Strict bans and restrictions on nicotine pouches are failing to eliminate consumer demand and may be driving sales towards illicit markets, according to a new report from TobaccoIntelligence.
The Global Illicit Nicotine Pouch Report 2026 found that countries with the toughest regulatory restrictions often have substantial illicit markets, with consumers turning to products that are banned, exceed permitted nicotine limits or are sold through prohibited channels.
Germany, where nicotine pouches are effectively banned, was the world’s ninth-largest market in 2026, with an estimated value of $195 million (£146m). France, which banned the products, ranked 22nd, with a market worth $34m.
The report estimated that Germany had 614,000 adult nicotine pouch users consuming 658 million pouches, while France had 200,000 users consuming 114 million pouches.
In France, awareness of the ban remained limited after its introduction. A TobaccoIntelligence survey found that only 32% of nicotine pouch users were aware of the ban in July 2026, compared with 24% before it came into force.
The findings come as the nicotine pouch category continues to expand rapidly. The report estimated the global market at around $10 billion, with more than 20 million consumers and compound annual growth of 44% between 2021 and 2026.
TobaccoIntelligence forecasts double-digit growth over the next five years, but said the extent to which that growth would be captured by illicit operators remained an open question.
Nicotine limits and online restrictions
Restrictions on nicotine strength are another factor contributing to illicit trade, according to the report.
In Norway, 68% of users surveyed consumed products with nicotine concentrations above a proposed limit of 12mg per gram. The report suggested that consumers seeking stronger products could turn to illicit suppliers rather than switch to lower-strength alternatives.
Modelling by Tamarind Intelligence suggested that introducing the proposed limit could roughly double the volume of illicit products in the Norwegian market, increasing the amount of untaxed product in circulation.
Ultra-strong pouches containing up to 50mg of nicotine per pouch were most commonly found in markets where the category was banned or effectively prohibited through very low nicotine limits.
Online restrictions also appeared to have limited success in preventing access to products.
In 2025, just 10% of nicotine pouch-related web traffic in Sweden went to foreign websites. In Germany, where the category is effectively banned, the proportion reached 90%.
The report said consumers in heavily restricted markets were more likely to access overseas websites, potentially resulting in purchases of products that were illicit and untaxed in their country.
Taxation presents a further challenge. In Hungary, the government collected HUF731 million (£1.67m) in nicotine pouch taxes in 2025, less than 40% of the HUF1,889m that TobaccoIntelligence estimated should have been collected if all products had been taxed.
The report said differences in tax rates between neighbouring countries could encourage cross-border trade, while products sold without tax payment could undercut legitimate businesses.
Implications for retailers
The report warned that illicit trade was not limited to organised criminal activity or counterfeit products. A product could also be considered illicit if it had not received the required regulatory notification, was sold through a prohibited channel, or failed to comply with rules introduced through regulatory changes.
This creates challenges for retailers operating in a fragmented regulatory environment, particularly where requirements differ between neighbouring countries or change rapidly.
TobaccoIntelligence said illicit products could undermine compliant retailers and manufacturers by avoiding tax and compliance costs, creating unfair price competition.
Consumers could also face risks because illicit products may be manufactured in unmonitored facilities or contain substandard or potentially dangerous ingredients.
Tim Phillips, founder of TobaccoIntelligence, said: “Illicit nicotine pouches are a by-product of rapid growth, fragmented regulation and limited enforcement, and they affect consumers, governments and compliant businesses alike.
“This report is an attempt to define the nature and scale of the problem. Our role is to provide independent data and analysis, and we hope it supports a better-informed debate.”
The report was commissioned by British American Tobacco. TobaccoIntelligence said its data and analysis represented its independent assessment.
Call for consistent rules
With the European Union expected to introduce further measures through its next Tobacco Products Directive and Tobacco Taxation Directive, the report called for a more consistent approach to regulating nicotine pouches.
It recommended aligning legislation between neighbouring countries, establishing straightforward rules that businesses can follow and enforcement authorities can implement, improving data collection, and increasing cooperation between governments to tackle illicit products.
The report said the challenge was to balance regulatory controls with avoiding excessive restrictions that could create opportunities for illicit suppliers.
It concluded that the nicotine pouch market would continue to grow over the next five years, but that the effectiveness of regulation and enforcement would help determine how much of that growth remained within the legal market.