yes, so as I said, we research in 100 markets within the nicotine space. In each of those markets, we have an analyst who's present in that market, who knows that market not only from a nicotine perspective, but also from a broader consumer and market landscape. We're approaching all of the research we do in terms of the syndicated data we have across industries using what we call a primary and secondary research approach. So primary, sorry for the jargon, refers to speaking directly to people involved in those categories in that market. So it could be brand owners, could be distributors, could be trade associations, could be governments in certain instances and so on. anyone who has a view or an angle or an opinion or has knowledge of that category in that market, we're speaking to them and gathering their intelligence about the category in that market. And then at the same time, the analyst is also looking at anything that's publicly available from an information source perspective. So again, could be company releases, could be government releases, could be trade press in certain instances, et cetera. And effectively, our analyst then is triangulating that and building a kind of consensus of all estimates in terms of the data we're building. When it comes to the illicit space, obviously it's more difficult to go and speak to a distributor of illicit product. We're not going to put our researchers in that position. So we also layer in things that could be things like gap analysis, looking at total user populations and what we expect. A market volume should be given the number of people that we know based on health or government surveys are using products in that market. And then looking at the difference between what we can establish the legal market is and what we expect or believe the total market should be. We also do things like store audits and product audits and look at, you know, when you look at the shelf space, you know, how many of those products we believe are legal or compliant in a given market, et cetera. So it's a combination of all sources. I think for obvious reasons the illicit space is more difficult to research than a legal space. The illicit evapour space is even more difficult again than researching something like the illicit cigarette market where you can do empty pack surveys and so on that have fairly high degree of statistical significance, I would say, or accuracy, that's not really possible in the illicit evapour space. So it is something where we're bringing as many different estimates, multi-methodology approach to it, and what we're trying to do is produce estimates where there are none right now. Are there some markets that are worse than others? Yeah, so, you know, obviously when we look at it, we sort of bundle or categorize markets into three different brackets. There are markets where there's still no regulation on e-vapor products and where that, you know, there's no regulation either specific to those products or which bring them within a broader kind of tobacco regulation framework. And we categorize those as 100% legal in terms of the consumption that's there. So it's a bit more straightforward. There are then a number of markets that obviously outright prohibit evapour products or certain form factors within the evapour within the evapour product family so to speak and again we categorize the consumption within those markets as 100% non-compliant or illicit and about I think about roughly speaking about 15% of all illicit consumption or all evapour consumption globally rather happens in markets where there's an outright prohibition. So one in every seven evapour consumption moment, roughly speaking, globally happens in a market where the products are not legal. And then there is a third bucket of markets where there is regulation in place and there is therefore a framework which dictates one brand or product may be legal, one is not legal, etc. And that's where we're going and looking at the mix between legal and non-compliant. So, you know, there are a number of markets where we see 100% illicit consumption, obviously, where there's prohibition. There are markets where there's de facto regulation in place, and it is theoretically possible to have a legal product in the market, but because of the severity of the regulation or the lack of enforcement, etc., we see virtually the market is entirely illicit. And, you know, there are markets like Israel, for example, where there are where there is effectively 1% of the products we estimate are legal and 99% of the products are non-compliant. Markets in GCC, UAE, Saudi Arabia etc. again in principle have a compliance framework where it is possible to put a legal product on the market but virtually all of the products consumed are non-compliant or illicit.
10:17 - 10:33
[Brent Stafford]
So how does the U.S. then measure up? Because you've got, you know, tens of millions of users of vaping products and you've got like a very small handful that are actually been authorized. So does that not, is the U.S. not one of those markets?
