Consumers will continue to increasingly spread usage out over different alternative nicotine products, partly driven by further, stricter vaping regulation coming in across the globe throughout 2022, TobaccoIntelligence predicts.
Usage will also be determined by situation – for example with pouches preferred in situations where exhaled substances would not be convenient. However, heated tobacco will have to make greater educational inroads with consumers who remain unaware of what they specifically want, believe they have very few options to choose from, and tend simply to use the product with greatest availability in their area.
Globally, TobaccoIntelligence predicts stricter vaping regulations will come in across multiple jurisdictions, effectively pushing reduced-risk users away from e-cigarettes to other tobacco alternative. These will range from flavour bans to higher tax rates to stricter marketing authorisation requirements.
For example, a tax directive at European level may bring in a minimum tax for all vape products in the 27 EU member states and political discussions in the European Parliament may well result in restrictions on flavours throughout the region. The European Parliament’s Special Committee on Beating Cancer (BECA) has already given the green light to a cancer report that urges the Commission to assess a ban on selected flavours in upcoming regulations. This report, which it should be noted also says e-cigarettes “could allow some smokers to progressively quit smoking”, is expected to be voted in the plenary session in early 2022 but no date has been scheduled yet.
The introduction of technical regulation is expected in Eurasian Economic Union (EAEU) countries, Russia, Belarus, Armenia, Kazakhstan and Kyrgyzstan. The increase in regulation is likely to have a negative impact on the overall growth rate of the vaping market.
As a result, TobaccoIntelligence predicts that heat-not-burn (HnB) and other alternative nicotine products such as pouches are most likely to benefit – particularly as our analysis reveals consumers do not tend to differentiate in many markets and already tend to switch between products depending on occasion or situation.
This is further backed up by the anticipated increase in availability of these products throughout numerous markets. Recent data from the US Centers for Disease Control and Prevention (CDC) showed that sales of nicotine pouches in the US have risen 300 times higher over the five years since they entered the US market in 2016.
The study, published in the Journal of the American Medical Association (JAMA), examined sales of nicotine pouches from March 2016 to June 2020, revealing that they rose from $709,635 in 2016 to $216.89m in just the first six months of 2020. The increase was from 163,178 units in 2016 to almost 46m units sold in 2020.
This rise is expected to continue. For example, PMI’s chief financial officer Emmanuel Babeau revealed that the company is designing nicotine pouches that will be available possibly in 2022, following the acquisitions of smokeless tobacco company AG Snus and Fertin Pharma, a manufacturer of gums, tablets and other oral products.
He said that he will likely come up with “a clear view on where the company will launch the product in February”. He added that the company was still finalising the launch plan for 2022.
Price reductions are also expected in the US market and other players, such as Swedish Match’s Zyn having had a premarket tobacco product application (PMTA) approved by the US Food and Drug Administration (FDA), could fuel further growth.
Stricter rules on the way
But it is not all positive developments for heated tobacco and other alternatives in 2022.
There has been some notice taken of the rise in popularity of the products and lawmakers are acting accordingly. In the Netherlands, HnB devices are expected to be regulated as tobacco-related products. Stricter advertising rules will apply and plain packaging will be introduced.
In Spain heated tobacco products will be specifically addressed in new regulations on e-cigarettes that could increase taxes but will at the very least provide specific regulations on them. Nicotine pouches may also be included in this bill.
The EAEU will introduce common technical regulations for heated tobacco as well as e-cigarettes, while Belarus and Armenia are expected to join Russia, Kazakhstan and Kyrgyzstan in banning nicotine-containing pouches.
In Ukraine, heated tobacco will fall under a new bill that was signed into law earlier this year and will come into force in 2023. It will introduce regulation similar to the EU Tobacco Products Directive (TPD) for both heated tobacco and e-cigarette products.
Denmark will see a tax on nicotine pouches come into force in July with the objective of deterring youth use. The government is also expected to propose further increase in heated tobacco rates for 2023.
– Freddie Dawson TobaccoIntelligence staff
Photo: Hernán Piñera