January 12, 2021
While vape and heat not burn have hogged the attention in recent years, oral nicotine products will be growing fast in 2021. Tom Gockelen-Kozlowski reports
Last year will go down – here’s hoping – as something of an anomaly. How can you make a detailed sales analysis of period in which toilet rolls and hand sanitiser suddenly became many stores top selling SKUs?
Yet, despite this, some trends did emerge in 2020 that store owners should be aware of. Perhaps the clearest of all is the rise of the oral nicotine market.
According to JTI, the category ended the year worth almost £400,000 a month in the UK and this speedy level of growth for a new product segment is predicted to continue in the year ahead.
Stephane Berset, JTI’s head of marketing, says: “Since its launch in 2019, we have seen our Nordic Spirit brand go from strength to strength as more smokers and vapers look for alternative nicotine products. This rapidly evolving category, already worth £380,410 a month, presents retailers with a huge profit opportunity, and we would urge retailers nationwide to incorporate Nordic Spirit into their offering as the category continues to flourish.”
BAT, meanwhile, says that it expects mammoth category growth of 70 percent in 2020 to continue. The firm’s Nielsen data suggests this growth included a gob-smacking 3,000 percent hike in traditional retail.
Numbers like these have inspired substantial investment from tobacco suppliers, with brands such as JTI’s Nordic Spirit, BAT’s VELO and Imperial’s ZoneX collectively holding the lion share of the oral nicotine category’s sales. Alongside these brands other names have also emerged, however. Swedish Match has brought its ZYN range to the UK, with major retailers such as Sainsbury’s and Waitrose supermarkets listing the brand as well as a growing number of forecourts, vape shops and convenience retailers.
Brands such as Zyn and VELO, meanwhile, arrive in the UK with an established pedigree in the US where the oral nicotine market is already a diverse and recognised part of the non-tobacco nicotine products category.
So, what does this sector offer that vape and heat not burn doesn’t? According to BAT its ease-of-use and flexibility: “There’s no mess, no smoke, no smell, which means VELO can go anywhere with you. Pair that with the fact it’s hands free and an instant and long-lasting experience.”
This means users can get their nicotine ‘hit’ whether they are in the gym, the office or even on an aeroplane.
The benefits that nicotine pouches offer consumers mean that, for one major brand at least, it is younger consumers who are its target market.
“With our prime target consumer age being 25 and 35 years old, VELO slots perfectly into the busy lives of those who don’t always have the time in their routine for a ‘nicotine break’. To be enjoyed anytime, anywhere, our VELO pouches are designed to work seamlessly alongside the lives of the on-the-go adventurers, the ones who want to avoid interruptions or inconveniences to their busy, day to day lives.”
To attract this demanding customer base, brands have invested in a set of trend-focused flavours that – in their breadth and sophistication – mirror that of the vape market.
JTI most recently launched an Elderflower variant for Nordic Spirit, which sits with Bergamot Wildberry and Mint flavours. BAT’s VELO range, meanwhile, includes Freeze, Ice Cool, Tropic Breeze, Polar Mint, Urban Vibe and Ruby Berry.
Swedish Match, meanwhile, launched a coffee-flavoured Espressino flavour last year to complement a range that includes Citrus, Cool Mint and Spearmint varieties.
Paola Midence, European brand and trade manager at Swedish Match says: “Espressino is the natural pick for consumers who prefer their nicotine buzz alongside the rich flavours of freshly roasted coffee, with notes of chocolate, nougat and vanilla. The newest addition is ZYN Espressino 6 mg nicotine per pouch giving consumers the option of an extra strong experience.
Finally, Imperial’s ZoneX product comes in a Fresh Mint flavour.
To say that major manufacturers are ambitious in their plans for the nicotine pouch category would be an underestimate. “We continue to see oral products becoming the product of choice for adult nicotine consumers, which is why we have invested significantly VELO,” says a BAT spokesperson. “We have always been at the forefront of innovation in the next generation products and we are delighted that this is reflected in VELO’s ranking as the number one nicotine pouch in Scandinavia.”
For any new category, one major challenge for store owners is developing a successful strategy for category management. As stores refocus on store management after the impact of coronavirus and more data comes in on the sale of these products in 2021, this will become a priority.
As with many categories a well-thought-through display that brings together leading brands is essential according to BAT. “Bring your modern oral product range together in a great display solution, as offered by the VELO gantry. If products and categories are scattered across the shop, your display may become disjointed and create confusion for retailers, staff and consumers alike.”
Some brands, meanwhile, will benefit from wider vape and next generation sales strategies. JTI, for example, is bringing display solutions to stores that include its Ploom heat-not-burn device and Logic vape range.
Keith Goggin, merchandising design lead manager at JTI says: “When it comes to next-gen displays, we know that for some retailers space can be an issue, which is why we have a large catalogue of vape franchise models available. These range from more semi-permanent display units – such as counter-top and on-shelf vending solutions – to our newly designed full category management solution that we are currently piloting.
“Our new category management solution, incorporates the entire category, including vaping and next-gen nicotine products, whilst also allowing for changes in configuration. Available in a variety of widths including 1, 1.2, 1.5 and 2m, these solutions are available free-of-charge for proactive retailers that are willing to comply with planogram terms and agree to keep the equipment for five years.”
With supplier support, greater category management insight and sales figures that suggest consumers are positively responding to the rise of this sector, nicotine pouches look to be secured as a welcome piece of good news for the year ahead.
How to grow your profits from nicotine pouches in 2021
Stock a range of major brands
Brands with big budgets behind them and growing distribution include VELO, Nordic Spirit, ZYN and ZoneX. Make sure you can offer your customers the brands they want.
Spend time building the right display
For a fast-changing and still-new category such as this, having a clean, clear and easily navigable display is essential for success.
Offer a broad range of flavours
As with the vaping sector, the pouch market offers consumers the opportunity to choose between a range of on-trend flavours.
Work closely with sales reps
As distribution grows, firms are getting more insight on how to effectively grow sales. Utilising the expertise of reps will help perfect your category management.
Be ready to answer your shoppers’ questions
Ensure you and your team are on hand to offer advice on the advantages of using nicotine pouches and how, importantly, shoppers are supposed to use them in the first place.