The next-generation nicotine market in the UK is witnessing a remarkable transformation as nicotine pouches emerge as one of the fastest-growing categories. With the recent ban on single-use vape products leaving gaps in both revenue and shelf space, savvy retailers are turning their attention to this burgeoning category that offers attractive margins and unprecedented growth potential.
Market performance and growth trajectory
According to the latest data from IRI Marketplace, total UK nicotine pouch sales are now worth just over £170 million (excluding online sales) and are growing by an impressive 68 per cent year-on-year in volume terms. Perhaps most significantly for convenience retailers, this channel is experiencing even more dramatic growth than the grocery sector.
“Although more sales take place in the grocery channel, sales of nicotine pouches are growing much faster in the convenience channel, where they are up by 88 per cent YOY in volume terms, compared to 58 per cent YOY volume growth in grocery,” explains Prianka Jhingan, Head of Marketing at Scandinavian Tobacco Group UK.
ZYN nicotine cases and pouches are seen on a table on January 29, 2024 in New York City. Photo Illustration by Michael M. Santiago/Getty Images
This trend is being driven by several key brands showing exceptional performance. ZYN nicotine pouches, positioned as the world's number one nicotine pouch brand, saw a staggering 497 per cent increase in sales volume between December 2023 and December 2024. Meanwhile, brands like XQS are making significant inroads in the convenience channel, where it has already become the sixth biggest selling brand with substantial potential for further growth.
The growth isn't confined to the UK market alone. Andrew Madeley, sales manager of Iceberg nicotine pouches, recently told Asian Trader that his brand has achieved a dominant presence across more than 40 countries in Europe, Asia and Africa. “Nicotine pouches are more than just a trend, according to a UK market analysis report (ASH Scotland), and between 2020 and 2024 the usage of nicotine pouches had doubled in the UK,” he states.
Understanding the consumer appeal
The surge in popularity can be attributed to several factors that make nicotine pouches particularly attractive to modern consumers. Unlike traditional cigarettes or even vapes, nicotine pouches offer a completely smoke-free, discreet experience that can be used virtually anywhere.
“This is largely because, unlike vapes, nicotine pouch users can enjoy them on public transport, at work, at sporting events, concerts or anywhere they like,” Jhingan explains.
This versatility has made them popular not just among former smokers, but also among what the industry terms “poly-users” – those using more than one nicotine product. “Retailers should view nicotine pouches as fulfilling a diverse range of customer preferences and not limit their approach to a single customer type,” Dor Matot, Head of ZYN at Philip Morris Limited, suggests.
The cost advantage is equally compelling. While the average price of a pack of cigarettes stands at £16.60 [RPI: Ave price - Cigarettes 20 king size filter - Office for National Statistics, January 2025], ZYN nicotine pouches are priced at £6.50 RRP, making them a budget-friendly alternative for legal-aged nicotine users.
Matot emphasises the broad appeal: “Nicotine pouches are a versatile, smoke-free alternative suitable for any adult smoker or legal-aged nicotine user. They are ideal for any location or occasion as they provide a cleaner, discreet nicotine experience compared to cigarettes.”
The demographic reach of nicotine pouches extends into unexpected territories. A report published in May 2024 by Loughborough University found that one in five (20 per cent) of professional footballers in England are active users of nicotine pouches, highlighting their acceptance among health-conscious consumers.
Product innovation and variety
The nicotine pouch category is characterised by continuous innovation in both formulation and flavour development. Different brands are taking varied approaches to capture market share and meet diverse consumer preferences.
ZYN offers two distinct formats to cater to different user preferences. ZYN Mini Dry features a unique recipe with nicotine salts and dried flavour powder designed to melt away, delivering an even experience in a small and comfortable pouch format that provides a gradual release of flavour and can be used for around 30 minutes. Meanwhile, ZYN Slim offers a balanced nicotine experience in a slim and comfortable pouch format.
In January this year, Zyn has become the first authorised nicotine pouch in the United States, after the U.S. Food and Drug Administration (FDA) gave the brand marketing authorisation.
