(Newswire.net — November 9, 2023) — Cigarette smoking rates among adults in the United States have gradually declined over the years, from 20.9% in 2005 to 11.5% in 2021. Although the tobacco epidemic remains, this trend signifies that there are consumers who have switched to tobacco-free alternatives to conventional smoking products. Among these products are nicotine pouches, designed to sate cravings through its blend of synthetic nicotine, plant fibers, flavors, and other additives. Instead of smoking it, pouch users place the product between the upper lip and the gum for direct nicotine delivery.
Although relatively new compared to other oral nicotine replacement products like gums and lozenges, nicotine pouches have seen tremendous growth in sales and demand in recent years. After multinational company Philip Morris International (PMI) pivoted away from its core market of combustible tobacco products like cigarettes, it added ZYN nicotine pouches to its product lineup. Despite declining cigarette sales, the company’s operating income increased by 13.8% from $8.03 billion in 2022 to $9.14 billion as of September 2023 — mainly due to nicotine pouch shipment volumes growing by 65.7% and surpassing market expectations.
The growth of nicotine pouch sales can be observed across the larger market, demanding a closer look at the factors driving the demand and popularity for these next-generation nicotine products.
Market overview of nicotine pouches
Beyond individual companies like PMI reporting a boost in revenue due to increased unit sales and shipments, the global nicotine pouch market has experienced rapid growth since pouches first went mainstream in 2016. According to a report by Polaris Market Research, the nicotine pouch market share was worth $1.60 billion in 2022. By 2032, the market is projected to reach a value of $26.8 billion, representing a compounded annual growth rate of 33.16% over ten years. Among the key market players with worldwide reach are Swedish Match (Sweden), Altria Group (US), Triumph Tobacco Alternatives (US), Japan Tobacco (Japan), and British American Tobacco (England).
Although nicotine pouches dominate the European market from which they originated, the same report notes that Asia Pacific records the fastest growth in sales due to the success of marketing methods deployed by international brands. Meanwhile, the US market has steadily increased pouch unit sales in the last few years. Sales grew from 126.06 million in December 2019 to 808.14 million in March 2022, representing an average monthly growth rate of 8.1%. With such impressive performance and forecast for nicotine pouches, the following section looks at the drivers for this market growth.
Growth drivers for nicotine pouch sales
Wide variety
A notable aspect of the increased interest in nicotine pouches is its distinctive flavor offerings. The brands with the largest market share, which include ZYN, On!, and Rogue, are tapping into this desire for flavored nicotine pouches through a wide selection of flavors with high-quality ingredients — ranging from refreshing flavors like spearmint and wintergreen to fruity flavors like berry and citrus. Although the mint-based options are designed to appeal to former smokers, flavored products generally allow users to customize their nicotine experience. Nonetheless, original and unflavored options are available to cater to a different target market.
Accessibility across distribution channels
The success of nicotine pouches can also be attributed to their accessibility across multiple distribution channels. To start, convenience store chains like Massachusetts-based Nouria Energy are increasing their stocks of oral nicotine products like pouches following strong sales and high customer acceptance. Although offline channels account for a significant portion of sales, the availability of nicotine pouches online also plays a role in consumer access to top brands like ZYN and VELO. Aside from stocking pouches in various flavors and strengths, online retailers also bridge the gap between product and consumer through direct delivery from their warehouse to anywhere in the US and express delivery options via UPS.
Reduced health risks
Since nicotine pouches use synthetic nicotine and not the natural kind derived from tobacco plants, they serve as viable reduced-risk products. Tobacco is widely documented to contribute to health risks, such as oral cavities and gum disease. Whether the tobacco is smoked in cigarettes or chewed as smokeless tobacco, it contains particles that are abrasive to the teeth and help bacteria form and grow in the mouth. In contrast, pouches are also consumed orally but do not cause the same level of risk due to their tobacco-free properties. Lastly, pouches do not emit smoke and thus help smokers avoid worsening their lung health.
Effectiveness as cessation aids
Nicotine pouches’ reduced-risk potential also makes them effective as cessation aids. While smokers can opt for prescription medication like bupropion to help them quit, they may also experience nicotine cravings and withdrawals that can hinder their progress and cause them to relapse. However, pouches can help relieve these symptoms by delivering fixed nicotine doses into the bloodstream. Moreover, these products come in various dosages and strengths from 2mg to 15mg, allowing smokers to adjust their pouch use to their smoking history and frequency for more successful cessation.
Affordable prices
Lastly, nicotine pouches also present themselves as an alternative to tobacco products with their affordable prices. A survey conducted by Goldman Sachs reveals that about 61% of consumers spent less on tobacco products in the fourth quarter of 2022 versus the previous quarter, mainly due to inflationary pressures and increasing cigarette prices. Aside from reducing their trips to convenience stores and looking for other locations with better pricing, about 45% of the respondents said they opt for more affordable smokeless options like nicotine pouches. This shift to pouch use can also be explained by their growing acceptability and more value per serving.
Evidently, nicotine pouches are here to stay as a next-generation product that can replace cigarettes in terms of nicotine delivery, accessibility, affordability, and reduced-risk potential. With multiple factors contributing to the rise of nicotine pouch sales, key manufacturers and retailers must remain aware of consumer attitudes and relevant regulations to sustain this growth. Stay tuned to Newswire for more news and updates on this growing market.