Smokeless tobacco remains one of the best-performing segments in the overall tobacco category. With more consumers becoming interested in these products, the segment is likely to see even more growth for the remainder of 2024.
For the 52 weeks ending April 21, smokeless tobacco came in strong with $10.4 billion in dollar sales, a 14.1% increase, according to Circana. Unit sales also showed significant growth at $1.55 billion, which is a 10.1% increase for the same period.
“I expect to see growth in the smokeless market through 2024 in both volume and variety, driven mainly by pouches,” said Alex Clark, CEO of Consumer Advocates for Smoke-free Alternatives Association.
Movement Fuels, operator of 34 c-stores throughout Texas, also expects the smokeless category to see forward momentum.
“There is a lot of room for growth in this category, especially now that more consumers are finding out about these products and choosing them over traditional tobacco products,” said Imran Ali, co-founder of Movement Fuels.
“We have a projected year-over-year increase of approximately 12-15% within the smokeless category,” added Tim Greene, director of tobacco and general merchandise for Boulder, Colo.-based Smoker Friendly, which operates 290 convenience stores in 13 states.
Although many retailers are seeing growth within the smokeless category, others have a different outlook.
Mike Wilson, chief operating officer for Cubby’s, which has 41 c-stores in South Dakota, Iowa and Nebraska, noted that he expects smokeless sales to be down as much as 30% because consumers are moving to cheaper, lower-quality moist products.
Regulatory Viewpoint
Even though, at the moment, there are no proposed federal rules pending to ban flavors in smokeless tobacco like there are for menthol cigarettes and flavored cigars, smokeless has received some regulatory attention lately.
U.S. Senator Schumer held a press conference in January calling for federal action to crack down on ZYN nicotine pouches due to their alleged youth appeal.
There are also some states seeking to ban flavors in all tobacco products, which would include smokeless tobacco.
At the moment, the states looking to potentially ban flavors in all tobacco products include Michigan (total flavor ban), Minnesota (total flavor ban), New York (adding oral nicotine pouch products to vapor flavor ban) and Pennsylvania (total flavor ban), according to David Spross, executive director of the National Association of Tobacco Outlets.
The states that have defeated flavored tobacco bans include Hawaii, New Mexico, Colorado, Maine and Vermont.
Along with keeping an eye on regulatory factors that could affect smokeless products, retailers must keep tabs on other potential hurdles, including the popularity of these products amongst youth.
“While smokeless is historically unpopular with youth, the advent of perceived lower-risk products may change that,” said Clark. “So far, it hasn’t happened, but trends in adult use may affect curiosity among youth. As companies enter the category, special attention needs to be paid to marketing, specifically branding and flavor descriptions.”
Clark also mentioned that while there is no established threshold of youth experimentation that will trigger aggressive action from the Food and Drug Administration, a real or perceived spike in use could set off alarm bells with regulators.
Taking on Smokeless Trends
When consumers enter a convenience store to purchase smokeless tobacco products, they are looking for certain factors to determine their purchasing decisions.
“Similar to what we saw in vaping, consumers are looking for a variety of flavors other than tobacco, a range of nicotine strengths and affordability,” said Clark.
Spitless tobacco is a smokeless segment that performs exceptionally well in convenience stores, outperforming both snuff and chewing tobacco products.
Spitless tobacco reached $3.41 billion in dollar sales, a 63% increase for the 52 weeks ending April 21, per Circana. Unit sales increased to $620 million (up 49.4%) for the same period.
Snuff, on the other hand, stayed relatively flat with a 0.5% decrease in dollar sales but dropped 6.5% in unit sales, while chewing tobacco slightly fell 3.8% in dollar sales and 1.2% in unit sales for the 52 weeks ending April 21, as specified by Circana.
However, nicotine pouches remain the most purchased smokeless tobacco product amongst tobacco/nicotine consumers.
The global nicotine pouch market size is expected to reach $22.98 billion by 2030, expanding at a compound annual growth rate of 35.7% from 2023 to 2030, according to a new report by Grand View Research Inc.
“I think the most obvious trend is the visibility and growing popularity of nicotine pouches and other smokeless analogs that don’t contain tobacco leaf. There also appears to be a number of vapor companies that are expanding into pouches,” said Clark.
“We are seeing a lot of people moving from chewing tobacco towards products like ZYN,” added Movement Fuels’ Ali. “We are also seeing people who smoke cigarettes move to smokeless because it’s cheaper.”
Smoker Friendly, as well, has seen a rise in nicotine pouch purchases, with customers looking for cleaner nicotine formats.
“Within the category, we’re seeing a demand for different nicotine levels from the traditional six-milligram and three-milligram offerings,” said Greene.
Retailers have also seen the way inflation has impacted how consumers are buying their smokeless tobacco products.
“The main demand that we see is customers looking for lower-cost alternatives as the costs of major brands increase,” said Cubby’s Wilson.
The Future of Smokeless
The remainder of 2024 and the start of 2025 look bright for smokeless tobacco as more consumers are taking notice of nicotine pouches, other products and brands that are coming out with new innovative flavors and ideas.
With the ever-changing demands and trends from consumers, retailers are starting to become picky when it comes to what stays on the backbar and what goes.
“We are cutting SKUs; cutting back on variety by removing slower-selling, non-returnable products,” said Wilson. “Where we used to keep a large variety of SKUs on hand to service the infrequent customer, we are moving to a more uniform set across the chain. One where we can try new items or brands and quickly remove them if they don’t do well.”
Smoker Friendly has expanded its nicotine pouch offering, giving its customers a wider variety of brands, nicotine strengths and flavors to choose from.
Movement Fuels has also begun rethinking its backbar setup and how it can showcase new smokeless products.
“At first, we were just carrying a few SKUs of ZYN, Rogue, on! and other brands,” said Ali. “Now, we are heavily focusing on whether there is a new product out, and we want to make sure we have it on our shelves.”