10:33 - 11:52
[Shane MacGuill]
Yes, so from a volume perspective, the US is without question the biggest illicit market globally because, as you say, the scale of the consumption there, there are probably thousands of SKUs in the US, possibly in the high single-digit thousands of individual SKUs, and only a small fraction of those are legal because they've gone through the full FDA process and acquired a marketing authorisation. Yeah, it's an extraordinarily large problem in the US and really the US is driving from a volume perspective the majority of illicit consumption or non-compliant consumption globally. We have seen, and I think it's reflected in the latest data, we have a little bit of an improvement in that situation. There's been more of a focus on enforcement. We've seen obviously an apparent change in the approach of the FDA to things like flavour and so on, from an authorisation perspective. So it appears to be improving to some extent, but there's still, you know, the vast majority of consumption in the US is still non-compliant or illicit, as we see. So it makes a big contribution to that number? Yes, exactly. It's the single biggest market from an illicit, non-compliant point of view, because of the scale of consumption there.
11:52 - 12:05
[Brent Stafford]
So many of those products across the border in Canada are legal. They're not illicit. It's just because of this wacky, crazy system the FDA has that makes that the case. What do you think?
12:06 - 13:54
[Shane MacGuill]
Yeah, so it's absolutely the case. I mean, you know, we see that market by market. There are products, you know, you can, in certain parts of the world, there is products that are legal in one country and not legal in the country next door, etc. So it's definitely an issue. It's something maybe we can, in terms of how you address this, I think, you know, standardization across markets is certainly one of the potential ways you can address an issue like this. But from our point of view, from a research point of view, the answer to that is You know, we never put a board up and say this SKU is non-compliant, this SKU is compliant in all markets. What we're doing is looking at it on a market to market basis. We're understanding what the framework is in that given market, you know, both in terms of any regulation that's there around the product features. So, you know, nicotine strength restrictions, volume restrictions, etc. Anything to do with distribution or access. So, you know, is there an online sales ban or anything else that's restricting access to the product. And then we also look at things like registration. So if there's a registration framework in place, how many brands and what brands have actually fulfilled or complied with that registration. So we're looking at it on a market by market basis. our analysts all produce, you know, a one pager which describes the regulation in that market and effectively is a criteria against which they're kind of judging in terms of how many products or brands are sitting in the compliant versus non-compliant space, etc. But there's no, in that sense, there's no universal definition of compliant and non-compliant in the eVapor space. So it definitely adds to the complexity of the research and adds obviously to the complexity of the landscape overall from an operational perspective too.
13:54 - 14:32
[Brent Stafford]
So there's, I guess, a couple of different parts of what drives something being illicit. One could just be the actual regulation itself in one country makes a product illicit, whereas across the border it may not be. And then you have the actual prohibitions and restrictions and bans that are heavily about enforcement and keeping the nicotine away from people very directly. Well, I don't think in the US that that's the case so much because you can obviously get the products everywhere. But you have Australia where it's almost de facto prohibition.
14:33 - 15:57
[Shane MacGuill]
Yeah, there are markets, like I said, that are trying to either heavily restrict or prohibit access to the products. I mean, you know, I think based on the research we do, it's questionable as to whether that is successful or not really, because as I said, 15% of all evapour consumption globally happens in a market where there is strictly no access to the product. So that's not a measure of the success of prohibition, I think, in terms of reducing access to the product. So consumers will, will get access to these products, I think, almost whether people intend they do or not. And we can see that in Australia. As you say, there's a very restrictive set of regulation in place. It's intended to reduce access to the product, and yet it's widely available. We can see use in markets like Singapore, for example, where again the category is prohibited and Singapore rightly in many cases held up as a market or a territory that can restrict access and can control access to products etc. and yet again in a market like that we're still seeing consumers being able to acquire evapour products and so on. There is this desire, I think, yes, to potentially restrict or control access, but on the basis of the research we do, it's hard to say that that's successful all the time in all cases.
15:58 - 16:10
[Brent Stafford]
I know you're a research company, so you may not be able to speak to this, but do you have a sense about what's driving government and public health to push these bans and restrictions?
