Introduction

As the global Vape industry navigates a maze of regulatory uncertainty, Europe is emerging as a pivotal battleground. With stable policies, growing consumer demand, and clear commercial pathways, the region is becoming a critical anchor for businesses. From the financial success of international tobacco giants to shifting export trends from China, and from predictable policy frameworks to accelerated localization efforts, Europe—once a secondary market—is now a decisive force shaping the industry’s future.

PMI’s Dominance in Europe

Philip Morris International (PMI) is capitalizing on Europe’s favorable conditions. Its 2025 first-half earnings report reveals total revenue of $19.4 billion, a 6.5% year-over-year increase. The new tobacco products segment, encompassing heated tobacco and Vape, generated $8.1 billion—a 15% rise—serving as the backbone of PMI’s growth.

In Europe, PMI’s IQOS heated tobacco product posted a 9.1% growth rate in Q2, boosting its market share to 10.9%. Meanwhile, the VEEV Vape brand doubled its sales volume, securing the top spot in the closed-system Vape category across six countries, including Greece and Italy.

U.S. Market Struggles

In contrast, the U.S. Vape market is faltering. Chinese brands are losing ground, and even global players like PMI are feeling the pinch—its Njoy brand reported a $108 million loss, while Vapepie saw a 13% revenue decline. Nicotine pouches remain the sole growth outlier.

The U.S. regulatory environment is a major hurdle. The FDA’s rigorous Premarket Tobacco Product Application (PMTA) process and flavor bans impose steep barriers, compounded by inconsistent state-level policies. For instance, Colorado’s recent decision to retain menthol cigarettes while banning flavored Vapes underscores the market’s regulatory contradictions.

China’s Exports Pivot to Europe

China’s Vape export data highlights Europe’s rising prominence. In March 2025, Germany surpassed the UK as the second-largest destination, with exports reaching $75.46 million—a 17.94% increase year-over-year. The UK, impacted by a disposable Vape ban, saw a 14.87% export drop that month.

By June 2025, the UK reclaimed the top spot with $127 million in shipments, while Germany and Poland ranked among the top ten markets. Poland stands out, with IQOS achieving a 9.9% penetration rate in the heated tobacco segment, reflecting Europe’s growing embrace of novel tobacco products.

EU’s Tax Framework: Clarity with Stricter Rules

The European Commission is rolling out a unified Vape tax system, balancing predictability with higher costs:

• E-liquids with 16-20 mg/ml nicotine: 40% of retail price (or €0.36/ml).
• Low-nicotine products (0-15 mg/ml): 20% (or €0.12/ml).
• Nicotine pouches: 50% of retail price.
• Heated tobacco products: 55%.

Though stricter, this framework offers a stable compliance roadmap—unlike the U.S.’s abrupt tariff hikes. The EU also plans to double the minimum cigarette excise tax from €1.80 to €3.60 per pack, widening the price gap with novel products.

Localization Gains Momentum

Leading Vape firms are intensifying localization to align with Europe’s regulatory landscape. Most have established compliance and marketing hubs to meet the Tobacco Products Directive (TPD2) requirements, including product registration and packaging disclosures.

Some brands are taking it further, building European production facilities. This “made in Europe, for Europe” strategy mitigates trade risks and enhances market responsiveness. The UK market alone is projected to grow by $1.2 billion by 2025, fueling investments from giants like PMI and British American Tobacco.

Conclusion

Europe’s blend of regulatory clarity, market stability, and growth potential sets it apart in a turbulent global industry. While challenges like tighter rules and rising taxes loom, the region’s structured approach offers a stark contrast to the unpredictability of markets like the U.S. For companies investing in compliance and local presence, Europe is not just a refuge—it’s a springboard for long-term success.