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Innokin’s Klypse Zip series comes in different attractive finishes. Photo credit: Innokin Technology Ltd.
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Alexandra Molokova, analyst, Euromonitor International. Photo credit: Euromonitor International
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Dean Wang, regional director Middle East, Innokin Technology. Photo credit: Innokin Technology Ltd.
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Innokin product display at a Bahrain Duty Free outlet. Photo credit: Innokin Technology Ltd.
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The INNOBAR V7000 is available in several GCC countries together with other Innokin vape products. Photo credit: Innokin Technology Ltd.
Despite a divergent policy and regulatory landscape, the nations straddling the Persian Gulf hold great market potential for NGP manufacturers.
The economic and political organization known as the Gulf Cooperation Council (GCC) comprises six nations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). Thanks to their strong economies and populations with high disposable incomes, as well as long traditions of tobacco use, they have long been coveted markets for tobacco industry players from all corners of the globe. However, when it comes to next generation products (NGP), the GCC countries are just as divergent as the rest of the Middle East in terms of policies towards alternatives to combustibles. For instance, both Oman and Qatar presently uphold strict bans on electronic smoking, particularly the commercial import and sales of devices within their borders – though authorities do tend to turn a blind eye on personal possession and consumption. In the remaining four countries, vapes and HTPs are legal, but subject to laws that differ considerably between nations.
Leader of the pack
The region’s most prolific market for NGP certainly ought to be the UAE, where a previous ban on e-vapor products was only lifted in April 2019 by the Emirates Authority for Standardization and Metrology (ESMA). “ESMA established [a set of] regulations - UAE.S 5030 - which govern the composition of electronic nicotine delivery products, their import, manufacture, packaging, and distribution, as well as the compulsory health warnings required on the packaging,” said Alexandra Molokova, an analyst with global market intelligence and research firm, Euromonitor International (Pty) Ltd. “In fact, the United Arab Emirates was the first country in the region to develop standards for e-vapor products,” she added.
Misleading advertising prohibited in the UAE
In line with regular tobacco products such as cigarettes or shisha molasses, it has been compulsory in the UAE since January 2021 for electronic smoking devices to bear a digital tax stamp in order to be sold, transported, stored, or possessed legally. In addition, ESMA regulations also stipulate that no NGP – or any tobacco product, for that matter – may be advertised or categorized as a “reduced harm alternative,” which includes a ban on misleading words and phrases, such as “light”, “mild”, “low tar”, “smooth”, “silky”, or similar. “This regulation is meant to prevent consumers, especially teenagers, from wrongly perceiving certain types of tobacco products as being less harmful and safer to use,” explained Alexandra Molokova.
Wide open territory for flavors
Apart from the UAE’s ESMA framework, regulations in the other GCC countries are complex and can differ from one another considerably. Yet they generally are “not as comprehensive as those in Europe and America,” noted Dean Wang, regional director for the Middle East of well-known Chinese NGP company, Innokin Technology Co. Ltd., adding that this relatively more relaxed regulatory landscape offered “many potential opportunities” in the region. Flavor-wise, for instance, the GCC countries (again, excluding Oman and Qatar) are wide-open territory. A notable exception may be cinnamon flavors, which are banned in the UAE. Cinnamon contains certain chemical compounds that can cause liver damage at excessive dosages; a distinct possibility in e-liquids made with highly concentrated flavor extracts.
Capitalizing on opportunities
Innokin was among the first Chinese firms to become active in the GCC region, establishing a foothold as early as 2012/2013 with its then-flagship iTaste MVP series. The devices proved an instant hit with local consumers thanks to adjustable voltage, screen display, large battery capacity, and other advanced functionality features rather un-common back then, quickly securing the company a whopping 30-40% market share, according to Wang. Another contributing factor for the success was that “not many e-cigarette brands were around in the GCC at the time,” Wang said. “Innokin capitalized on that, building a strong reputation and fostering a loyal consumer base.” However, when Innokin’s sales in Europe and the US began skyrocketing from 2015 onwards, the company decided to shift its focus to there. “We never left the GCC region, but decided to take a bit of a backseat in order to dedicate more resources to the EU and the United States,” explained Wang.
