The global nicotine market hardly makes it into the buzz of geopolitics. But the same tensions that could reshape energy, technology and trade could potentially affect the tobacco and reduced-risk nicotine products market. For smokers seeking to quit, the ramifications of the latter would be huge.
The availability of low-risk nicotine alternatives has led millions to move away from combustible cigarettes. But supply chain disruptions, regulatory priorities and pricing structures could slow that progress and reshape nicotine markets around the world.
Conversely, geopolitics is making the link between global politics and nicotine policy more visible.
Could global vape supply chains be disrupted?
International manufacturing networks are a major crutch for the vaping sector. Basic parts — batteries, coils, microchips and pod systems — are manufactured in specialised hubs, particularly in East Asia. Tariffs, sanctions or shipping disruptions often occur after tensions rise. Tighter export restrictions and logistical bottlenecks can delay the movement of goods or raise production costs. Manufacturers grappling with these pressures might be forced to increase prices or reduce distribution.
Discussing these issues with tobacco harm reduction expert Clive Bates, he shared an article by Craig Tindale, looking into the possible repercussions that the much-feared closure of the Strait of Hormuz would have. Tindale explains how intricately the supply of goods in the modern world is connected, and how “the interruption of one narrow corridor can propagate outward into a general crisis of civilisation.”
To make matters worse, China, both a major domestic market and a major manufacturer of vaping products for the world, is looking to restrict production. In recent weeks, the country’s tobacco regulator rolled out new rules to stabilise the domestic vape market. Authorities also directed manufacturers to halt new investment projects and put a pause on the building of additional production facilities, as a remedy for excess capacity.
The measures are meant to stabilise pricing, prevent overcompetition and enhance regulatory supervision.
But because China is so central to vape manufacturing, these policies could affect global supply conditions and pricing.
How instability can fuel illicit markets
In the face of large-scale crises, companies normally seek alternative production locations to lower risk. To this effect, parts of Europe, Mexico and other parts of South America may benefit if manufacturers shift supply chains away from a single geographic centre. But moving production networks takes time and money. Establishing facilities, meeting regulatory requirements and building a skilled workforce are time-consuming processes. In the interim, consumers may pay more or face less availability of regulated products, although the exact effects remain unclear.
Meanwhile, supply disruptions and soaring prices can, of course, in parallel create windows for illicit trade. The tobacco industry has repeatedly shown how the creation of restrictive environments can drive black markets. Research on the transnational trade in tobacco finds that high prices, restrictions on legal supply and complex regulations can create opportunities for illicit distribution networks.
Consumer stress and the demand for nicotine
In the meantime, geopolitical crises often also recalibrate government priorities. National security, economic stability and border control frequently take precedence in policymaking discussions, which can divert attention from more complex public health strategies. Consumer products that are perceived to be non-essential may see stricter oversight during uncertain times, even when evidence indicates they are effective in reducing harm derived from smoking. An example is vape shop closures during the COVID-19 lockdown, with policymakers seemingly oblivious to the fact that users would be prone to smoke more/use more nicotine during times of such stress.
Geopolitical pressure can also push toward more restrictive policies. Governments intent on tightening control over cross-border trade may introduce further customs inspections or import restrictions. While these measures are intended to hinder illicit activity, they have the unintended consequence of slowing the flow of legal products.
All this suggests that during the crisis, the demand for nicotine products will remain at the same level or even grow. Still, due to economic pressure, consumers will become more price-sensitive. If the regulated alternatives suddenly rise in price, for example, due to supply disruptions or changes in taxation, many users will likely switch to cheaper products available on the informal market. Therefore, the price factor also plays an important role in the structure of the market for nicotine products.
The question of taxation is superimposed on the price; due to the precarious financial situation, governments can raise taxes on tobacco/nicotine products. Traditionally, cigarette tax receipts, in addition to reducing tobacco consumption, have been used to fund public services. However, if there is no differentiation in product taxation based on the risk of their use, it reduces the incentive for a smoker to switch to a safer alternative.
Harm reduction in a shifting political context
These changing geopolitical realities pose new challenges for nicotine policy. The markets for vaping and other reduced-risk products could be affected by trade disruptions, regulatory shifts and economic pressures alike. Yet through all this, consistent access to regulated alternatives not only remains crucial to mitigate smoking-related disease, but is more important than ever.
