In its active embrace of tobacco harm reduction, the United Kingdom has long been considered an outlier. Unlike many countries, the United Kingdom didn’t merely tolerate e-cigarettes and other reduced-risk products (RRPs)—it actively promoted them as smoking cessation tools starting in the 2010s. Today, RRPs are integral to the country’s public health care system and local smoking-cessation services, and it has introduced increasingly strict controls on combustible tobacco products.
The United Kingdom this year is expected to become the first country in which vaping surpasses smoking. According to data from U.K. group Action on Smoking and Health, 10% of adults—or 5.5 million people—currently vape, while smoking prevalence dropped from 23.7% in 2005 to 11.9% (about six million people) in 2023.
Convenience stores, which support 443,000 jobs, are the leading distribution channel for tobacco products in the United Kingdom, followed by hypermarkets, supermarkets, tobacco specialists and an increasingly significant online channel.
The United Kingdom’s dual strategy for nicotine products has profoundly reshaped nicotine retailing in convenience stores and transformed the backbar. The market is dark for tobacco but light for RRPs: Following a display ban and plain-packaging rules, combustible tobacco products are hidden in closed gantries and sold only in standardized olive-green packs, 65% of which are covered by health warnings and graphic images. Branding has been eliminated; only the name appears, in a standard typeface. In contrast, vapes, nicotine pouches and heated tobacco products (HTPs) remain visible, in bright packaging and supported by point-of-sale advertising. They’re also increasingly taking up sales space.
Tobacco products, long valued for driving visits and consistent revenue, still play a central role in U.K. c-store profitability. With 2025 revenue estimated by Statista at £22.58 billion ($30.27 billion at press time), compared to £3.13 billion ($4.2 billion) for vape products, the combustibles category still dwarfs the e-cigarette segment. However, its role as a cornerstone for traffic and ancillary sales is waning, challenged by tightening regulation, rising health-consciousness and a shift toward lower-cost, smoke-free alternatives.
“The share of tobacco as an overall value contributor in the convenience sector has been in gradual decline over at least the last decade but is still significant for the sector as a whole and higher for independent stores,” said James Lowman, chief executive of the United Kingdom’s Association of Convenience Stores (ACS). “In the last three to five years, vapes have grown from a very low base to becoming an important category for convenience retailers, with further change in the last two to three years coming from more sales of pouches, although this is still a minority in the category.”
According to ACS’ “The Local Shop Report 2025,” tobacco and vape product sales were £9.17 billion ($12.35 billion), or 18.8% of total sales across mainland United Kingdom’s 50,486 convenience stores. The composition of this contribution has been constantly evolving. A 2022 University of Edinburgh study found tobacco transactions represented just 12.8% of all convenience store purchases, down from 20% a decade earlier. Meanwhile, vapes have become the fastest-growing retail category in U.K. convenience and independent grocery stores, worth £1.7 billion ($2.3 billion) in 2024, according to NielsenIQ data.
Customers Hunt for Value
Tobacco shoppers deliver higher basket sizes: an average of nearly £20 ($26.80) per visit, compared with about £11 ($14.74) for non-tobacco customers. But although tobacco drives revenue and trip frequency, profit margins are thin. At about 8.5%, tobacco margins are smaller per unit than those of RRPs, which average 37%.
Factory-made cigarettes account for about 70% of all tobacco sales and still hold potential for retailers, but the category is polarized. The United Kingdom applies some of the highest tobacco excise duties in Europe and regularly increases them, resulting in some of the highest cigarette prices in the world. Premium brands—such as Marlboro, Benson & Hedges and Lucky Strike—retail for at least £18 ($24.26) per pack of 20 cigarettes. They retain loyalty among older, brand-conscious smokers. However, inflation and a cost-of-living crisis have driven smokers to downtrade, with growth concentrated in the value and economy segments, now 72% of sales of ready-made cigarettes. Economy brands such as JPS, Pall Mall and Sovereign retail for £12-£14 ($16.08-$18.76) per pack. Manufacturers are responding to the long-term search for value by introducing new products aimed at this segment.
