Joseph Hart 10 July 2024

 

Philip Morris International’s late 2022 purchase of ZYN manufacturer Swedish Match has truly been a mixed bag. The Big Tobacco giant bet on the surge of interest in nicotine pouches, and it looked as if they were at least partly pursuing a pathway that would see them add some harm-reduction products to their portfolio.

However, as we covered a few weeks ago, they halted online sales after receiving a Washington, D.C. subpoena over claims that some of their third-party vendors violated the 2022 Flavored Tobacco and Electronic Smoking Device Products Prohibition Act.

Their woes don’t stop there. As reported in the Wall Street Journal, Swedish Match has been struggling to keep up with consumer demand. Indeed, their sole U.S. factory in Kentucky is “working to add production capacity,” with a spokesman suggesting the issue will not be solved until the end of 2024.

Bloomberg News reported that the situation has left a gap in the market that new companies are trying to fill, with the screeching headline, Zyn Imitators Rush In as Online Sales Halt Worsens US Shortage. Let’s take a look.

So, what’s the problem?

The article is a bit confusing. On the one hand, they’re worried about “a flurry of new pouch brands”, many of which are Chinese-made. Yet, on the other, they report that according to consumer intelligence firm NIQ, retail sales of oral nicotine pouches amount to just $6 million of a nearly $80 billion market. That’s a grand total of 0.0076%.

Of course, as the author points out, retail sales don’t account for online sales. However, without data on the size of the online market or any indication that the internet is the primary way that pouches are sold in the US, it’s hard to share their concerns.

Another part of the article concerns the news that a California-based wholesaler recently displayed some Dennis Rodman nicotine pouches at Houston’s Alternative Products Expo.

When the oddballs at TobaccoFreeKids tweeted about this news with the familiar cry of “illegal nicotine pouches that are clearly targeted toward kids”, perhaps this is what they meant. I don’t know about you, but if I were marketing a product toward kids, my first choice would be a 63-year-old basketballer who peaked in the late 1990s.

Later, the article tries to draw parallels between the Juul debacle and the growth in “illicit” vaping devices. It quotes Steven Callahan, managing director of Altria Group, whom Bloomberg News suggests “leads enforcement measures.” His interest in stopping an unregulated market has understandably more to do with protecting Altria sales than anything else.

No surprise

The FDA’s glacial pace at approving nicotine pouches is costing Americans again. With ZYN pouches thin on the ground for the reasons stated above, the market has created new demand.

However, there are limited approved alternative products available to US pouchers, so an opportunity has emerged for other brands, some of which will be less incentivised to meet regulatory or health requirements.

In many ways, this is just another example of how removing popular products from the market does nothing to eliminate demand. Instead, people will get their nicotine where they can, even if that means rolling the dice on black market products.

At least Bloomberg News’ take on the matter isn’t quite as hysterical as Tobacco-Free Kids take. Their obsession with kids using tobacco-free products continues to defy logic, much like their website, where they make the outlandish claim their work has resulted in a near 50% decline in adult smoking. Yes, that’s what it was, not the availability of vapes and pouches.