A first-of-its-kind regional report reveals shifting behaviors in cigarette smoking and the use of alternative nicotine products, such as e-cigarettes and heated tobacco products, across Indonesia, Malaysia, the Philippines, Singapore and Vietnam. Conducted by Milieu Insight, the Cigarettes & Alternative Nicotine Delivery Products: Product Usage & Consumption Behavior Study in Southeast Asia surveyed over 18,000 legal age adults, offering insights on consumption trends, flavour preferences, purchase channels, dual usage, reasons for use, and future adoption.

Gerald Ang, Chief Operating Officer of Milieu Insight, noted “Our data shows that the younger population under 35 typically have lower smoking incidence but higher incidence of using alternative nicotine products than older age groups.” This is particularly pronounced in Singapore and Vietnam where the incidence of using alternative nicotine products among the younger population (21-29 in Singapore and 25-34 in Vietnam) is, respectively, 44% and 39% higher than the average in the country.

The Trend and Underlying Factors

The study highlights that across the region, majority of e-cigarette users started using such products within the past two years. While this reflects a relatively recent trend, the study shows that alternative nicotine products are already an established segment in the region, with incidence of alternative nicotine products in Malaysia (12.2%), the Philippines (9.5%) and Singapore (5.4%) nearing or exceeding half of regular smoking incidence in these countries.

The study shows some key factors influencing this trend. One key factor is the variety of flavour, with fruit and menthol flavour dominating consumer choice in alternative nicotine products. E-cigarettes and heated tobacco products being “cheaper” is also an important reason for using alternative nicotine products.

Ease of access plays a role, as consumers have multiple purchase channels, including e-commerce platforms such as Shopee, Lazada, TikTok Shops and messaging apps such as Telegram being identified in the study as among the top avenues to purchase alternative nicotine products.

The study shows that the alternative nicotine products segment is expected to grow, as “a sizable proportion of smokers across the region indicate their likelihood to start using alternative nicotine products in the next 6 months,” noted Mr. Ang.

Illicit Trade, Non-Compliance and Tax Evasion

With the alternative nicotine products segment already entrenched in Singapore and Vietnam despite total ban on such products, the study also sheds light on the illicit trade problem in these countries. The cigarette consumption by dual users in Singapore and Vietnam are, respectively, 48% and 32% lower than regular smokers who do not use alternative nicotine products. This points to the shift from duty-paid cigarettes to untaxed, unregulated illicit products.

Chris Humphrey, Executive Director of the EU-ASEAN Business Council, said “Malaysia’s 55% illicit cigarette market is a cautionary tale — when a government imposes a sudden, excessive tax increase, it sends a price shock to consumers and push them to cheaper alternatives in the black market.” Mr. Humphrey added, “An excise policy with predictable and moderate tax increases can mitigate illicit trade, while achieving government’s public health and fiscal objectives.”

In Malaysia where 12.2% of adult population use alternative nicotine products, the Government recently started to gradually implement regulations on e-cigarettes, and Mr. Humphrey noted that “strong enforcement of these regulations will be critical to curb non-compliant e-cigarettes from worsening Malaysia’s illicit trade problem.”

On the Philippines with 9.5% alternative nicotine product incidence, Mr. Humphrey observed that Philippines' tax system currently taxes 'freebase' vapes 8.7 times lower than 'nicotine salt' vapes, while many nicotine salt vapes are mis-declared as freebase, exploiting this gap at the expense of government revenue. Mr. Humphrey added, “The House Bill 11360 in the Philippines Congress is a step in the right direction to close this loophole by establishing a single tax rate for all vape liquids.”

Conclusion: A Call for Effective Policy Response

The findings reveal the rapid evolution of nicotine consumption in Southeast Asia, and the growing illicit trade problem in the region highlights the need for intensified enforcement, cross-border collaboration, public private partnership, and more balanced policy design that can mitigate illicit trade while achieving public health and fiscal objectives. This study provides critical insights for policymakers and businesses navigating the evolving landscape of nicotine consumption in ASEAN.

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