The Scandinavian Tobacco Group's XQS brand has been particularly aggressive in flavour innovation. “Already this year we have launched five new flavours, meaning we currently have eight different SKUs in the XQS portfolio, and I can assure retailers that we won't be stopping there,” says Jhingan. “Our current best-seller is the Tropical flavour, which was one of the original three to launch, while other particularly popular ones to call out at the moment would be Black Cherry and Strawberry Kiwi.”
Iceberg nicotine pouches
Innovation extends beyond traditional nicotine delivery. Iceberg has recently launched capsule pouches that incorporate flavour capsules within each pouch, giving users the versatility of two flavours in one product. The brand has also ventured into the energy drink alternatives market with nicotine- and tobacco-free energy pouches that provide a caffeine boost without traditional beverages.
“Iceberg have just launched a new, improved formula that has enhanced the feel and strength of the pouches without compromising on our great flavours. The new pouches give an instant nicotine release, which promotes a stronger nicotine experience whilst maintaining compliance with industry guidelines,” explains Madeley.
Flavour trends and consumer preferences
The research conducted by King's College London in collaboration with Action on Smoking and Health (ASH) provides valuable insights into who is embracing nicotine pouches. Usage is notably higher among young adults aged 18-34, predominantly male consumers, and individuals living in London. The study also found that most users had prior experience with nicotine, particularly through smoking or vaping.
This demographic profile presents retailers with a clear target market – young, urban professionals seeking a more discreet and convenient alternative to traditional tobacco products or vaping. The appeal lies in the product's invisible nature, making it suitable for any environment without breaking social norms or workplace restrictions.
Understanding flavour preferences is crucial for retailers looking to optimise their nicotine pouch range. While mint remains the predominant flavour in the category, fruity flavours are proving increasingly popular with consumers.
Steve McGeough, General Manager at RV Karma, makers of Übbs Pouches, observes: “Customers are becoming more curious about flavour selection and want to have a good variety of different products to try before landing on a favourite. It's important for retailers to have a wide range, because flavours and even nicotine delivery varies a lot between brands.”
The market shows interesting segmentation by nicotine strength, with Extra Strong variants (more than 8 mg/pouch) capturing 33.41 per cent of revenue share in 2024, according to Grand View Research. This strength category appeals particularly to experienced nicotine users and former heavy smokers seeking an intense alternative to cigarettes.
However, Light strength pouches (2mg/pouch) are expected to show the fastest growth at a CAGR of 11 per cent from 2025 to 2030, driven by new users and those aiming to reduce their nicotine dependence. This bifurcation suggests retailers should maintain a balanced offering across strength categories to cater to diverse consumer needs.
The trend towards stronger products is particularly notable in the UK market. “Currently in the UK the trend is for stronger products, with Iceberg being the strongest on the market whilst remaining fully compliant. Our new innovative formula hits the spot for UK consumers,” notes Madeley.
All of the XQS SKUs come in strengths of either 8mg or 11.2mg, apart from their best-selling Tropical flavour which also comes in 4mg.
This evolution in consumer taste mirrors the development of the vape market in its early years. “In the next year, we can expect consumer tastes to carry on maturing, with more complex flavours and diversity of brand preference, similar to how the vape market evolved in its early years,” McGeough predicts.
Building an effective retail strategy
For retailers looking to capitalise on this growing category, experts recommend a multi-faceted approach that goes beyond simply stocking products. The key lies in understanding the diverse range of customer preferences and ensuring adequate variety in both strengths and flavours.
“Retailers should ensure they offer a variety of strengths and flavours to meet the diverse needs and preferences of legal-aged nicotine users. Additionally, they should understand the different formats of nicotine pouches that their customers may look for,” advises Matot.
The importance of proper product placement cannot be overstated. “The display of next-gen products like pouches is also really important, which is why to really maximise sales of XQS, we know it is best suited in multiple locations due to it being a new product in the category that consumers may not be aware of,” explains Jhingan.
Many suppliers offer comprehensive display solutions to accommodate different store sizes, all designed to ensure maximum visibility to customers. Counter display units (CDUs) are particularly important for introducing customers to new brands, as confirmed by McGeough, of Übbs Pouches: “We always offer a CDU to new retailers, as it's important to create a space for the brand whenever possible.”
Jhingan adds: “We currently offer a number of different display solutions to accommodate different sized stores, all of which ensure maximum visibility to those entering, so please speak to your STG rep to find the best solution for your store.”