For even more price-sensitive customers, roll-your-own (RYO) tobacco remains a popular choice. With 4.5 million users, RYO smokers now outnumber cigarette smokers in the United Kingdom, especially among younger and lower-income groups. With £6.3 billion ($8.34 billion) in retail sales and a 22% global share, the United Kingdom is the world’s largest RYO market, according to an industry estimate based on market share data. Like the cigarette segment, the RYO market is split between ultra-value brands and artisanal blends, with midtier declining. According to Imperial Brands, value and economy products in RYO make up more than half of sales, while the premium sector holds a 35% market share.
Cigars remain a small but profitable niche, valued at £324 million ($434 million) in 2024. Growth is largely driven by cigarillos, which hit £144 million ($193 million) in sales last year—up from virtually zero before the pandemic. They now represent 56% of all cigar volume sales, Tobacco Insider reports. Due to weight-based taxation, cigarillos are significantly cheaper than cigarettes and fall outside the minimum-pack-size requirement of 20 and the United Kingdom’s 2020 ban on menthol cigarettes. Sales of flavor-capsule cigarillos, priced at about £5.85 ($7.84) per 10-pack, have doubled in the past 18 months.
Smoking accessories, estimated at £1.3 billion ($1.74 billion) in 2025, also play a vital role in U.K. retail. Rolling papers, filters, flavor cards, lighters and storage tins represent more than 20% of tobacco-related transactions in convenience retail, especially in stores with strong RYO sales.
Amid a decline in overall tobacco consumption and a shift toward newer alternatives, strategic category management and responsiveness to evolving regulations will be key for retailers
to sustain profitability in the combustible-
tobacco category.
Ban on Disposables Dents Sales
The United Kingdom’s RRP market is overwhelmingly dominated by e-cigarettes; HTPs and nicotine pouches remain niche. Showing modest growth, the HTP category—in which Philip Morris International’s iQOS commands a 95% share—is projected to be worth £450 million ($603 million) in 2025, up 5% from the previous year, according to Tobacco Insider.
Nicotine pouches, however, have gained momentum. According to Haypp’s “Nicotine Pouch Report 2025,” the market grew 95% year over year in 2024, nearly doubling in size. Consumers view pouches as discreet, clean and more socially acceptable than other RRPs. IRI Marketplace estimates pouches’ value at £170 million ($227.9 million) in 2025, excluding online sales, and projects a 68% year-over-year increase in volume. Considering that 81% of pouch users prefer buying online, category value could be significantly higher.
To purchase vapes, four-fifths of U.K. users prefer in-person shopping. According to Statista, 15.2% of vape purchases happen online, up from 10.6% in 2018. This proportion is projected to increase to 19.4% by 2028.
In the U.K., vape products are regulated under the Tobacco and Related Products Regulations 2016 (TRPR) regime. Before being placed in the market, whether online or in-store, nicotine-containing vape products and refill containers must be notified to the Medicines and Healthcare Products Regulatory Agency (MHRA)—sellers must ensure that the product appears on the MHRA “Notified Product List.”
Vaping products must carry a health warning (“This product contains nicotine, which is a highly addictive substance”) and meet the maximum nicotine strength of 20 mg/ml as well as maximum tank sizes of 2 ml as per TRPR (for nicotine-containing products). Selling vape products to anyone under 18 is illegal, as are proxy sales. The requirement to verify age also applies to distance sales: The seller must have an “effective system” to verify the purchaser’s age if selling by distance (online or catalogue).
Starting June 1, 2025, the U.K. has banned the sale and supply of single-use disposable vapes, as part of a nationwide effort to curb youth vaping and reduce environmental waste. Youth vaping among 11- to 17-year-olds in Great Britain has almost constantly risen from 1% in 2013 to 7% in 2025, the July 2025 factsheet by ASH finds. According to research commissioned by Material Focus in 2023, more than eight million disposable vapes are thrown away or binned incorrectly in the U.K. every week. The disposable vape ban applies to all retailers, both online and in-store. Refillable, rechargeable and pod-based vape systems remain legal under existing regulations.
