Liquid-type Electronic Cigarettes Past Their Prime... Effectively Phasing Out

430 Million Pods Sold in July Last Year Alone
But Q4 Total Sales Only Reach 1 Million Pods
Overall Tobacco Market Size Also Shrinks

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] The sales volume of closed-system (CSV) liquid e-cigarettes, whose sales channels have been blocked due to harmfulness controversies, has sharply declined. In South Korea, suspected cases of lung damage have occurred, and the government has recommended discontinuing use, so it appears that these products are effectively being phased out of the market. Sales of heated tobacco products have also sharply decreased in the second half of the year.

According to the '2019 Tobacco Market Trends' announced by the Ministry of Economy and Finance on the 22nd, CSV e-cigarettes recorded a total sales volume of 16.9 million pods since their launch in May last year. After selling 6.1 million pods in the second quarter and 9.8 million pods in the third quarter, sales dropped sharply to just 1 million pods in the fourth quarter.

CSV e-cigarettes peaked at 4.3 million pods sold in July last year, but after the Ministry of Health and Welfare's recommendation to stop use in September, sales plummeted to 400,000 pods in October and 300,000 pods each in November and December, causing the market to shrink rapidly. The Ministry of Economy and Finance explained, "Sales in the fourth quarter decreased by 89.8% compared to the previous quarter, which is attributed to the government's recommendation to refrain from and ban liquid-type e-cigarettes following the severe lung disease outbreak in the United States."

The overall tobacco market also shrank. Last year's tobacco sales volume was 3.45 billion packs, a 0.7% decrease compared to the previous year. Compared to 4.36 billion packs in 2014 before the cigarette price increase, this is a 20.9% reduction. In the fourth quarter, sales were 840 million packs, down 9.1% from the previous quarter. Cigarette sales were 3.06 billion packs, down 24% from the previous year and 29.7% compared to 2014. In the fourth quarter, 760 million packs were sold, showing an 8.4% decrease from the previous quarter.

Heated tobacco products sold 360 million packs, a 9.4% increase from last year, but quarterly growth is slowing. After strong growth every year since their launch in 2017, sales peaked at 10.17 million packs in the second quarter, then declined to 8.72 million packs in the third quarter and 8.22 million packs in the fourth quarter, marking two consecutive quarters of decline.

Additionally, solid tobacco material e-cigarettes, launched in July last year, sold a total of 3.7 million packs, but fourth-quarter sales dropped sharply by 45.4% to 1.3 million packs compared to the previous quarter. Solid tobacco material e-cigarettes are a type of e-cigarette that vaporizes liquid by passing it through solid tobacco material for inhalation.

Last year's excise tax revenue was 11 trillion won, decreasing by 6.5% as shipments (3.36 billion packs) fell 6.2% compared to the previous year. Cigarettes shipments were 3.03 billion packs, down 4.5% from the previous year, resulting in excise tax revenue of 10.0604 trillion won, a decrease of 471.7 billion won. Heated tobacco product shipments were 300 million packs, down 27.4% from the previous year, with excise tax revenue of 901.1 billion won, a decrease of 339.1 billion won compared to last year.