on the establishment of a substantial change of circumstances for heated tobacco products in line with Directive 2014/40/EU

1. Introduction

Article 2(28) of Directive 2014/40/EU (hereinafter referred to as ‘the Directive’) defines the ‘substantial change of circumstances’ as an increase of the sales volumes by product category by at least 10 % in at least five Member States, based on sales data transmitted in accordance with Article 5(6) of the Directive or an increase of the level of prevalence of use in the under 25 years of age consumer group, by at least five percentage points in at least five Member States for the respective product category, based on the Special Eurobarometer 385 report of May 2012 or equivalent prevalence studies. According to the same provision, a substantial change of circumstances is deemed not to have occurred if the sales volume of the product category at retail level does not exceed 2.5 % of total sales of tobacco products at Union level. Articles 7(12) and 11(6) of the Directive require the Commission to establish a substantial change of circumstances for a specific product category in a report.

This Report provides information on market developments, which are relevant to the assessment of a substantial change of circumstances for heated tobacco products. Heated tobacco products are novel tobacco products that are heated to produce an emission containing nicotine and other chemicals, which are then inhaled by user(s), and that, depending on their characteristics, are smokeless tobacco products within the meaning of Article 2(5) of the Directive, or tobacco products for smoking within the meaning of Article 2(9) of the Directive. The analysis presented in this Report is based on data transmitted in accordance with Article 5(6) of the Directive via the EU Common Entry Gate (‘EU-CEG’), data collected from the EU tobacco traceability system established under Article 15 of the Directive and “Euromonitor International Passport Tobacco 2021” data. The latter is a commercial dataset that the Commission acquired from Euromonitor International. This Euromonitor dataset does not include data for LU, MT and CY (accounting for less than 0.5% of the EU population). Nevertheless, it was used as a representative proxy for the EU27 sales.

2. Analysis of the substantial change of circumstances for heated tobacco products

2.1 First condition for the substantial change of circumstances:

To fulfil the first condition for a substantial change of circumstances, one of the following two circumstances needs to be established.

2.1.1 Increase of the level of prevalence of use in the under 25 years consumer group by at least five percentage points in at least five Member States

The Special Eurobarometer 506 report did not identify an increase of the level of prevalence of use in the under 25 years of age consumer group by at least five percentage points in at least five Member States for heated tobacco products.

2.1.2 Increase of the concerned products’ sales volumes by at least 10% in at least five Member States

Table 1 that is based on EU-CEG data, presents the increase of the sales volumes of heated tobacco products at retail level for the period 2018 - 2020 in the Member States where the relevant increase was established to be higher than 10%.

Table 1: Sales volumes of heated tobacco products, in million sticks (2018 – 2020)

Member State 2018

sales volumes 2019

sales volumes 2020

sales volumes 2019-2018

percentage increase 2020-2019

percentage increase 2020-2018

percentage increase CY 44.590 96.660 147.260 117% 52% 230% CZ 0.859 1 284.094 1 744.4 Over 999% 39% Over 999% FR 36.796 78.215 186.009 113% 138% 406% GR 0.007 1 159.804 1 443.958 Over 999% 25% Over 999% HR 0.003 219.072 289.592 Over 999% 32% Over 999% IT 0.042 3 571.016 5 819.033 Over 999% 63% Over 999% NL 28.262 43.120 71.618 53% 66% 153% PL 0.010 1 206.171 2 466.150 Over 999% 104% Over 999% PT 338.022 637.649 944.977 89% 48% 180% RO 486.239 671.053 837.587 38% 25% 72% EU27 934.854 12 332.655 19 716.820 1219% 60% 2009%

Source: EU-CEG data

The data presented above thus confirm that the sales volumes of heated tobacco products at retail level increased by a percentage higher than 10 % in more than five Member States over the defined period of 2018 to 2020.

On this basis, the first condition for a substantial change of circumstances regarding heated tobacco products was met.

2.2 Second condition for the substantial change of circumstances: sales’ volume of the concerned products at retail level exceed 2.5% of total sales of tobacco products at Union level

The market share of heated tobacco products at retail level was calculated by dividing their annual sales volume by the overall sales volume of all tobacco products at Union level. Alternative data sources were explored to ensure the robustness of such calculation.

2.2.1 Sales volume of heated tobacco products at retail level