Shifting consumer preferences
However, while Innokin took its temporary hiatus, consumer preferences in the GCC countries gradually shifted away from larger mod devices like those in Innokin’s portfolio and towards smaller pod systems and disposable products. “As a result, our early products experienced decreased market compatibility,” admitted Wang, “but it also encouraged us to redesign our approach and tailor products that would meet consumer demand in the GCC region.” Consequently, the erstwhile technically-advanced but complex iTaste MVP series was retired and replaced with more consumer-friendly, easy-to-operate refillable and disposable products.
The comeback
It was only in 2022 that Innokin awoke from its self-induced slumber and rekindled its activities in the region. To facilitate its comeback, the company under the leader-ship of Dean Wang established a Middle East and Africa team in early 2023. “We are soon opening a subsidiary in Dubai to more strongly focus on the GCC market again after the European and American markets have become saturated and bogged down by increasingly difficult regulations,” Wang divulged. Following the discontinuation of iTaste MVP, Innokin is now providing a whole slew of new device ranges that should strike a chord with local customers. “Our refillable offerings include the Klypse, Klypse Zip, and Sceptre pod systems, all of which are extremely compact and offer high levels of performance while maintaining the excellent value for money that comes with a refillable device,” explained Wang. But the company also has introduced its current flagship Innobar disposable devices. “The Innobar 3500, 6000, and V7000 are all designed to be incredibly simple to operate while offering outstanding longevity, value for money, and flavors that appeal to local tastes.”
In the starting blocks to enter Qatar
For the time being, Innokin has been limiting its comeback to Bahrain, Saudi Arabia, and the UAE. “These three countries have relatively open policies and large market sizes. Moreover, many of our clients have connections in surrounding markets, which means that by [initially] focusing our efforts on these three markets, it may well lead to gaining access to other GCC countries further down the road,” Wang reasoned. He also disclosed that Qatar may potentially open up and allow NGPs in the near future. “One of our clients is a leading real estate and energy conglomerate in Qatar. They are willing to negotiate a modification of relevant laws with the government to legalize the import of NGPs.” If successful and Qatar abolishes – or at least softens - its current ban, Innokin will have a front row seat, being the first vape manufacturer permitted to enter the country. Time will tell.
Further stepping stones
But even without Qatar (or Oman, for that matter), Innokin and other international players will continue enjoying lucrative growth in the GCC region. Wang insisted that market saturation is not going to happen anytime soon. “As far as Innokin is concerned, we still have a solid 3-5 year window for expanding our market share in the GCC area, this is beyond doubt.” Furthermore, there also is significant potential in non-GCC countries in the Middle East, such as Israel, Iraq, Iran, Jordan, as well as North African markets like Egypt, Morocco, Tunisia, and others. All of them could be comfortably managed from Innokin’s soon-to-be-established Dubai regional base, ascertained Wang.
Innokin Partners with Bahrain Duty Free
In late August, Innokin Technology Ltd. entered into a strategic partnership agreement with Bahrain Duty Free (BDF), the company announced. The collaboration will see the introduction of Innokin’s popular Innobar vaping products to BDF’s premium stores, which cater to the increasing demand for e-cigarettes in the small island state and the GCC region. The partnership kicked off with a pilot project in April 2023. The collaboration has now been expanded to BDF locations. As part of the agreement Innokin will pro-vide knowledge sharing and product training to equip local sales staff their staff with the expertise needed to offer informed guidance and advice to customers. George Xia, co-founder of Innokin Technology Ltd., said, “We are thrilled about our partnership with Bahrain Duty Free. This collaboration signifies not only our dedication to the growing Middle East market but also our commitment to fostering responsible practices in the industry. With our decade-plus experience and the shared values of both organizations, we are confident that this partnership will set new standards of excellence for vaping.”