Before the disposable vape ban, 83% of vape sales were disposables. Elf Bar and its sister brand Lost Mary were the leading brands in U.K. convenience and independent stores, generating combined sales of £654.4 million ($877.2 million) in 2023—10 times more than any other brand, according to Electric Tobacconist. Other leading brands include Elux and SKU.
In the months before the ban took effect, sales had already slowed; manufacturers proactively remodeled devices to be refillable and rechargeable. However, in the week ending June 8, after the ban took effect, vape category sales dropped from £23 million to £17.8 million ($30.83 million to $23.86 million), according to Talysis, a United Kingdom-based convenience retail insight agency. Despite the ban, more than £1 million ($1.34 million) worth of disposables were still sold, indicating widespread noncompliance. While sales of reusable vapes, kits and pods increased in the two months after the ban, it remains to be seen whether they can compensate for the loss of sales of disposables.
“Retailers have reported a fall in their vape sales of between 20% and 40% as a result of the disposable-vape ban,” Lowman said. “A lack of effective enforcement has meant that consumers are still able to find disposable vapes at low prices from rogue traders. Retailers are extremely concerned about the rise in illicit trade, both in disposable vapes and the wider tobacco category.”
The United Kingdom continues to grapple with a large and sophisticated illicit tobacco trade, dominated by organized-crime groups. Despite long-standing enforcement efforts, the black market has expanded significantly in recent years. The surge is largely attributed to steep tobacco duty increases—up to 76% for hand-rolling tobacco and 39% for cigarettes—which have driven consumers toward cheaper, illegal alternatives. The illicit tobacco trade is estimated to cost £1.4 billion ($1.87 billion) in lost excise duty and an additional £400 million ($536.1 million) in lost value-added tax (VAT) annually.
The illicit vapes market has also grown rapidly, with nearly 1.2 million illegal vapes—worth more than £9 million ($12.1 million)—seized in 2024 alone. The disposable-vape ban is expected to intensify the problem.
For U.K. retailers, the regulatory horizon remains challenging. Beginning in October 2026, vape products will be subject to an excise duty of £2.20 ($2.94) per 10 ml of liquid. This new tax will raise prices, impose compliance burdens and test whether consumers remain committed to legal supply or are drifting toward illicit alternatives. Retailers, already skeptical about enforcement capacity, fear a flood of untaxed and counterfeit products undermining legitimate sales.
“Additional duties on vaping products could create even more concern with the illicit trade and the provision of cheap product from rogue sellers,” Lowman said. “Any interventions in this market must be accompanied by a robust enforcement strategy and additional resources for local trading standards to ensure that they can clamp down on the illicit trade.”
According to the U.K. government’s “Trading Standards survey 2024 to 2025,” only 1% to 1.7% of illicit vapes are being seized.
Generational Smoking Ban Looms
There’s more to come for U.K. c-store retailers: The Tobacco and Vapes Bill, expected to take effect on January 1, 2027, is progressing through Parliament. One of its key provisions is a generational smoking ban, which makes it illegal to sell tobacco to anyone born on or after January 1, 2009. This would gradually phase out tobacco sales by raising the legal age of sale each year. The ban would also apply to HTPs.
The legislation would also restrict vape flavors, packaging, advertising and displays; introduce licensing requirements for nicotine retailers; and allow vape-free and HTP-free designations in smoke-free areas.
While U.K. retailers broadly support the protection of minors, they have clear concerns about the bill’s effect. These include sales and visit losses, further illicit trade and operational burdens. Retailers also anticipate awkward or even violent customer interactions—especially in the early years of the generational ban, when confusion may arise over why a 21-year-old can buy cigarettes but a 20-year-old cannot.
Their concerns may be justified: According to ACS’ “Crime Report 2025,” there were more than 59,000 incidents of violence and 1.2 million cases of verbal abuse in the U.K. convenience sector last year.
“The generational ban will create a different age-checking policy for convenience retailers, so it’s essential that we support stores with the right communication and training to ensure that retailers and their colleagues are confident with the new rules when they come into force,” Lowman said.
In the United Kingdom, the backbar tells the story of an industry in flux. Convenience retailers are learning daily that their future lies not in one category but in their ability to adapt, diversify and serve customers in a market in which the only constant is change.