Market evolution: Nicotine products for inhalation (CN 2404) — 2015–2025

Introduction

This report examines the EU trade dynamics for CN 2404, a customs category that encompasses a broad range of modern nicotine products — from heated tobacco and e-liquids to nicotine pouches, patches, and other oral or transdermal delivery systems. The period under review coincides with the rapid global expansion of alternative nicotine products, regulatory shifts within and beyond the EU, and structural changes in supply chains. Drawing on EU-level trade data, the analysis identifies three core dynamics: a dramatic expansion of EU export capacity, a deepening dependence on Chinese imports, and an internal product-level transformation driven by the rise of oral nicotine products (pouches) alongside heated tobacco.

1. The EU as a dominant and growing net exporter of alternative nicotine products

The EU's trade position in CN 2404 is striking: over the 2022–2025 window, the bloc ran a consistently and increasingly large trade surplus, reaching nearly €1.45 billion in 2025. The net import reliance remained deeply negative (around -106% in the last year), confirming that the EU is a substantial net exporter. This is not a marginally positive balance — it reflects a structural feature of the market in which EU-based production serves a large share of global demand.

1.1 Export volumes more than doubled in four years

EU exports of CN 2404 products surged from €1.34 billion in 2022 to €2.91 billion in 2025, a growth of 117.5%. In volume terms, exports rose from 26,077 tonnes to 56,206 tonnes (+115.5%). This near-doubling occurred while average export unit prices remained broadly stable (around €51,000–52,000 per tonne), suggesting that the growth was driven by genuine market expansion rather than price inflation alone.

1.2 Japan and the UK anchor EU export growth, while the United States emerges as a fast-growing market

The geographic profile of EU exports reveals a concentrated but diversifying pattern. Japan remained the single largest destination, absorbing €1.66 billion in 2025 (up 75.9% from 2022), largely reflecting Japanese demand for heated tobacco products. The UK, Ukraine, and the United States each more than tripled their imports from the EU, with the US recording the steepest relative increase (+746%, from €13.1 million to €111.3 million). Türkiye and the United Arab Emirates also showed strong momentum, indicating that EU producers are successfully penetrating Middle Eastern and Eurasian markets.

1.3 Italy, Romania, and Sweden drive the EU's export surge

At the member-state level, three countries dominate the export profile. Italy's exports nearly tripled (from €426 million to €971 million), Romania's grew by 71% (from €518 million to €887 million), and Sweden's expanded almost eightfold (from €47 million to €373 million). Sweden's explosive growth is consistent with the global commercialisation of Swedish-origin nicotine pouch products. The Netherlands and Hungary also recorded strong growth, suggesting the emergence of new production or re-export hubs.

The specialisation data confirms the underlying structural advantage: Croatia (RCA 21.5), Romania (9.4), Greece (7.2), and Sweden (2.9) all show strong revealed comparative advantage in CN 2404, suggesting that their export growth reflects genuine productive specialisation rather than transhipment.

2. A deepening import dependence on China amid supply-chain concentration

While the EU is a net exporter overall, its import side tells a very different story: it is heavily concentrated on a single supplier — China — and that concentration has intensified over the period.

2.1 China accounts for over 90% of EU imports by value

EU imports of CN 2404 products grew from €931 million in 2022 to €1.46 billion in 2025, a 57.1% increase. Nearly all of this growth was driven by China, whose share of EU imports rose from €797 million to €1.33 billion (+67.5%). In the final year, China's share stood at approximately 91% of total EU imports — a remarkably high concentration for any product category.

The import concentration HHI rose from 7,387 to 8,354 (+13.1%), moving the market further into the "highly concentrated" zone by conventional standards. This is consistent with China's dominant role as the global manufacturing base for e-cigarette hardware and disposable vaping devices, which fall under subheading 240412.

2.2 The decline of Hong Kong and the rise of new marginal suppliers

Hong Kong — once a significant re-export channel for Chinese-origin products — saw its share collapse from €51.3 million to €9.4 million (-81.7%). This likely reflects a combination of supply-chain rationalisation (direct shipments from mainland China replacing Hong Kong intermediaries) and possibly regulatory changes affecting re-export flows. Meanwhile, new and small but rapidly growing suppliers have emerged: Lao PDR (+409.9%) and Switzerland (+90.5%) showed notable growth, though from low bases.

