Market Recovery and New Policy Changes
The “major disruption” caused by the disposable vape ban led to a temporary decline in vape sales, but the market has since rebounded noticeably. However, the industry must now prepare for the next wave of change – the implementation of a vape tax.
Speaking at the On The Road With Forecourt Trader event hosted by Park Garage Group, Tom Power, Senior National Account Manager at Phoenix 2 Retail, urged the industry to prepare early.
Tax Impact Expected to Be Smaller than Disposable Ban
Under the planned measures, e-liquid will be taxed at 22p per ml from 1 October 2026. For example, a 10ml high-puff device would incur £2.20 in tax, in addition to the existing 20% VAT. Power believes the impact of this policy will be significantly less severe than that of the disposable vape ban.
Starting 1 April 2027, all stock must carry a tax mark. Although retailers will have a grace period to clear existing inventory, he advised forecourts and other retail channels to begin preparations immediately to avoid being left with unsellable products.
Growth Momentum for Nicotine Pouches
Since nicotine pouches are not subject to the tax, Power expects this category to continue expanding.
“The nicotine pouch category has grown steadily in recent years and remains untaxed. Even if growth slows, demand should at least remain stable,” he said.
Power recommended that retailers first stock leading market brands such as Velo and Nordic. Once shelf space has established a stable consumer base, they can then introduce brands like Fumi, Zyn, and higher-strength options such as Killa and Pablo.
Consumers May Shift to Lower-Capacity Devices
Power expects the tax to encourage consumers to adjust their purchasing habits to reduce per-item costs.
“As prices rise, consumers will evaluate whether they are willing to bear the cost of 22p per ml plus VAT,” he explained. “A £12.99 high-puff device with 10ml capacity will face a noticeable price increase. Some may therefore switch to cheaper 2ml low-capacity devices or move toward oral nicotine products to avoid the tax.”
UK Industry to Closely Watch Ireland’s Policy
Power noted that the industry could gain early insights by observing the market response to Ireland’s recently implemented e-liquid tax. Ireland’s policy aims to reduce youth vaping and will be accompanied by stricter sales, flavour and advertising restrictions.
“Ireland has only just begun implementing the tax. We will gather significant insights over the coming weeks and months and monitor how things develop,” Power said.
Sufficient Preparation Time, But Action Is Needed Soon
He added, “The vape tax will take effect in October 2026, which gives everyone plenty of time to prepare. However, communication with suppliers is essential. Discussions with major companies are already underway. Since there will be a transition period until April 2027, the overall shift should be relatively smooth.”
Two Key Growing Categories Post-Ban: Pods and High-Puff Devices
Power pointed out that since the disposable vape ban, the two fastest-growing categories have been refillable pod systems and high-puff devices, led by brands such as Lost Mary, SKE, and IVG. The disposable segment, which once accounted for 80% of the market’s value, was abruptly removed, forcing the industry to “rebuild almost from zero.”
Tax Shock Expected to Be Less Disruptive than Ban
Therefore, he expects the upcoming tax changes to be less structurally disruptive than the ban. “Yes, the tax will have an impact, but it won’t shake the market as dramatically as the ban did,” he concluded.
