The way people consume nicotine is changing rapidly. Traditional smoking is slowly fading, making way for a new generation of smoke-free alternatives. Nicotine pouches, offering a discreet and convenient experience, have seen tremendous growth in recent years.

Within this thriving market, three brands have risen to prominence: ZYN, VELO, and On!. Each has charted a unique course to success, using distinct growth strategies, tapping into consumer insights, and understanding the evolving market. Let’s take a closer look at the journeys of these industry leaders and uncover the keys to their success in 2024.

ZYN: Leading the Pack

ZYN’s story began in 2016 when Swedish Match, a company with a rich history in smokeless tobacco, introduced it to the U.S. market. Swedish Match, later acquired by Philip Morris International in 2022, recognized ZYN’s potential as a key player in the tobacco-free alternatives space. This acquisition strengthened Philip Morris’ portfolio, firmly establishing ZYN as the cornerstone of their nicotine pouch offerings.

Since its launch, ZYN has seized a commanding position in the U.S. market, holding an impressive 77% share of the retail value by 2023. Its growth has been nothing short of extraordinary, with shipment volumes surging by 65.7% from 2022 to 2023 alone. This rapid expansion is fueled by a combination of factors, including ZYN’s early market entry, its wide array of flavors, and effective distribution strategies.

ZYN’s Winning Formula: Marketing and Consumer Connection

ZYN’s marketing strategy focuses on providing a premium, tobacco-free alternative that attracts both current nicotine users and those trying to quit smoking. The brand boasts an extensive selection of flavors, from mint and citrus to coffee, satisfying diverse consumer tastes. ZYN has also prioritized establishing a strong presence in convenience stores, gas stations, and online platforms, ensuring easy access across the U.S.

ZYN’s promotions highlight the convenience and discretion of using nicotine pouches, which can be enjoyed anytime, anywhere, without the need for smoke or devices. This approach has struck a chord with consumers seeking a socially acceptable way to manage their nicotine cravings.

The typical ZYN user is often a former smoker who has switched to pouches as part of their smoking cessation journey. Interestingly, approximately 20% of ZYN users are former cigarette smokers, while another 25% transitioned from vaping. The brand appeals to a wide range of age groups, but it particularly connects with younger adults who appreciate the convenience and modernity of nicotine pouches over traditional tobacco products.

ZYN consumers are typically well-informed about the product’s advantages, with many valuing the perceived lower health risks compared to smoking. This aligns with broader trends in the nicotine pouch market, where consumers are increasingly seeking harm reduction options.

In response to growing consumer demand for sustainable products, ZYN has taken steps to incorporate eco-friendly practices into its production processes. This includes efforts to minimize the environmental impact of packaging and exploring sustainable sourcing of ingredients. Furthermore, ZYN remains committed to innovation, constantly developing new product formulations and flavors to anticipate consumer preferences and maintain its market-leading position.

VELO: Global Reach and Convenient Access

VELO, a product of British American Tobacco (BAT), one of the world’s largest tobacco companies, was introduced as part of BAT’s strategy to diversify its product offerings and meet the growing demand for smoke-free nicotine alternatives. VELO has gained significant traction since its launch, particularly in markets like the U.S. and Pakistan, where it has rapidly expanded its presence.

VELO has experienced consistent growth, with monthly shipments surpassing 40 million pouches globally in 2023. The brand has benefited from BAT’s extensive distribution network and strategic focus on markets with high growth potential. The overall nicotine pouch market, which includes VELO, is projected to grow from $3.98 billion in 2023 to $5.17 billion in 2024, a clear indication of the increasing consumer shift toward these products.

VELO’s Approach: Online Presence and Price Advantage

VELO’s marketing strategy utilizes its robust online presence, offering a wide selection of products through e-commerce platforms. This approach has allowed VELO to connect with a wider audience, particularly younger consumers who prefer the convenience of online shopping. The brand’s product lineup features an array of flavors and nicotine strengths, catering to different preferences and needs.

VELO has also focused on pricing strategies that make its products accessible to a broader demographic. By offering competitive pricing and bulk purchase options, VELO attracts cost-conscious consumers seeking value without compromising quality.

VELO’s user base is diverse, with a significant portion being former smokers or individuals seeking a discreet way to consume nicotine. The brand is especially popular among younger adults who value the convenience and flexibility of nicotine pouches. VELO users are also more likely to purchase their products online, where they can access a wider selection and take advantage of discounts and promotions.

As part of BAT’s broader commitment to sustainability, VELO has implemented eco-friendly practices in its production and packaging processes. The brand is also pursuing new product innovations, including the development of synthetic nicotine pouches, which are gaining popularity among consumers seeking tobacco-free alternatives. These efforts align with growing consumer preferences for sustainable and innovative products in the nicotine market.

