New vaping legislation could see vaping stores go up in smoke

New legislation could lead to a spike in vape store insolvencies

Concerns about children’s health and the environmental impact of disposable e-cigarettes have led the government to announce strict new laws that could threaten the booming UK vaping industry. There are currently around 3,500 specialist e-cigarette stores in the UK catering to 4.7 million vapers, yet there are concerns that the new regulations will put revenues of £2.8bn and almost 18,000 jobs at risk.  

The Prime Minister has announced today [Monday 29 January] that the government will ban disposable vapes altogether, restrict the selection of vape flavours available, introduce plain packaging, and change how vapes are displayed in shops. It will also become illegal to sell tobacco products to anyone born on or after 1 January 2009, with the intention of creating a smokefree generation.

Vapes will remain available to adults as they remain an effective way to stop smoking.   

The current state of the vaping market

The ban on disposable vapes is hugely concerning for store owners. Disposable vapes are by far and away the most popular product on the market, accounting for up to 83% of all vape sales. In the UK, sales in this category are worth around £1.2bn, which is expected to climb to £1.4bn in the next three years.

As well as the environmental issues caused by disposable vapes, there has also been a rise in child vaping, which the industry is struggling to tackle. A 2023 report from the UK’s antismoking foundation found that one in five children had tried vaping, with nearly 70% saying they most frequently used disposable vapes. Of those, nearly half of the 11-17-year-olds bought their vaping products from shops, even though sales to under-18s are currently banned.  

How does the landscape look for vape stores?

After an initial surge in popularity, new legislation and other headwinds are threatening to cast a cloud over UK vape stores and drive up insolvencies.  

The impact of new legislation

The new legislation has the potential to put vaping stores under a tremendous amount of strain. A wholesale ban on the sale of disposal vapes, threatens to cut revenues for specialist stores in half, and any business that’s solely reliant on the sale of vapes could struggle.  

Competition

The commercial success of vapes has led to a host of sellers entering the market. Customers no longer have to head to specialist stores to get their hit, with supermarkets, newsagents, online retailers, and bars and nightclubs getting in on the action. However, these businesses also have other revenue streams, meaning the new legislation will have a greater impact on specialist sellers. 

Usage among some users is falling

Vapes were introduced as an aid to help people stop smoking, and to that end, they have been effective. Data shows that around 12.9% of people in the UK currently smoke, down from over 20% in 2011. However, vapes were not designed as a long-term alternative, and adults who have used e-cigarettes as an aid to stop smoking are increasingly quitting vaping, mainly due to worries about the potential impact on their health.     

Increasing pressure from trading standards

A trading standards task force has been set up to enforce the rules on vaping and tackle black-market vapes and sales to children. Shutting down illegal vape stores and ensuring compliance with the law is vital, but meticulous trading standards investigations can also increase the administrative burden for legitimate sellers, with more paperwork and more time spent on Challenge 25.  

Is your vape shop struggling? You do have options

If your vape shop is struggling financially and you’re worried about the future, it might be time to consider your options. If you think your business is still viable but you’re struggling with debts, a Company Voluntary Arrangement (CVA) can give you more time to pay your debts while you continue to trade. If your business needs an overhaul, Company Administration can give you the time to restructure and potentially turn it around. 

Alternatively, if you think the time has come to leave the industry, a Members’ Voluntary Liquidation (MVL) enables you to close the solvent business and extract the value in a tax-efficient way. If you want to close your shop but have bills you cannot pay, a Creditors’ Voluntary Liquidation (CVL) allows you to close it down and write off your outstanding debts.    

If you want to discuss your options, get in touch for a free, same-day consultation with one of our experts. We will explain the routes available to you and guide you on your next steps.