Mouth bag compound annual growth of 30%, the domestic nicotine mouth bag will be a new air mouth?

In November 2022, when the eyes of most new tobacco-related practitioners in China were still locked in the latest trend of the introduction of electronic cigarette consumption tax, a big deal that shook the new tobacco industry was finally reached, causing many overseas investors to discuss:

Philip Morris International (PMI) successfully acquired Swedish Match for approximately $16 billion to advance its future plans - from the current 67.9% contribution of combustible tobacco to smokeless tobacco revenue dominance by 2025. The potential of Swedish Match as a manufacturer of Zyn nicotine bag heads with a global share of 40% has led more investors to look at this new track.

From a global perspective: the overall global market size of nicotine bags in 2022 reached 1.98 billion US dollars, based on the current growth forecast, the compound annual growth rate of nicotine bags from 2022 to 2030 will remain at more than 30%, which can be called a rocket rise.

After the relevant combing and analysis, we found that as a new nicotine alternative, nicotine bags are likely to become the next category with great growth potential after electronic cigarettes.

What's a nicotine bag?

In fact, in the current Chinese Internet environment, reports on nicotine bags are extremely limited, and there is no unified name, some people confuse it with lip smoke, and some people call it oral smoke. In order to make it easier to understand the difference, we uniformly call it nicotine mouth bag.

EGP, a domestic nicotine bag brand, introduced to us that the current mainstream nicotine bag was launched in the United States in 2015, and in addition to nicotine salt, it will add the necessary ingredients including flavoring agents, stabilizers, fillers, sweeteners, etc., to achieve the slow release of nicotine and flavor (generally a nicotine bag lasts 15 to 30 minutes). Avoid the harmful effects of tobacco ingredients on the mouth.

In terms of packaging specifications, according to EGP Hankang Technology, we introduce that it uses the current market mainstream double-pack form of sales, from the lower layer after use by the upper layer of storage, a can containing 20 small bags of nicotine bags, currently providing more than ten flavors

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These tobacco-free nicotine packs are now the dominant category of oral nicotine products in the United States.

Nicotine mouthpacks do not contain tobacco, and nicotine is absorbed faster through the lining of the mouth and the blood. It not only reduces the combustion and atomization hazards in traditional cigarettes and e-cigarettes, but also breaks social restrictions and is a new nicotine replacement solution.

How hot are nicotine packs?

Were it not for the promising growth of nicotine packs, Swedish matches would never have been gobbled up by PMI at a valuation of about $17 billion. So, how popular are nicotine bags in overseas markets? We can make a simple feeling through the following set of data.

According to the U.S. Centers for Disease Control and Prevention (CDC), sales of nicotine packs have increased 300-fold in the five years since they were officially launched in the U.S. market in 2016. The American Cancer Society reported in November 2022 that the use of nicotine packs in the United States has doubled every year since 2019. Compared to the last five months of 2019, sales of nicotine packs increased by 700% in the first three months of 2022 - and the growth rate continues to improve.

At present, the so-called "four major multinational tobacco companies" have already laid out nicotine bag product lines. The first share of Zyn comes from Swedish Match, which was acquired by PMI above, followed by on! Third place Velo is owned by British American Tobacco. Imperial Tobacco and Japanese Tobacco International have also laid out their own nicotine bag product lines (as shown below) :

According to Zyn's official data, it sold 6 million cans in the first quarter of 2019, and two years later this figure rose to 37 million, an increase of 516% - Swedish Match data in October 2022 shows that it accounted for nearly two-thirds of nicotine pack sales in the United States last year.

After combing through the official statements of major multinational tobacco companies, we found that most of them define it as part of the "non-combustible tobacco product portfolio" - that is, as heated cigarettes and vaped e-cigarettes, to meet the needs of different users.

Why are nicotine packs on fire?

There are at least three reasons for the popularity of nicotine packs.

One is derived from nicotine replacement therapy; The so-called alternative therapy is to obtain nicotine in a non-tobacco form, commonly nicotine chewable tablets, sprays, patches. Smoking addiction is difficult to quit, in addition to the addiction of nicotine itself, but also because "smoking" has become a habitual action. The nicotine bag no longer delivers nicotine into the lungs through aerosols, which further reduces the addictive factor.

A consumer research report published by Northerner.com and NicoKick.com found that 43% of people who started using nicotine bags cited "trying to quit" as the main reason. Among consumers who have used nicotine packs to quit smoking, 93 percent said they "feel better" after switching to nicotine packs.

Second, higher convenience and lower disturbance; Compared with traditional tobacco, nicotine packs do not need to be lit or recharged; And it does not exist combustible tobacco and electronic cigarette aerosols, reduce the degree of disturbance in social occasions, but also can be used in non-smoking public places.

Third, relatively inexpensive nicotine replacement programs; In terms of the same nicotine intake, compared with the current mainstream domestic experience program - national standard e-cigarettes, the use of nicotine bags is usually lower: on the one hand, there is no cigarette expenditure, and the packaging of a can of 20 bags can also relatively more accurately control the intake of nicotine.

For the domestic market, nicotine mouth bags may also have another potential advantage: different from the decorative properties of electronic cigarettes and the visual experience of puffing smoke, nicotine bags, both the product and the use process, are more personal, relatively difficult to cause the crowd effect of teenagers as a "social currency", and it seems that the risk of causing the problem of youth flooding is lower.

How is the development of nicotine bags in China?

Just as the development of the domestic e-cigarette market lags behind that of overseas, so do nicotine bags. At present, the traditional lip smoke has a relatively fixed group of users in China, but it is currently limited to a few online shops and wechat business to form a niche circle, and the consumer group of nicotine bags is more limited, mostly for people with study abroad and overseas working background.

According to statistics in 2022, the global nicotine bag market has reached nearly $2 billion, but the domestic market is still in its infancy, and the market potential of adult cigarette groups is large.