On!: Harm Reduction and a Flavorful Twist

On! is a product of Altria, a company known for its deep roots in the tobacco industry and its ongoing efforts to provide harm reduction alternatives. Altria’s acquisition of the On! brand was part of its strategy to diversify its portfolio and offer smoke-free options to consumers.

Since its launch, On! has steadily gained market share, particularly in the U.S. In 2023, the brand recorded an impressive 32.8% increase in shipment volumes, a testament to growing consumer interest in its products. On! has carved out a niche in the market by offering a range of unique flavors, such as coffee and cinnamon, that appeal to consumers seeking something different.

On!’s Strategy: Marketing Harm Reduction and Unique Flavors

On!’s marketing strategy focuses on its positioning as a harm reduction product. The brand emphasizes its tobacco-free and discreet nature, appealing to consumers who are health-conscious but still want to enjoy nicotine. On! sets itself apart from other brands through its distinctive flavor offerings, such as coffee and cinnamon, which cater to consumers looking for novel experiences.

Furthermore, On! leverages its association with Altria’s broader harm reduction strategy, appealing to smokers looking to transition away from traditional cigarettes. On! has also found success in utilizing targeted marketing campaigns that highlight the benefits of nicotine pouches over traditional tobacco products, particularly in terms of reduced harm and convenience. This approach has helped the brand attract a dedicated customer base that values both innovation and health considerations.

The On! Consumer: Transitioning and Seeking Variety

The typical On! user is someone who is likely transitioning from smoking or other forms of tobacco use. The brand’s appeal lies in its unique flavors and the perception of reduced harm. On! has a diverse user base, but it is particularly popular among individuals who are looking for a way to satisfy their nicotine cravings without the stigma associated with smoking or chewing tobacco.

Economic factors have also played a role in consumer behavior, with many On! users opting for bulk purchases online to save money. This trend reflects broader patterns in the nicotine pouch market, where consumers are increasingly turning to e-commerce for convenience and cost savings.

On! is committed to sustainable practices, aligning with Altria’s broader corporate responsibility goals. The brand has made efforts to reduce the environmental impact of its products through sustainable packaging and sourcing. Furthermore, On! is exploring innovations in product formulations, particularly in the development of synthetic nicotine options, which are gaining popularity among consumers who prefer a tobacco-free alternative.

The Changing Tides: Competition and Future Trends

While ZYN, VELO, and On! currently dominate the market, new competitors are emerging, particularly in the synthetic nicotine space. Brands like NIIN, The Pouch Plug (TPP), and BOLTBE are making inroads by offering products that appeal to consumers seeking tobacco-free options. These emerging players focus on innovative product formulations and sustainable practices, resonating with the growing segment of eco-conscious consumers.

The competitive landscape is intensifying as more traditional tobacco companies enter the nicotine pouch market, either through acquisitions or by launching their own brands. This influx of new players will likely drive further innovation and diversification in product offerings, making the market even more competitive.

The regulatory landscape for nicotine pouches is also evolving, with significant implications for the market. In the U.S., the FDA is expected to introduce new regulations that could impact the marketing and availability of nicotine pouches, particularly concerning flavored products and synthetic nicotine. These regulatory changes could create challenges for established brands but also open doors for those who can successfully adapt to the new rules.

Globally, the regulatory environment varies, with some regions imposing stricter controls on nicotine products than others. Brands that can adeptly manage these varying regulations and maintain compliance will have a competitive advantage in the international market.

The nicotine pouch market is expected to grow significantly in the coming years, with projections indicating an increase from $3.98 billion in 2023 to $14.5 billion by 2028. This growth will be driven by several factors, including increased consumer awareness of nicotine pouches as a harm reduction tool, the expansion of e-commerce channels, and the continued introduction of new products and flavors.

The U.S. market, in particular, has substantial room for growth. Although nicotine pouch use in the U.S. is still in its early stages compared to markets like Sweden, there is potential for significant expansion as more consumers become aware of these products and their benefits.

Looking Ahead: The Future of Nicotine Pouches

The nicotine pouch market is on the cusp of substantial growth, driven by ongoing innovation, increasing consumer awareness, and the expansion of online retail.

As consumers increasingly seek out eco-friendly products, sustainability will become a key differentiator in the market. Brands that prioritize sustainable practices will likely gain a competitive edge.

ZYN, VELO, and On! have each carved out a significant place in the market through their unique strategies and understanding of consumer needs. As the market evolves, these brands, along with emerging players, are poised to shape the future of nicotine consumption. The future of the nicotine pouch market is bright, with ample opportunities for growth and expansion in the years to come.

Sources: sphericalinsights, businessresearchinsights, maximizemarketresearch, nicokick, prilla, tobaccointelligence, tobaccoreporter, researchandmarkets