Tobacco

Retailers Reveal Insights on Nicotine Pouches

New ‘modern oral’ category shows early promise for panelists at TPE convention
Photograph by CSP Staff

LAS VEGAS With flavored vaping cartridges taking a hit from federal health agencies in January, retailers are struggling to find new sources of revenue in the embattled tobacco category. During the Tobacco Plus Expo (TPE), two convenience-store operators spoke alongside two other speakers about their experiences with nicotine pouches, an emerging new product line that appears to be gaining traction with customers.

Generally, nicotine pouches are increasing in both volume movement and sales, said Jason Carignan, president of Dryft Sciences, Moorpark, Calif., who also spoke on the panel. Citing numbers from New York-based Nielsen, Carignan said the category is expected to become a $400 million business in the United States this year, and is on pace to be 4.5% of all smokeless sales. The Zyn-branded pouch product from Swedish Match, Richmond, Va., has the highest share at 87%.

The new pouch category began emerging in 2011-2013 but was overshadowed by the growth of vaping, Carignan said. The increase in vape usage, however, educated the public about alternatives for nicotine consumption. “It’s no combustion, no tobacco, great flavor,” Carignan said. “It opened minds to the idea that people didn’t have to get their nicotine through tobacco anymore.”

Both Peter Frattarola and Ray Johnson have had nicotine pouches in their stores for a relatively short time, but they both have seen a positive reaction from customers. Frattarola, senior category manager for The Wills Group and Dash In stores, La Plata, Md., said he has had product in his stores since July 2019 and has seen sales sometimes double month to month. He intends to increase the number of brands and products he offers. “It has opened [customers’] minds to a less risky product, and it’s also the ability to customize, have a variance of milligrams, a nicotine percentage,” Frattarola said. “Millennials want to customize.”

Johnson, operations manager for Speedee Mart Inc., Las Vegas, agreed. He has been offering the product for about two years and saw interest from the very beginning. When the chain introduced nicotine pouches, he said, advertising appeared at his pump TV displays before he was able to get the product in the stores. The confusion worked itself out, but Johnson said, “Convenience has always been a dominant supplier of nicotine.”

With the U.S. Food and Drug Administration taking a hard stance on flavored vape with its final guidance on e-cigarettes in early January, emerging products such as nicotine pouches help retailers create business strategies going forward, Frattarola said.

During the Jan. 29 panel session at the Las Vegas Convention Center, Thomas Ericsson, a scientist who participated in the development of many of today’s most popular pouch products, said products ultimately must develop to customers’ tastes. Any new product needs to be “affordable, accessible and attractive," he said. "These must match before you bring a product [to market].”

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