Demand for Oral Nicotine Pouches Is Up

Swedish Match sees an increase in sales, while other companies join the chewing tobacco race.

February 18, 2020

ALEXANDRIA, Va.—Oral nicotine pouches, chewing tobacco’s modern cousin, are in demand, according to The Wall Street Journal.

Last week, Swedish Match, the Stockholm-based maker of oral nicotine pouches, announced that sales in the fourth quarter increased by 15% over the same period of 2018. Behind that strong growth is the company’s U.S. rollout of Zyn, a tobacco-free pouch that releases nicotine into the bloodstream when placed between the upper gum and cheek.

Swedish Match owns cigar brands that contribute almost 30% of total revenue and has a portfolio of chewing tobacco and snus, a pasteurized oral tobacco. Snus sometimes is considered more socially acceptable than traditional chewing tobacco because it doesn’t require the user to spit.

The market for modern oral nicotine pouches is becoming more competitive. Last summer, Marlboro-maker Altria purchased a majority stake in the company that owns the on! brand and is increasing production. British American Tobacco (BAT), which owns Lucky Strike, is investing in its Velo oral pouches, which were first rolled out last July and are now available in 75,000 U.S. outlets.

Both cigarette companies have deep pockets and strong distribution systems, and they have an incentive to focus on oral pouches now that changing U.S. tobacco regulations are expected to slow sales of their e-cigarette brands. And unlike cigarettes, products, such as Velo, can be advertised on TV, radio and billboards.