2.3 Import prices declined, suggesting a maturing supply chain

While import volumes doubled (from 16,090 tonnes to 32,195 tonnes), the average unit price of imports fell by 21.5%, from €57,841/tonne to €45,423/tonne. This decline is consistent with the commoditisation of e-cigarette and vaping products, where intense competition among Chinese manufacturers has driven prices down. It may also reflect a compositional shift toward higher-volume, lower-unit-value product categories (such as disposable vapes) within the 240412 subheading.

2.4 Germany emerged as the EU's largest import gateway

Within the EU, Germany's imports surged by 214.8% (from €128 million to €403 million), making it the largest single importer by 2025 — overtaking the Netherlands and Belgium. Germany's rapid growth likely reflects both its large domestic consumer market and its role as a logistics hub for distribution across Central and Eastern Europe. By contrast, France recorded a decline of 13.5%, possibly reflecting tighter domestic regulation on vaping products.

3. A structural product shift: the rise of nicotine pouches and heated tobacco

The subheading-level data (available from 2022 onward) reveals that the headline growth of CN 2404 is not evenly distributed across product categories. Two subsegments dominate, but their trajectories differ markedly between imports and exports.

3.1 E-cigarette liquids (240412) dominate imports; heated tobacco (240411) dominates exports

The composition of EU imports and exports differs fundamentally. Imports are overwhelmingly concentrated in 240412 (nicotine-containing products for inhalation, excluding tobacco — essentially e-liquids and disposables), which accounted for 29,905 tonnes and €1.36 billion in 2025, representing roughly 93% of total import volume and 93% of import value. Exports, by contrast, are dominated by 240411 (products containing tobacco for inhalation without combustion — i.e., heated tobacco), which reached 46,702 tonnes and €2.23 billion in 2025, accounting for 83% of export volume and 77% of export value.

This pattern reflects the EU's role as a global hub for heated tobacco manufacturing (driven primarily by Philip Morris International's operations in Italy, Greece, and Romania) while remaining a major importer of vaping products manufactured in China.

3.2 Oral nicotine products (240491) are the fastest-growing segment on both sides

The most dynamic subsegment is 240491 — nicotine-containing products for oral application, a category that encompasses nicotine pouches. On the import side, this segment grew from 461 tonnes / €14.7 million (2022) to 1,092 tonnes / €46.6 million (2025), roughly tripling in value. On the export side, the growth was even more dramatic: from 1,609 tonnes / €81.1 million to 7,727 tonnes / €566.0 million — a sevenfold increase in value.

This growth trajectory is consistent with the rapid global expansion of nicotine pouch products, particularly those originating from Swedish manufacturers. The EU's strong net export position in this segment (exports roughly twelve times imports by value) confirms its role as a leading global supplier.

3.3 EU production shifted from volume to value, signalling product upgrading

EU domestic production data shows a notable divergence between volume and value. Production quantity fell from 350,880 tonnes to 277,073 tonnes (-21.0%), while production value rose from €821 million to €1.21 billion (+47.1%). This implies a significant increase in the average unit value of EU-produced goods — consistent with a shift toward higher-margin heated tobacco and nicotine pouch products, and possibly away from lower-value commodity items. The EU is producing less by weight but capturing more value per kilogramme.

Conclusion

The EU trade in CN 2404 products over 2022–2025 tells the story of a market undergoing rapid, multidimensional transformation. At the headline level, the EU has consolidated its position as a major net exporter, with a trade surplus that grew to nearly €1.5 billion. This export strength is built on two pillars: heated tobacco (dominated by Italy and Romania) and nicotine pouches (led by Sweden), both of which have found fast-growing global markets.

At the same time, the EU's import side is increasingly dependent on a single supplier — China — which accounts for over 90% of inbound shipments by value. This concentration poses a latent vulnerability, even though the net export position means the EU is not structurally reliant on imports for its own consumption. The declining unit price of imports suggests a commoditising market for vaping products, where Chinese manufacturers compete aggressively on cost.

The product-level data reveals a subtle but important structural shift: while heated tobacco remains the volume and value backbone of EU exports, nicotine pouches are the fastest-growing segment and may eventually reshape the product mix. Meanwhile, EU production has moved up the value chain — producing less in tonnage terms but generating substantially more revenue — a pattern consistent with premiumisation and product innovation.

Looking ahead, the key variables to watch include: (i) regulatory developments within the EU, particularly around flavour bans and taxation of novel nicotine products; (ii) the potential for supply-chain diversification away from China; and (iii) whether the nicotine pouch boom continues to accelerate or reaches a plateau in mature markets.