Übbs Pouches, after gathering consumer feedback from a number of sampling initiatives, has recently launched a packaging refresh, coinciding with its launch at Booker, with the aim of making the labelling clearer, and more eye-catching on the shelf.
“Our new look packaging is a reflection of what our customers have been asking for – a visual representation of each flavour that can be recognised instantly. We're very excited to see the reaction as this rolls out towards the end of September,” McGeough says, adding that the partnership with Booker represents a “significant expansion of our presence throughout the UK, with 100 top performing depots added to our network.”
The importance of staff training and education
Given that nicotine pouches remain a relatively new category for many consumers, staff training emerges as a critical success factor. The complexity of the category, with its various strengths, flavours, and formats, requires knowledgeable staff who can guide customers to appropriate products.
“Like any nicotine product, it is essential that staff are well-trained and have a good understanding of their full product portfolio,” emphasises Matot. This training becomes particularly important given the regulatory requirements surrounding nicotine products, including age verification and health warnings.
“In line with PMI’s strict marketing practices, we ensure that legal-aged nicotine users understand that while ZYN products are not risk-free and contain nicotine, which is addictive, they release 99 per cent less harmful chemicals compared to cigarettes. ZYN cans display an 18+ icon, tactile warning labels, and health warnings,” Matot adds.
A caveat: 99 per cent less represents the average reduction in levels of nine harmful chemicals the World Health Organisation recommends to reduce in cigarette smoke which do not include nicotine, but this does not necessarily equal a 99 per cent reduction in risk.
Zyn introduces new extra-low 1.5mg strength
Philip Morris augments their marketing practices by providing retailers with information through their field force, including Youth-Access Prevention measures like Challenge 25.
Übbs Pouches has made retailer education a cornerstone of its strategy. “Our most important initiative this year has been retailer education through field sales and follow up visits,” McGeough explains. “We've invested heavily in training our field sales teams to understand the strengths and challenges around nicotine pouches. This knowledge is passed on to our retailers, which allows customers to purchase with confidence, knowing that they've found a flavour and strength that works for them.”
This educational approach has yielded impressive results, with Übbs reaching 6,000 independent retailers across the UK. The company provides educational leaflets that explain the category to both staff and customers, recognising that considerable educational work remains to be done in this emerging market.
In rapidly growing categories, product quality becomes a potential risk factor for retailers. McGeough positions his company's manufacturing approach as a critical differentiator: “In terms of product, all Übbs pouches are made to pharmaceutical standards, so we're very confident in the effectiveness of our unique nicotine blend and carefully selected flavours.”
Profit margins and business benefits
Beyond the growth potential, nicotine pouches offer attractive financial benefits for retailers. The category generally provides good profit margins, with some brands offering particularly compelling returns.
“Remember, nicotine pouches offer attractive profit margins in general, but I'm pleased to confirm that XQS in particular offers one of the highest margins of all pouch brands, which is yet another reason to ensure you are well-stocked,” notes Jhingan.
The timing couldn't be better for convenience retailers. “The recent ban on single use vape products has undoubtedly given retailers a headache by leaving gaps in their revenue as well as shelf space on the counter or on the gantry, but this represents a really good opportunity for nicotine pouch brands like XQS, as many next gen nicotine users are looking elsewhere for different next gen products, and pouches offer an extremely credible alternative,” she explains.
Navigating the regulatory landscape
As the nicotine pouch market flourishes, retailers must also prepare for significant regulatory changes on the horizon. The Tobacco and Vapes Bill, currently progressing through UK Parliament, will introduce comprehensive restrictions that mirror those applied to traditional tobacco products, fundamentally altering how these products can be marketed and sold.
The legislation will ban all advertising and sponsorship of vapes and nicotine products, including nicotine pouches, whilst closing existing loopholes to ensure all such products cannot be sold to under-18s. Additionally, the bill prohibits free distribution of these products and their sale from vending machines, requiring retailers to adapt their sales strategies accordingly.
Perhaps most significantly for the convenience sector, ministers will gain powers to regulate the flavours, packaging, and display of nicotine products, along with authority to amend product standards as needed. These provisions could substantially impact the category's current growth drivers, particularly the flavour innovation that has proven so popular with consumers.
