Sunday, April 21, 2024

Unveiling the ‘Honest Label’ Revolution: Implementing Transparency in Russia’s E-cigarette Market


Russia’s “Honest Label” Policy Boosts Demand for Compliant E-Cigarette Products

In an effort to regulate the e-cigarette market, Russia implemented the “Honest Label” policy on April 1st. This policy requires wholesale importers of e-cigarettes to upload retail information of the relevant products to the Honest Label system. Without this label, e-cigarette products will face difficulties passing through Russian customs.

2FIRSTS recently spoke with Wang Juncheng, the general manager of Russia Sooching, a local customs clearance company in Russia, to gain insights into the latest developments in the Russian e-cigarette market. More than six months have passed since the implementation of the “Honest Label” system.

According to Juncheng, there is currently a high demand in the Russian market for compliant products. Due to policy reasons, there are very few options for accessing the market through unofficial channels. In addition, transportation times for unofficially imported goods have increased from 30 days to 2 to 3 months since August.

Over the past two months, the transportation volume of Russian compliant logistics companies has significantly increased. Juncheng stated that Russian Soocleaning’s customs clearance tickets have also increased by three to four times compared to before. The logistics costs for compliant e-cigarettes have also risen, currently exceeding 40 RMB per kilogram, up from over 30 RMB.

The rise in volume can be attributed to the growing demand from e-cigarette terminal shops and distribution stores. Most terminal stores, chain supermarkets, and distributors in the Russian e-cigarette market now only accept compliant products. While some stores may sell both compliant and non-compliant products, the shelf rate of compliant products is gradually increasing, with a minimum proportion of 50%.

However, transporting compliant products on a large scale is challenging due to their higher value and taxes. They can only be transported in small batches. Additionally, the procedures for obtaining an honest label for compliant products are relatively complicated, and ensuring compliance channels for logistics, distribution, and stores also takes a considerable amount of time. As a result, Juncheng advises companies wishing to list compliant products on the Russian market to make thorough preparations at least 3 months in advance.

Furthermore, Juncheng revealed that e-liquid taxes are set to increase in early 2024, leading to a significant cost increase of e-cigarette products in Russia.

The “Honest Label” policy has brought about significant changes in the Russian e-cigarette market. The demand for compliant products is on the rise, and companies must adapt to the complex procedures and time requirements to access this lucrative market. With an impending tax increase, the future of e-cigarette products in Russia remains uncertain.
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