Brands and retailers are fighting back against illegal products
Is the illicit tobacco and vape market now out of control? The results of recent test purchasing by Japan Tobacco International (JTI) should make unsettling reading for law makers and retailers alike. It found that out of 186 UK stores, more than half (96) sold a mix of illegal cigarettes, roll-your-own tobacco or vapes – including dangerous ‘over-filled’ vaping products.
“Unfortunately, the illegal sale of tobacco and now vapes seems to be everywhere and it’s very difficult to put the genie back in the bottle,” says Ian Howell, fiscal and regulatory affairs manager at JTI.
And it’s not just illegal products on sale to adults. Some unscrupulous shops are compounding the problem by selling vapes to under-18s – a move which is making responsible retailers rightly furious.
“We have local shops selling the illegal products right there on the counter to just about anyone,” says Jimmy Patel from Jimmy’s Store in Northampton.
“There’s no secrecy to it at all. And it hurts because they’re hitting my trade and openly doing something illegal.”
New laws for a new category
Laws against illicit tobacco have been around at least as long as smugglers first sold foreign ‘baccy on the Cornish Coast. But vaping is a relatively new and fast-moving market. Legislation has lagged behind – until recently.
From Daily Mail exposes on illegally high nicotine levels, to school-run outrage at vapes sold to kids, the government is under pressure to act. Rishi Sunak has responded with a soon-come revamp to the law. This is set to address underage sales and marketing, alongside the rise in illegal products.
At its heart is the plan to give new powers to Trading Standards to impose stiffer financial penalties and potentially revoke a trader’s Track and Trace EOID. This new ‘illicit vape enforcement squad’ will be backed by a £3m investment helping HMRC and the Border Force work together on the problem.
It’s not before time, as illegal vape manufacturers find fresh ways to rinse the under-age market.
“Disposable vapes have seen impressive growth over the last year and this popularity has made them an area of focus for illicit traders,” says James Hall, anti-illicit trade manager at Imperial Tobacco UK&I.
“As a result, we’re seeing an increasing number of non-compliant vape products come to market that are disguised to appear as something else to avoid detection, such as a recent seizure which saw an illicit vape product made to look like a highlighter pen. These products often feature names that are seemingly designed to appeal to children, like fidget spinners, gummy bears and ice lollies.”
Who’s upholding the law?
New laws are very welcome. But the worry among c-store retailers is that, despite the new taskforce, there’s no one to enforce them properly.
Research by Arcus Compliance found that just two shops across six major UK cities were successfully prosecuted for underage or illicit vape sales between 2021 and April 2023.
“It’s a policing matter – and the law needs to be enforced,” says Jimmy.
“Some authorities are better than others but at the end of the day they don’t have the resources to enforce it and that’s why people get away with it.”
Richard Inglis, owner of several stores in Southampton, agrees that enforcement is lax. He connects the problem to a whole raft of issues affecting the convenience store sector right now.
“There’s a whole lack of enforcement across the board,” he says. “It’s not just illegal vapes but HFSS – and shoplifting doesn’t appear to be a priority. There just doesn’t seem to be the [police] resource. It’s a cliché, but crime really does seem to pay for some people at the moment.”
Jimmy adds that when shops are caught with illegal products, the fines they get aren’t enough to put them off – especially for shadier stores that might change names and owners every six months or so. He mentions that if a store is fined a thousand pounds “…they can make that back in a day because they’re making such good margins on illegal products. So why change?”
Mohammad Agrabawi, senior director of corporate affairs at ANDS, a manufacturer and distributor of alternative nicotine delivery products, highlights a meagre fine of just £26 given to a retailer in Barnsley for selling a vape to a minor.
“Illicit vape products are a huge challenge for the industry,” he says.
“We need a swift, severe crackdown on bad actors.”
Working together
Ultimately, ditching the illegal trade starts with the right laws and proper enforcement. And it’s up to brands and retailers to do their bit too.
“Retailers and brands must do everything in their power to ensure they are on the right side of the law,” says Lee Bryan, CEO at Arcus Compliance, which recently teamed up with vape supplier Phoenix2Retail to launch the ‘Pre 2 Post-Market Compliance Testing Program’.
“If they don’t, they could face being grouped in with the cowboy traders that are increasingly under the spotlight. If retailers and brands are struggling to navigate the complex legal landscape, then they must take action and ask for help.”
On enforcement, PML use a specialist team, led by a former Detective Chief Inspector at Scotland Yard, to carry out test purchases at convenience stores and gather intelligence on the illegal trade. Meanwhile, Imperial Tobacco runs a dedicated trade hotline where retailers can report illegal activity direct.
“For us, operating in the smoke-free category is about strict adherence to all local laws when developing science-based, smoke-free alternatives that meet the highest possible standards and undergo rigorous quality-control measures to ensure compliance and consistency with every product in our expanding portfolio,” says a PML spokesperson.
Brands know that the stakes are high. The big worry for the industry is that if enough isn’t done to stamp out illegal sales, the government will reach for the big guns. Vapes are completely illegal in Australia outside of prescription. If MPs decide the UK industry is out of control they might try something similar over here.
“There is a risk that concerns about underage access and counterfeit products could drive decisionmakers to consider more drastic options and the industry must do everything it can to steer the conversation towards more balanced measures,” says Bryan.
The problem with price
Whatever measures emerge from parliament, those seeking to snuff out illegal sales face a huge hurdle in 2023: the cost-of-living crisis.
“Amid the ongoing cost-of-living crisis, with adult consumers searching for affordable products that offer value for money, adult vapers are increasingly vulnerable to illicit products that are sold at a discounted rate,” says Chris Aikens, RELX International’s external affairs manager for Europe. “While convenience retailers can readily flex offers and deals on vape devices, to meet the demands of financially-savvy consumers, there is the possibility that this could result in an increase in illicit vape trade going unnoticed.”
Consumers now expect to be able to find illicit tobacco and vapes, which is fuelling the problem as they look to save money, states JTI’s Howell. “Shopkeepers wouldn’t sell it if there wasn’t a demand for it. So how do you persuade people not to buy these products?” he asks.
Richard keeps to the letter of the law in his stores and claims that legal vapes already deliver strong margins. “It really amazes me that stores go for the illegal stock when you can buy vapes legally, make good margins and just not have to worry about it,” he says.
“I’m not going to pretend we don’t make good money from vapes. So why would I want to save 50 or 60p a vape and risk selling something that’s not safe or illegal? There’s absolutely no point in going there.”
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