Phil Hudson, Associate Director of the Global Institute for Novel Nicotine (GINN), argues for a more nuanced regulatory approach based on scientific evidence.
“Public perception of nicotine has long been clouded by misconceptions and stigma, often confusing the substance itself with the harmful effects of smoking,” Hudson recently told Asian Trader.
“A fundamental distinction needs to be emphasised: nicotine itself is not the primary cause of smoking-related diseases. The dangerous health impacts come from combustion; the burning of tobacco that releases thousands of toxic compounds including tar and carbon monoxide.”
This distinction is crucial for retailers engaging with consumers who may have questions about nicotine pouches. The products represent a fundamental shift in nicotine delivery – eliminating combustion entirely and, with it, many of the health risks associated with traditional tobacco products.
Hudson positions nicotine in a more familiar context: “Nicotine is essentially a mild stimulant with effects comparable to caffeine. While it does have addictive properties, nicotine is not responsible for the cancers, heart conditions, or respiratory diseases associated with smoking.”
He notes that nicotine occurs naturally in several everyday foods, including tomatoes, potatoes, and eggplants – with research suggesting these common foods can contribute up to 2.25 micrograms of nicotine to daily dietary intake.
“This highlights a crucial point: the delivery method determines the risk, not the nicotine itself. Smoke is the danger, and not nicotine,” Hudson points out.
Besides, nicotine pouches are among the most promising developments in nicotine replacement therapy (NRT) - tobacco-free, smoke-free oral products that deliver nicotine without combustion.
“The harm reduction potential of these products is considerable. However, regulations based on outdated assumptions or misconceptions risk limiting this potential and discouraging smokers from adopting safer alternatives,” Hudson warns.
'Nicotine pouches rising in popularity' Photo: iStock
International data strongly supports harm reduction approaches. Sweden provides a compelling example, where widespread adoption of non-combustible nicotine products has contributed to Europe's lowest smoking rates and related mortality.
Smoking prevalence across the country went down to 5.3 per cent, according to the health data released by Sweden’s public health agency in November last year, but the figure is just 4.5 per cent among the nation’s Swedish-born adults – significantly below the globally recognised benchmark of 5 per cent for smoke free status.
Commenting at the time, Dr. Delon Human, leader of Smoke Free Sweden campaign group, said the Swedes’ extraordinary success is the result of their pioneering policy approach to safer alternatives to cigarettes.
“In the early 1960s, nearly half of Swedish men smoked. By embracing and encouraging the use of alternative nicotine products such as snus, oral nicotine pouches and vapes, Sweden has paved a clear path to a smoke-free society while safeguarding public health,” Dr. Human said, adding: “They should serve as a beacon of hope for the rest of the world and as inspirational proof that a pragmatic, enlightened approach can deliver sensational public health gains and save lives.”
Hudson noted that this pragmatic, outcome-focused approach offers valuable lessons for nations seeking to reduce smoking prevalence through means beyond prohibition.
“Treating modern novel nicotine products in the same way the same as traditional tobacco not only misinforms consumers but also impedes innovation and public health progress,” he says.
“Policy frameworks should reflect the scientific consensus that nicotine products carry different levels of risk. This differentiation is essential to provide adult smokers with viable alternatives that support both cessation efforts and long-term harm reduction.”
The regulatory changes present both challenges and opportunities for retailers. Whilst advertising restrictions may limit promotional activities, they could also level the playing field by reducing marketing spend requirements. The focus on product standards and youth prevention measures may actually strengthen consumer confidence in regulated products.
Future perfect
The trajectory for nicotine pouches appears exceptionally positive, with all indicators pointing towards continued strong growth. The category benefits from regulatory advantages over other nicotine products, consumer acceptance of reduced-risk alternatives, and the practical advantages of discrete, smoke-free consumption.
“The category is continuing to go from strength to strength, with increased uptake from current smokers and vapers, who are looking for a product that is more discreet and can be used almost anywhere,” observes McGeough.
Success in this dynamic category would require a commitment to variety, proper product placement, staff training, and partnership with suppliers who can provide ongoing support and education.
As the UK continues its journey towards a smoke-free future, nicotine pouches are positioned to play an increasingly important role. Retailers who act now to establish strong positions in this category are likely to reap the benefits as the market continues its impressive expansion trajectory.