Smokeless continues to shine in the tobacco category, outpacing other segments in dollar sales growth and unit sales increases.
Nearly two-thirds of the 67,000 retailers, including convenience stores, responding to the Goldman Sachs 2023 Q4 “Nicotine Nuggets” survey noticed an uptick in promotional efforts from nicotine pouch manufacturers late last year.
That marketing investment plus a recent history of double-digit sales gains has the industry optimistic for the smokeless category. In fact, respondents expect an estimated 12% growth this year, with the authors noting many businesses plan to commit more of their backbars to pouches.
Sean Bumgarner, vice president for Scrivener Oil Co., already has made extra room for ZYN and On! in all 12 Signal Food Store sites located in Missouri. He is prepared to make additional shifts if necessary.
“There will continue to be new flavors, brands and packages that we will have to incorporate into our space somehow,” he said.
The entire smokeless segment posted impressive numbers last year. According to Circana data from the U.S. convenience store channel, smokeless cashed in on nearly $10 billion for the 52 weeks ending Dec. 31, 2023. Snuff and chewing tobacco, however, lost ground in both dollar and unit sales, while spitless and chewing tobacco alternatives pushed up the segment. Spitless registered a 53.2% increase in dollar sales and 40% in unit sales.
Alternatives grew in dollar sales by more than 35% and boosted unit sales by more than 24%.
Goldman Sachs, using NielsenIQ data from all retail channels, showed ZYN remains No. 1 among pouches by earning $1.8 billion last year. The brand enjoyed a 66% year-over-year gain in dollar sales for the 52 weeks ending Jan. 27. Copenhagen chewing tobacco holds top-earning honors for producer Altria Group Inc., but On! pouches surpass it in sales gains: 95.6% for dollar sales and 49% in units. Rogue also had a good year with an increase of 46% in units for the same time period.
On The Regulation Front
Of course, lawmakers have expressed interest in passing additional regulations on nicotine products, which could dampen the success pouches and other modern nicotine items are currently experiencing.
“So far the legislation is limited to just vapor products, but we see an uptick in attention paid to nicotine pouches,” said Alex Clark, CEO, Consumer Advocates for Smoke-free Alternatives Association. “The popularity of ZYN among adult consumers and celebrities, for example, seems to have caught the eye of New York’s Senator Schumer. In reality, use of nicotine pouches (or white pouches) is extremely low among youth. If anything, the low popularity of white pouches among young people pokes holes in assertions that ‘flavors are a driver of youth experimentation and use of nicotine products.’”