Market Watch: Middle East

A relatively new market for legal vapor products, the Middle East is beginning to embrace tobacco harm reduction.

By Timothy S. Donahue

According to World Bank estimates, the Middle East and North Africa (MENA) market has seen a steady decline in tobacco consumption since 2000, with 23.3 percent of adults using the products in 2000, 20.8 percent in 2010, and 19.2 percent in 2020. Many industry experts attribute this decline to the region’s growing acceptance of vapor products.

E-cigarettes were banned in Qatar in 2012 and then three years later in Oman but legalized in Bahrain and Kuwait in 2016; however, neither country immediately adopted manufacturing standards or a taxation structure. Then, in April 2019, the United Arab Emirates (UAE) Authority for Standardization and Metrology (ESMA) approved standards for the nicotine-based e-cigarettes. It was the first country to develop standards for the products in the region.

Before 2019, e-cigarettes were illegal in the UAE, and use of the products was growing rapidly in an unregulated market. This worried UAE regulators who wanted to curb combustible tobacco use, limit youth initiation and check a thriving vapor market.

The goal of e-cigarette regulations in the UAE was to offer nicotine consumers less risky alternatives to combustible products. The standards set by ESMA were designed to regulate all nicotine components used in vaping products, including technical specifications, ingredients, imports, packaging and labeling requirements in the UAE as well as a corresponding fiscal and tax structure.

After the success of the World Vape Show (WVS) Dubai in 2021, the first e-cigarette trade show in the region, the number of companies legally producing vapor products in the UAE has grown tremendously. During their 2022 conference, held June 16–18, WVS representatives said that they welcomed 50 percent more visitors than in 2021.

During a seminar session that focused on the growth of the Middle East markets, several speakers said that the UAE and its regulatory outlook has become a blueprint for other Middle East markets such as Saudi Arabia, Kuwait, Jordan and Egypt. In 2021, Saudi Arabia announced new regulations for e-cigarettes similar to the UAE (which in turn are similar to Europe’s Tobacco Products Directive).

In April of this year, Relx International, a major China-based vaping manufacturer, commended Egyptian authorities for their decision to allow the legal import and commercialization of vaping products in the country. Like Saudi Arabia, Egypt’s proposed regulations for vaping products are nearly identical to the UAE’s.

Rebecca Haining, head of external affairs for BAT’s Middle East, South Asia and North Africa markets, said that the UAE should be applauded for being the first Middle Eastern country to enact regulations.  She noted that in 2019, the UAE had approximately 15,000 vapers. In 2020, that number had grown to 60,000 vapers. Today, that number is an estimated 70,000.

“They paved the way for the regulations in Saudi Arabia … I think what [the UAE] has done in this area is very important … getting the industry together to talk about what are the possible solutions. The UAE moved very quickly to institute a range of regulations and standards that now give the manufacturers certainty and give consumers some certainty around the safety and the quality of the products,” said Haining. “That’s very important, and I think it’s a job very well done.”

By lifting the ban on e-cigarette products, UAE authorities have allowed for the growth of new businesses and investment opportunities in the region. Experts say the move will bolster existing businesses that sell such products and will attract entrepreneurs. According to Arabian Business, the vaping and e-cigarette market in the MENA region is expected to grow by 9.74 percent annually to reach $485 million by 2025, up from $267.9 million in 2018, the year before UAE regulations were enacted. By comparison, the U.S. vaping market is expected to grow to $40.25 billion by 2028.

Omar Abdellatif, general manager for Philip Morris Management Services Middle East Limited, told WVS attendees that the increase of exhibitors at this year’s show, compared to 2021, reflects how many new businesses are serving the UAE market. He said the show is also an example of how the market has changed as innovation has flourished since legalization.

“Look at the evolution that has happened here in the UAE in just over one year. I think the last time you were probably sitting here [at WVS 2021] … it was a lot more about the tanks and closed pod systems; a lot more about the traditional side of vaping,” he said. “But you’ve seen what’s come up very quickly. Disposables, once they became legalized, have taken the market by a storm. And I think this is what we continue to expect. We’ll start to see these innovations.”

Some studies suggest that e-cigarettes may be gradually replacing the use of shisha products. In a joint investigation with the American University of Beirut, the Tobacco Free Initiative found that an estimated 40 percent of young adults in Lebanon are now using vaping devices instead of hookah tobacco. One speaker during the WVS said that the opportunity for e-cigarettes to replace cigarette use, and to a lesser extent hookah, “represents a considerable shift in the culture of tobacco consumption in the Middle East.”

Fadi Maaytah, CEO of Alternative Nicotine Delivery Solutions, said during the WVS that to continue the trend of moving combustible tobacco users toward less risky alternatives in the MENA region will require innovation. He said that innovation, however, should not attract new consumers but instead protect consumers looking to stop traditional smoking by bringing high-quality products to market.

“It’s not for ex-smokers. It’s not for nonsmokers. It is for smokers trying to quit. Today, the development and the flow of product that’s coming to the market, it’s coming with a lot of innovation, but the risk point here is that it might attract the wrong audiences, and this is what we see more often happening,” said Maaytah. “This is why [the industry] needs more of a collaboration between the industry and the regulators to work together and push the industry in the right direction.”

From a manufacturing perspective, positive industry innovation can only be achieved through product standards that are abided by all participants in the market, according to Haining. She said that standards are not only important for the safety and quality of products for consumers but also—if products comply with the standards—they’re less likely to have youth appeal.

“That’s part of the reason we have the standards. Secondly, from a manufacturer perspective, it’s around marketing freedoms and marketing regulations … making sure that all players in the market are marketing responsibly and not targeting youth and [are] discouraging youth uptake of these products,” she said. “If I look at an ideal situation, from a regulatory perspective, it would be regulation and excise frameworks, in general, that are proportionate to the risk [of e-cigarettes compared to combustible] cigarettes. There needs to be a wider berth between cigarettes and potentially reduced-risk products when it comes to regulations, standards, marketing freedoms and excise frameworks.”