Nicotine pouches are emerging as one of the tobacco industry's biggest bets for a future beyond cigarettes, with rapid sales growth, high margins and relatively lighter regulation helping products such as Zyn and Velo attract growing attention from investors and tobacco companies.
The small oral sachets contain nicotine but no tobacco and are placed between the lip and gum, allowing nicotine to be absorbed through the mouth without producing smoke or vapour.
For Philip Morris International (PMI) and British American Tobacco (BAT), the attraction is increasingly clear: pouches are growing rapidly at a time when traditional cigarette consumption is declining, while their economics can be considerably more favourable than conventional tobacco products.
But whether nicotine pouches can actually become a global successor to cigarettes remains uncertain.
The biggest question may not be profitability. It is whether consumers in countries without an established tradition of oral nicotine use will adopt them at scale—and whether regulators will allow the category to expand as quickly as tobacco companies expect.
Pouches are growing faster than several alternatives
BAT expects global industry revenue from nicotine pouches to reach £11 billion ($15 billion) by 2030, up from £4 billion in 2025.
The company projects that the number of pouch users could reach 47 million by 2030, representing just over half the number of expected vape users.
BAT has reported increasing demand in markets including Britain and Poland, while pouch volumes across its Asia, Middle East and Africa businesses rose 27.5% to about 700 million pouches during the first half of 2026.
That figure, however, remains substantially below the more than 3 billion pouches sold through BAT's US and European businesses during the same period.
BAT Chief Executive Tadeu Marroco described pouches as a potential long-term growth engine capable of replacing cigarettes, pointing to their lower cost and ease of use compared with some competing nicotine products.
Why investors are watching Zyn and Velo
The financial appeal of nicotine pouches is helping drive investor interest.
Philip Morris said its US oral nicotine business generated eight times the gross profit per thousand units of its international cigarette business in 2024. Its flagship heated tobacco product, IQOS, generated 2.4 times the gross profit per thousand units by comparison.
That difference helps explain why investors are increasingly examining pouch performance when assessing tobacco-company valuations.
Andrei Andon-Ionita, an analyst at Jefferies, said tobacco-company valuations are increasingly linked to the performance of nicotine pouches.
The category also gives established tobacco companies an advantage over the vaping market, where Chinese manufacturers have a much stronger presence.
Chris Beckett, an analyst at Quilter Cheviot, said PMI and BAT dominate pouch sales, unlike vaping, where Chinese competitors control a significant share of the market.
For investors, the appeal is therefore not simply that pouches are growing. It is that major tobacco companies already have strong brands and distribution networks in a category capable of producing higher margins.
A nicotine product that does not need smoke or vapour
Another factor behind the industry's optimism is the flexibility of nicotine pouches.
Because they generate neither smoke nor vapour, pouches can be used in settings where smoking and vaping are restricted.
Anthony Sedgwick, co-founder of BAT investor Abax Investments, said the products are reopening opportunities for nicotine consumption because of this ability to be used in more locations.
That characteristic may become increasingly important as smoking restrictions expand globally.
But it also raises a public-health question: could the convenience that makes pouches attractive to adult smokers also make nicotine easier to initiate and use among people who otherwise might not have smoked?
FDA says pouches are not risk-free
The health picture is more nuanced than the industry's growth story.
The US Food and Drug Administration (FDA) says nicotine pouches can generally be a lower-risk alternative for adults who smoke cigarettes, but stresses that they are not risk-free. Nicotine is highly addictive, and the agency says people who do not use tobacco products should not start using nicotine pouches.
For adults who smoke, the FDA says switching completely from cigarettes to nicotine pouches may reduce exposure to many harmful chemicals found in cigarette smoke. However, the agency emphasises that the health benefit depends on complete switching rather than continuing to smoke while also using pouches.
