Almost half of all e-cigarettes sold in Europe originate from irregular sources, with China supplying 90 per cent of these unregulated products, according to a study published today by the Fraunhofer Institute for Integrated Circuits (IIS).
The illicit market, valued at €6.6 billion in 2026, is projected to swell to €10.8 billion by 2030, exposing gaping holes in EU customs controls, tax enforcement, and consumer protection. These difference and gaps between member states create grey zones where illegal trade can flourish.
Only 52 per cent of the market is considered ‘white’, while 13 per cent is ‘grey’ and 35 per cent is ‘black’.
The study, commissioned by logistics consultancy SKR AG and conducted in collaboration with MRU GmbH, and presented on March 12 provides the first comprehensive analysis of the shadow trade in vaping products across the continent.
Researchers combined foreign trade statistics, supply chain data, and market segmentation to quantify the scale of the problem, which has long evaded precise measurement due to fragmented regulations and opaque logistics flows.
China, particularly the manufacturing hub of Shenzhen, dominates the supply of irregular e-cigarettes to Europe.
The study found that 72 per cent of Chinese production is concentrated in Shenzhen, where highly automated factories churn out billions of disposable devices annually.
It was also noted that China has very strong control on novel smoking products, notably on flavoured products targeting youngsters, while there is almost no control in the exports towards Europe.
These products enter the EU through major logistics gateways, especially the big harbours in Germany, the Netherlands, and Belgium, before being distributed across the single market, often evading taxes and quality checks.
“In less than a decade, the e-cigarette industry has transformed from a niche craft to industrialised mass production,” said Uwe Veres-Homm, Head of Risk and Location Analysis at Fraunhofer IIS. “Shenzhen is now the global epicentre, and Europe’s fragmented regulations create loopholes that irregular traders exploit.”
The sheer volume of imports poses a monumental challenge for customs authorities.
Last year, an estimated 12 million parcels arrived daily in the EU from China, a figure that has surged in recent years.
With limited resources for inspections, authorities struggle to distinguish legal shipments from illicit ones, allowing untaxed and unregulated products to flood the market.
The financial toll on EU member states is substantial.
In Germany alone, tax evasion linked to irregular e-cigarettes reached €119 million in 2024, a figure expected to rise as the shadow market expands.
The study warns that divergent national tax policies, ranging from no specific levies in countries like France and Italy to high excise duties in Lithuania and Slovenia, fuel price disparities and incentivise smuggling and re-imports.
Beyond fiscal losses, the proliferation of unregulated products raises serious health concerns, in particular toward children and adolescents, who are often targeted with colourful and attractive packaging by these illegal products.
Irregular e-cigarettes often bypass safety standards, with unknown or banned substances posing risks to users.
The World Health Organization (WHO) has highlighted Europe as the region with the highest vaping prevalence among adolescents aged 13–15, a demographic particularly vulnerable to unchecked products.
Insufficient oversight and regulation of vaping products contributed for example to the widespread EVALI outbreak in the US, which, according to CDC data, resulted in 68 confirmed deaths.
E-cigarette or Vaping Product Use-Associated Lung Injury (EVALI) is primarily caused by inhaling harmful substances from vaping devices, with Vitamin E acetate in tetrahydrocannabinol (THC)-containing products strongly linked to the 2019 outbreak.
Key risk factors include using informal, black-market THC devices, young age of users, and pre-existing lung conditions.
“E-cigarettes from irregular sources circumvent all consumer protection measures,” said Horst Manner-Romberg, Managing Director of MRU GmbH. “This not only distorts competition but endangers public health.”
It was noted that the irregular products often had rich, colourful packaging, resembling sugary sweets, candy and toys, highly attractive for children.
The study underscores the unintended role of logistics networks in facilitating the irregular trade.
Millions of parcels, indistinguishable from legal shipments, move daily through European hubs, overwhelming customs capacities.
Rico Bach, Managing Partner of SKR AG, described the situation as a “structural failure,” where global supply chains collide with national regulations.
“No customs authority can manually inspect millions of parcels each day,” Back said. “We need digital traceability and closer cooperation with countries of origin to curb illegal flows at their source.”
The authors propose three key measures to stabilise the market: Uniform product definitions and tax classifications across the EU, digital traceability systems such as blockchain-based serialisation, and enhanced cooperation with Chinese authorities to monitor exports.
They caution against outright bans, which could drive demand further underground.
“A blanket ban would be counterproductive,” Veres-Homm warned, who highlighted that the data shows that nearly 50 per cent of the market already operates outside regular structure and that a ban would only make things worse.
He stressed that strengthening those structures through transparency and harmonisation is the only sustainable solution.
The study’s findings arrive as the European Commission considers stricter regulations on flavoured e-cigarettes and vaping products, together with general tax hikes.
Critics argue that without addressing the root causes, regulatory fragmentation and supply chain opacity, such measures risk exacerbating the very problems they aim to solve.