16:10 - 18:54
[Shane MacGuill]
I mean, as you say, we're a research company. I try to look at this impartially, objectively. You know, I think in part... It feels to me there's a few different factors in play. One is in certain instances, I think it's been prevalent in what you might call developing markets for many years, although actually I think we're beginning to see it in some Western markets as well, where regulators just say, look, we don't have the resources to deal with the complexity of these products. You know, we don't have the bandwidth almost to look at what the appropriate regulation is and therefore we're just going to put a blanket prohibition in place and try and deal with the issue that way. So I think that's one of the reasons why we're seeing it. You know, there are also regulators or those in public health who I think sincerely believe that people should have their access to nicotine restricted. for whatever reasons. I think, you know, there are obviously differential views on the science around nicotine, and I'm not an expert in that area, but it feels to me like there must be people who are operating in good faith in terms of saying, look, we feel it's beneficial for a population that their access to nicotine is restricted and so on. I know there will be many at this conference, almost all, who will disagree with that, but I think it's worth recognising that there probably are those in good faith who are operating in that way. And then I think there are others who within the public health community and then are influencing regulators and so on who disagree with things like the profit model for a substance like nicotine, who do not like the idea of big tobacco companies being able to continue their revenue streams through these products and are really trying to create non-nicotine markets and non-nicotine societies. I think, again, looking at it from an objective point of view, it's not always clear that that objective is communicated clearly, and I think that may be one of the issues here is that we have regulators or people advocating regulation. through that motivation when that's not always clearly stated. And I think, you know, it's always best probably to be clear and transparent about the rationale for regulation. Then maybe people can look at it in a slightly different way and debate and discuss in a slightly different way as well. But I think those are probably the three. There's, you know, in part it's a lack of resource and a desire just to kind of try and almost perhaps postpone dealing with the problem. There will be some who are genuinely of the belief that this is the best way to deal with the problem. And then there are others who are perhaps trying to create a future that isn't always clear to everyone.
18:55 - 19:04
[Brent Stafford]
So this number, you know, around US$47Bn, illicit evapomarket, what does that say about consumer demand?
19:04 - 20:14
[Shane MacGuill]
Yeah, so it's strong. I mean, again, if you look at it just from a volume perspective, eVapor accounts for now about that 15% figure. So about one in all seven nicotine consumption moments now, including cigarettes, et cetera, globally is in the eVapor category. So it's obviously a product category that's strongly appealing to consumers. And there is clearly a demand there for the category and the consumption data that we have and that value data speaks to that without question. And I think I would also add that when you look at that 60 billion, to a large extent, that's non-tax inclusive right now. We're seeing more and more markets taxing the evapour category, but by and large, up until now, there hasn't been significant excise in place. So if you start to see markets bringing excise into the mix, that 60 billion figure overall from a tax-inclusive perspective increases potentially relatively quickly, and then also obviously has the risk of increasing the arbitrage between the legal and illicit market as well.
20:14 - 20:22
[Brent Stafford]
Right. So the taxes do push a lot of people into that illicit market, even when product is still available in their market.
20:22 - 22:02
[Shane MacGuill]
Yeah. So, you know, up until now, like I said, excise hasn't been as much of a feature of the eVapour space as in the cigarette space. And again, I think that's either been because governments have just been slower to get to the pitch in that sense, or in certain markets, again, there's been a recognition that these products are are potentially safer for consumers and there has been a desire to go lightly in terms of excise. But we are seeing more and more markets now increasing excise and evapour. I mean, Poland is a good example where we are right now. There was a relatively big increase in evapour taxation introduced and that has led already to more consumers moving into the illicit space. You know, the drivers are not homogenous all the time for illicit or non-compliant consumption. You do have a lot of product-led or product-driven consumption in the sense that consumers are just trying to access product that isn't available to them in the legal market. But we're increasingly seeing price as a factor as well in terms of non-compliance. You know, it's again a feature of the category that we've seen in many markets. And again, if you look at the UK, for example, where there's also been or there will be an excise increase on eVapor, a lot of the shift into the eVapor category from the cigarette category has been price driven. It's consumers who are price sensitive. They recognize that eVapor offers them a a more affordable way of accessing nicotine, and they've moved into the category on that basis. So they're even more sensitive to price in that sense, and anything that kind of increases the relative price of evapour, decreases the gap between evapour and other categories, potentially will fuel that non-compliant or illicit consumption even more.
