South Korea's nicotine pouch market on the cusp: new opportunities under policy dividends and consumption upgrades

Ⅰ. Market status: in the initial stage, potential is beginning to emerge

Although the South Korean nicotine pouch market is still in its infancy, its growth potential has attracted global attention.

Policy openness and influx of foreign capital: In recent years, South Korea has adopted policies such as the revised Foreign Investment Promotion Act to provide tax exemptions for foreign-funded enterprises (such as exemption of corporate tax for the first three years of cross-border e-commerce), attracting companies including Chinese brands to quickly deploy by registering South Korean companies.

Diversified consumer demand: South Korea's young population (under 30 years old) has a high acceptance of new consumer goods. According to data from 2025, the size of South Korea's e-commerce market will exceed US$170 billion, and the growth rate of beauty, smart home and other categories will exceed 40%, providing a market foundation for sub-categories such as nicotine pouch.

Duty-free channel advantages: South Korea's duty-free market accounts for one-third of the world's total, and the sales of duty-free shops in the city account for as much as 81%. This channel may become an important entry point for nicotine pouch to reach international tourists.

Ⅱ. Driving factors: policies, logistics and localized operations

1. Release of policy dividends

The South Korean government has significantly reduced corporate operating costs through tax incentives (such as a 50% reduction in income tax) and the "tax refund upon departure" policy for cross-border e-commerce, attracting foreign companies to register local companies.

2. Upgrade of logistics infrastructure

The "12-hour economic circle" between China and South Korea has taken shape (such as the Weihai-Incheon express ship), and the customs clearance time has been shortened by 60%. Enterprises can adopt the "South Korean warehouse + Chinese supply chain" model, reducing logistics costs by 25%, helping nicotine pouch to enter the South Korean market efficiently.

3. Localized marketing strategy

The penetration rate of live e-commerce in South Korea exceeds 53%. Chinese brands have entered platforms such as Temu and AliExpress through localized companies, combined with KOL marketing and celebrity endorsements, with a user growth rate of 7.9% and a conversion rate of 15%.

Ⅲ. Challenges and risks: Regulation and competition coexist

Regulatory uncertainty: South Korea's regulations on new tobacco products have not yet been fully clarified, and we need to pay attention to future policy trends, such as environmental certification, KC certification and other compliance requirements.

International giant competition: Multinational companies such as Philip Morris International and British American Tobacco have seized the market through acquisitions or self-developed products. Local companies need to accelerate technology upgrades (such as slow-release nicotine technology) to cope with competition.

Ⅳ. Future Trends: Healthy Demand and Global Layout

Healthy Consumption Wave: Korean consumers have a surge in demand for low-harm tobacco alternatives, and smoke-free and tar-free nicotine pouch (especially nicotine pouches) have grown significantly. In 2023, global modern nicotine pouch sales will surge 61.1% year-on-year.

Global Supply Chain Integration: As a hub in Northeast Asia, South Korea can rely on the China-South Korea Free Trade Agreement and RCEP to become a springboard for snus to radiate the Japanese, Korean and Southeast Asian markets.

Growth Expectations for 2030: The global nicotine pouch market is expected to reach US$23.6 billion, with a compound annual growth rate of 35.8%. The Korean market may take advantage of this opportunity to become a growth pole in the Asia-Pacific region.

Ⅴ. Recommended actions for enterprises

1. Compliance first: Prioritize the registration of a joint-stock company (registered capital of 100 million won), assign a Korean representative director, and quickly pass the KC certification.

2. Channel diversification: Combine cross-border e-commerce platforms (such as Coupang), duty-free shops and live e-commerce to create an omni-channel sales network.

3. Localized innovation: Develop flavors that meet the preferences of Korean consumers (such as herbal and fruity flavors), and use local MCN institutions to train bilingual anchors to strengthen brand awareness.

Conclusion

The Korean nicotine pouch market is at the intersection of policy dividends, consumption upgrades and global layout. Although challenges remain, with its efficient logistics network, young consumer groups and duty-free channel advantages, this track may become the next "golden window" for Chinese brands to go overseas.