Can nicotine pouches drive Big Tobacco's future beyond cigarettes?

• BAT predicts industry pouch revenue will reach £11 billion ($15 billion) by 2030, up from £4 billion in 2025, overtaking vapes with 47 million expected users
• Philip Morris's U.S. pouch business generated eight times the gross profit per thousand units of its international cigarette business in 2024, far exceeding its IQOS heated tobacco device
• 160 countries still lack specific pouch regulations according to WHO, but authorities are growing concerned about youth uptake and aggressive marketing, with France banning pouches and the EU tightening rules

Summary: Nicotine Pouches Emerge as Big Tobacco's Key Growth Driver

Nicotine pouches are becoming a critical component of Big Tobacco's transition away from cigarettes, offering rapid growth, strong margins, and lighter regulation than competing alternatives like vapes and heated tobacco products.

Market Performance & Projections:

• BAT predicts industry pouch revenue will reach £11 billion ($15 billion) by 2030, up from £4 billion in 2025, surpassing vapes
• Expected user base: 47 million by 2030, approximately half the projected vape user numbers
• Philip Morris's U.S. pouch business generates 8x the gross profit per thousand units compared to international cigarette sales (versus 2.4x for IQOS heated tobacco)
• BAT's Asian, Middle Eastern, and African pouch volumes grew 27.5% to 700 million units in H1 2026

Key Players & Products:

• Philip Morris International (Zyn brand)
• British American Tobacco (Velo brand)
• Both companies dominate the pouch market, unlike vaping where Chinese competitors lead

Major Challenges:

1. Cultural barriers: Success concentrated in Scandinavia and the U.S. where oral nicotine is traditional
2. Regulatory uncertainty: 160 countries lack specific pouch regulations, but tightening rules emerging (France banned pouches; Finland, UK, and EU introducing restrictions)
3. Youth uptake concerns raised by WHO, which cites aggressive marketing and high nicotine strengths

Market Context:

Despite investor enthusiasm, pouches represent only 2.6% of Philip Morris's total volumes, with cigarettes remaining the primary profit engine. Analysts emphasize tobacco company valuations increasingly depend on pouch performance, though both BAT and PMI stress multiple alternatives are necessary for complete cigarette transition.