22:03 - 22:20
[Brent Stafford]
It was a huge driver for me in Canada, switching, you know, making this switch, because I was a two pack a day smoker, and by 2015 that was almost, that was $30 a month, or a day. $30 a day. I couldn't afford it. I mean, it was a mortgage payment.
22:20 - 23:28
[Shane MacGuill]
So it's an important, you know, it is an important public health discussion, I think, in terms of where the appropriate excise level is for a category like the eVapor category. I think there are good reasons to levy excise and at not least in terms of trying to combat the non-compliant consumption because, you know, if you flip around the other way, the issue at the moment is that there isn't a great incentive for governments in many cases to actually enforce against illicit evapour and non-compliant consumption in the evapour space because they're not losing tax revenue because it's not there in the first place. So I think there is probably a Goldilocks spot where there's enough excise in the category that you're raising revenue for governments, that you're potentially, again, protecting vulnerable communities in terms of making sure that, for example, it's less accessible to children and so on, and that there's enough incentive there to enforce against illicit consumption. But again, obviously, if you pitch that level too high, it can have a counterproductive effect of driving consumers into the black market.
23:29 - 23:36
[Brent Stafford]
Here at the Global Forum on Nicotine, you're presenting some stuff. Why is an event like this important?
23:36 - 25:11
[Shane MacGuill]
You know, as we've discussed, this is a complex industry, a complex landscape, and it's one in which it's difficult, I think it seems to me, to get the solutions right and to find the right way forward. So, I think an event like this is very important. to kind of air those complexities, discuss them, try to learn from different parts of this puzzle. There is a role for researchers to play in this. There's a role for industry to play. There's certainly a very strong role for public health and regulators to play in this space as well. So I think a forum like this which tries to bring those different parts of this together and obviously the consumer as well and having the consumer voice which is a notable future of GFN, is important too. So bringing all of those different stakeholders together, I think, and trying to build consensus around the right way forward. There's a lot of, again, looking at it almost externally or objectively, as we try to do as a research organization, it feels to me like there's more agreement uh often than is is highlighted in terms of you know not wanting to make sure these products don't get into the hands of vulnerable communities and so on i think everyone is aligned with that um and it it's really around trying to find a way forward that balances those different competing interests and i think there you know there is a path forward it's narrow but i think events like this can help in making sure that different parts of the stakeholder set here is aligned in terms of how to go forward.
25:12 - 25:17
[Brent Stafford]
If you had a moment to give governments around the world some advice, what would that be?
25:19 - 27:41
[Shane MacGuill]
Well, as an observer, I'm not usually in the business of giving unsolicited advice, but I think there are a few things. I mean, certainly as a data and research person, I would say there is data and research in this space, and I think it's important to look at that data and research and make sure that um you know regulatory frameworks that are being proposed are are being built in the context of the appropriate data and research so i think you know i would say that as a research person but i think that's an important first step and again it's not always been the case i think with every framework that's been brought in that that's um that that's so I think one of the other aspects of this as well is and you know we didn't quite get into it during the conversation but the gap between the regulation enforcement I think is very very large at the moment what we're seeing is regulatory frameworks being put in place like in Australia and then a lot of money being thrown at enforcement against those regulatory frameworks and the enforcement is just not successful because the gap between the framework and what's possible from an enforcement perspective is too large. So, again, there are notable exceptions to this, but I think in general terms it's not always clear to me that there's a consensus or alignment between regulators and enforcers, if I can use that word, in the building of regulation. That's something I think that would be beneficial. And then in a broader sense, again, there are wider groups here that have a lot of knowledge of markets, that have a view and lived experience in terms of either industry or consumers. And I think, again, it feels to me that it would benefit the regulatory frameworks to have those voices. appropriately embedded into some of those and again you know there are issues around the involvement of industry in certain cases and you know respect that in terms of what individual regulatory bodies want to do but again to whatever extent it's possible to broaden the input into regulatory frameworks in this area which is a complex one I think would be beneficial.