The FDA has also authorised specific nicotine pouch products for sale in the US. In June 2026, it granted modified-risk orders for 20 Zyn products, allowing them to be marketed with specific claims about lower risks compared with cigarettes following scientific review. The agency stressed that no tobacco product is safe and that complete cessation of tobacco and nicotine products remains the best option for health.
WHO warns of youth addiction, aggressive marketing
At the same time, the World Health Organization (WHO) has raised serious concerns about the rapid expansion of nicotine pouches.
In May 2026, WHO reported that retail sales of nicotine pouches had exceeded 23 billion units globally in 2024, while the global market was worth nearly $7 billion in 2025.
WHO said nicotine pouches are increasingly being promoted through youth-oriented marketing, including social media, influencers, flavours, lifestyle branding and sponsorship of music and sporting events.
The organisation reported that around 160 countries had no specific regulations governing nicotine pouches, leaving significant regulatory gaps as the products spread internationally.
WHO has called for stronger controls covering flavours, advertising, sponsorships, age verification, health warnings, nicotine limits and taxation.
The concern is not simply that young people may use the products. Nicotine exposure during adolescence can affect brain development, including attention and learning, while early nicotine use can increase the likelihood of long-term dependence.
Regulation could become the industry's biggest obstacle
The regulatory environment is already changing.
France has banned nicotine pouches, while Finland has introduced restrictions including plain packaging. Britain and the European Union are also moving toward tighter regulation.
For tobacco companies, the challenge is finding a balance between expanding products that may offer lower exposure to harmful chemicals than combustible cigarettes for adults who switch completely, and preventing those same products from creating new nicotine dependence among non-users and young people.
Tighter regulation could therefore slow the industry's growth expectations, particularly if restrictions target flavours, advertising, sponsorships and nicotine concentrations.
Can the pouch boom travel beyond the US and Scandinavia?
This may ultimately be the industry's biggest test.
Nicotine pouches have gained substantial acceptance in the United States, Sweden and Norway, where oral nicotine use has a longer cultural history.
But analysts say that success may not automatically translate to countries where consumers have traditionally inhaled nicotine through cigarettes or vaping products.
Chris Beckett said consumers in many countries may be more comfortable inhaling nicotine than consuming it orally, while Andrei Andon-Ionita identified the absence of an established oral nicotine culture outside a small number of markets as the biggest obstacle to wider adoption.
That means the global future of pouches could depend as much on culture and consumer behaviour as on price, regulation and marketing.
Cigarettes still dominate Big Tobacco
Despite the industry's enthusiasm for nicotine pouches, cigarettes remain the financial foundation of the major tobacco companies.
At PMI, oral nicotine products currently account for only 2.6% of total volumes, while cigarette sales continue to represent a major part of the business.
A recent increase in cigarette sales helped PMI exceed second-quarter expectations, prompting Bernstein analysts to caution that investor enthusiasm around Zyn may have obscured the continued importance of the company's traditional cigarette business.
The numbers illustrate the scale of the industry's transition: pouches are growing rapidly, but they still have a long way to go before replacing cigarettes as the dominant source of tobacco-company volumes and profits.
Tobacco companies say one product will not replace cigarettes
Both PMI and BAT increasingly present nicotine pouches as part of a broader portfolio rather than a single replacement for cigarettes.
A PMI spokesperson said adult smokers are not a homogeneous group and have different preferences, rituals and tastes, arguing that a diverse range of products will be necessary to support the industry's shift away from cigarettes.
That strategy means the future of Big Tobacco may not be built around one replacement product.
Instead, companies are positioning nicotine pouches, vaping products and heated tobacco as different routes for consumers moving away from combustible cigarettes.
For the tobacco industry, nicotine pouches offer an unusually attractive combination of rapid growth, high margins and discreet use.
For public-health authorities, however, the critical question is different: can the products help adult smokers move away from cigarettes without creating a new generation of nicotine users?
That unresolved tension is likely to shape the next stage of the global nicotine market.
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