Can Nicotine Pouches Replace Cigarettes for Big Tobacco?

Tobacco giants Philip Morris International (PMI) and British American Tobacco (BAT) are accelerating the global rollout of nicotine pouches to offset declining cigarette volumes. This strategic shift capitalizes on high profit margins and currently lighter regulations, though rising scrutiny over youth marketing threatens to slow expansion.

Nicotine pouches—small, tobacco-free packets placed under the lip—are growing faster than vapes and heated tobacco. British American Tobacco projects industry pouch revenue will climb to £11 billion by 2030, up from £4 billion in 2025, representing a projected 47 million users.

High Profit Margins Drive Tobacco Investor Interest

The financial appeal for manufacturers is clear. PMI reported that its US pouch business generated eight times the gross profit per thousand units of its international cigarette business in 2024. By comparison, its heated tobacco device, IQOS, generated 2.4 times the gross profit of cigarettes.

Product Category (PMI)	Relative Gross Profit per 1,000 Units
International Cigarettes	1.0x (Baseline)
IQOS (Heated Tobacco)	2.4x
Zyn (Nicotine Pouches)	8.0x

Additionally, pouches allow nicotine consumption in public spaces where smoking and vaping are banned. Unlike the vaping market, which is largely controlled by Chinese manufacturers, major tobacco firms dominate the pouch sector.

Regulatory Scrutiny Intensifies Over Youth Marketing

While the US Food and Drug Administration notes that switching to pouches can reduce health risks for smokers, public health advocates warn about youth uptake. The World Health Organisation (WHO) has called for stricter controls, noting that 160 countries currently lack specific pouch regulations.

Some manufacturers have used aggressive marketing channels, including sports sponsorships and free samples, to promote these products. In response, France has banned pouches entirely, Finland has mandated plain packaging, and the UK and EU are drafting tighter rules.

BAT Chief Executive Tadeu Marroco supports the category’s potential. “I do believe that this is an engine of growth… that has the potential to replace cigarettes in the long run,” Marroco stated, noting that pouches are cheaper and easier to use than other alternatives.

The Challenge of Expanding Beyond Traditional Markets

The primary obstacle for investors is whether oral nicotine products can succeed in regions without a history of oral tobacco use, such as Scandinavia or the US. Analysts note that consumers in most global markets prefer inhaling nicotine rather than absorbing it orally.

Currently, traditional cigarettes remain the primary profit driver for the industry. At PMI, oral nicotine products represent only 2.6% of total product volumes. A spokesperson for PMI noted that a diverse portfolio is necessary to transition smokers, stating, “Adult smokers are not a homogenous group of people with the same preferences, rituals or taste.”

Source: Can nicotine pouches drive Big Tobacco’s future beyond cigarettes?

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.