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Tobacco-free herbal sticks are expected to continue growing in popularity thanks to potential price and flavour range advantages over heated tobacco products.
Even though they can contain nicotine, herbal heated products will, in many cases, be spared from increasing taxes on tobacco-related products in Europe and also offer the advantage of not being covered by the EU ban on heated tobacco flavours. Member states had to transpose the ban into national law by 23rd July 2023, although, as trackers from our sister site TobaccoIntelligence show, many of them are late.
The ban would start from 23rd October this year if transposed and would mostly be applicable to popular heated tobacco hardware systems such as Iqos – putting herbal sticks in a potentially advantageous position.
“We predict the market for herbal sticks will continue to grow,” said Tamarind Intelligence analyst Stefan Plesa. “The rate of growth is hard to measure, but in October the heated tobacco flavour ban is supposed to be coming into effect in Europe. So, in theory, herbal sticks will gain even more traction.”
Company representatives from brands that produce herbal heated sticks told CannIntelligence that they are considering the inclusion of CBD-based heated sticks in their product line. This may represent a further opportunity for herbal stick brands to widen their offering in jurisdictions where CBD is permitted as an ingredient.
Lower prices, flavour varieties and little to no regulation
The absence of tobacco from the mix that is used to make herbal sticks – and the fact that they are not combusted – allows for them to not fall under tobacco control laws, including flavour bans, in most cases.
This includes the Commission Delegated Directive (EU) 2022/2100 of 29th June 2022 amending Directive 2014/40/EU of the European Parliament and of the Council as regards the withdrawal of certain exemptions in respect of heated tobacco products.
Based on TobaccoIntelligence research, menthol is the most prevalent flavour among herbal sticks currently on the market, followed by blueberry and coffee. Other popular flavours, of which TobaccoIntelligence counts more than 100, include orange, peach, strawberry and lemon.
Flavour variety is not the only advantage herbal sticks may enjoy over traditional heated tobacco products. Prices of Iqos-compatible herbal heated sticks are lower than those of Iqos Heets, with a difference of €1.15 per package in Hungary.
Based on research conducted by TobaccoIntelligence on five European countries, Hungary has the largest number of herbal heated stick brands, followed by Germany, the Czech Republic, Poland and the UK.
Restrictions and taxes vary across EU countries
In the EU, these products, whether they contain nicotine or not, currently fall into a regulatory gap, which means they are regulated and taxed differently depending on member states’ national regulation and not the EU Tobacco Products Directive (TPD). This is because the TPD only regulates “herbal products for smoking”, which means only those herbal products that are combusted fall under the TPD, while those intended for heating do not.
The TPD and the EU Tobacco Excise Directive (TED) revision processes are currently underway and are likely to increase both restrictions as well as taxes on traditional smoking, alternative and novel nicotine products, including heated tobacco.
It is likely herbal heated products will eventually be encompassed in the revised TPD, considering closing regulatory loopholes is one of the main drivers of the revision and that questions that specifically referred to herbal heated products were asked.
In Hungary, tobacco- and nicotine-free herbal sticks compatible with heating devices are covered by the country’s tobacco regulation framework and are taxed as tobacco products as of February this year.
Herbal sticks were also brought under the tobacconists’ monopoly by the Hungarian government at the end of last year. As a result, they can be sold only in licensed tobacco stores, although some brands are still available online.
In Slovakia, tobacco-free herbal heated sticks do not fall under tobacco regulation and are therefore not taxed as tobacco products. Regulatory approaches in other countries differ.
– Tiziana Cauli CannIntelligence staff
Photo: Elsa Olofsson
