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First of its kind study values vaping industry at £2.8bn

November 29, 2022

Photo: iStock

A new report commissioned by the UK Vaping Industry Association (UKVIA) has underlined vaping’s true economic value, highlighting the sector’s contributions to the national and regional economies, the jobs it creates, and the cost savings to the NHS, among others.

The study by Centre for Economics and Business Research (Cebr) has valued the UK vaping industry’s aggregate turnover last year at £2.8bn, as record numbers of smokers switch to vaping.

Besides, the sector supports almost 18,000 full time equivalent jobs in retail, manufacturing and supply chain and the estimated cost saving to NHS of adult smokers switching to vaping was over £300m in 2019 alone, the study has found.

And, the figure is estimated to more than double if 50 per cent of UK smokers switched to vaping, the first ever study measuring the impact vaping has on the UK’s economy has forecasted.

“In little over a decade vaping in the UK has grown from very much a ‘cottage industry’ to one of the fastest growing sectors in not just retail, but the whole economy,” commented John Dunne, director general of the UKVIA.

“More people than ever are vaping and by all measures this is a true British success story, creating employment and wealth, generating precious revenue for the government through taxation while at the same time saving the NHS more than £300m a year through people switching from smoking to vaping.

“No wonder some of the world’s biggest retail brands are now extolling the virtues of vaping as they know how valuable it is both as a commodity and as a force for good when it comes to harm reduction.”

Whilst the High Street has generally suffered in recent years, vape retail stores have bucked the trend and represent one of the biggest growing sectors since the Noughties when they started to appear for the first time.

The report looked at vaping’s direct economic contributions as well as its broader footprint, taking into account factors such as supply chains and wider spending facilitated by the industry.

As a whole turnover within the UK vape sector grew by 23.4 per cent from 2017 to 2021, an increase of £251m, and stood at £1.325bn last year alone. When indirect economic benefits such as supply chain support and the spending power of vape sector workers is factored in the economic impact more than doubles to £2.8bn.

The number of people directly and indirectly employed in the vape sector – such as those employed elsewhere in the supply chain – was 17,700 in 2021.

The contribution vaping made to the Exchequer through taxation was £310m in 2021.

Owen Good, head of economic advisory at Cebr, said: “The findings of the vaping industry’s first ever economic impact report demonstrates its significant success as a fast-growing disruptive sector.

“Whilst many high street retailers have suffered in recent years, the vaping sector has bucked the trend, with significant growth both in-store and online. Even the effects of the pandemic have not significantly hampered the sector’s growth.

“The sector’s growth has been hugely beneficial to the UK economy; businesses and their employees directly involved in the industry and those running operations across the wider supply chain; and the NHS which has seen a massive cost saving with increasing numbers of smokers switching to vaping in order to quit their habits.”

Photo: iStock

The vaping sector has also had wider socio-economic benefits, most notably the positive impact it has had on the health economy. Cebr’s report estimates that the total saving in healthcare costs associated with smokers switching to using vaping products was £322m in 2019. The research organisation goes on to say that “the potential healthcare saving if 50 per cent of all smokers switched to vaping” would have been £698m in 2020.

The gain in “economic productivity” associated with smokers switching to using vaping products was estimated to be £1.3bn in 2019, which, according to the study, would increase to £3.33bn if 50% of remaining UK smokers switched to vaping.

“For some time now we have known that vaping supports smokers to turn their lives and health around by quitting for good, but now we know just how far this industry has come and what a massive impact it has had – and continues to have – on the health and wellbeing of the economy too,” Dunne concluded.