WIPO: Dominance of Large-Puff in Russia Leads to Challenge of White Market Regulation

On December 16th, the VAPE CLUB SHOW 2023, a prominent e-cigarette exhibition in Russia, opened in Moscow with the participation of more than 200 brands. The event brought together industry leaders for a grand gathering. As one of the official media partners, 2FIRSTS had the opportunity to engage in a conversation with Sun Hairui, representative of the e-cigarette brand WIPO. During the discussion, the company's perspectives on the market and its strategies for coping with policy changes were extensively explored.

Sun Hairui expressed optimism about the current e-cigarette policy of the Russian government to 2FIRSTS, emphasizing that the Russian government is more inclined towards a transitional implementation period compared to China. As a result, he maintains confidence in the future development of the e-cigarette industry in Russia.

However, he also mentioned the uncertainty that the ongoing Russia-Ukraine war brings to the overall market. He observed that Russia is facing geopolitical pressure, which may result in some policies being in a "suspended state" and not yet implemented.

He believes that the e-cigarette industry is expected to continue its momentum in Russia after the war ends. "It's not a very stable trend here, but I feel that the market will return to normal after the war is over.

In a tightening trend for e-cigarette regulations in Russia this year, the government's focus on tariff revenues becomes increasingly important amid stricter compliance measures. Particularly, the e-cigarettes exported from China to Russia are highlighted as a means to generate additional tax revenue.

For Russian market brand businesses, going through customs is a necessary but challenging process. The CEO of WIPO, Mr. Bai Guan, used WIPO's own experience to illustrate this point: "We also chose to go through customs, but we have to admit that it is indeed a cumbersome and time-consuming task. It took us nearly three months to process the first batch of customs goods, mainly due to the tedious procedures and paperwork involved.

In the e-cigarette industry, three months is a long time for a product as the market constantly evolves and undergoes significant changes, with continuous iterations of products.

New products may have already emerged, while we are still in the process of handling paperwork," Sun Hairui lamented.

On December 1st, the Russian government mandated the comprehensive implementation of "honest labeling" for e-cigarette products in circulation. This decision has had a significant impact on local distributors in Russia, who have reported a decrease in orders since then. In Moscow alone, purchases made by previous distributors have essentially been cut in half.

They are also waiting and watching as Russia's new policy implementation does not have a specific timeframe," said Sun Hairui.

In the discussion on market competition, he emphasized the importance of brands adhering to Russian regulations. He further noted that customers who adopt a wait-and-see attitude are more inclined to purchase well-established old products in the market, such as ELFBAR, LOST MARY, Puffmi, and waka, which are all renowned brands in the Russian market and enjoy top rankings.

Sun Hairui specifically mentioned the "surge" of Waka this year, according to his account. He explained that Waka suddenly gained significant traction in the months of May and June, with the market atmosphere being well controlled. Based on his observations, Waka experienced stock shortages across Russia, as customer demand continued to grow, resulting in a scarcity of the product.

Perhaps, the rise of Waka can be attributed to the popularity of high-wattage products in Russia. He further explained, "Some people may find a 10,000-puff e-cigarette too strong and uncomfortable to use. However, Russian consumers prefer e-cigarettes with higher puff counts.

When discussing the changes in the market, he placed great emphasis on the importance of respecting Russian laws and regulations. He stated that as long as the business does not cross any red lines, significant issues can be avoided. Additionally, WIPO engaged in in-depth discussions regarding strategies to respond to market changes, particularly in the face of potential policy uncertainties. The company intends to remain flexible and adapt to market fluctuations.

Sun Hairui expressed that WIPO will continue to promote the promotion of new products in the future and strive to expand its market share by passing through customs and collaborating with major distributors, while complying with Russian regulations.