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ZYN nicotine pouches dominate the US market. Photo credit: Aphis Marta, CC4.0.
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The content of a nicotine pouch. Photo credit: Jakubdrastich2, CC4.0.
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BAT’s VELO nicotine pouches lead in the European market. Photo credit: Jakubdrastich2, CC4.0.
Nicotine pouch products, as a low-risk tobacco alternative, were introduced in the early 21st century and have gradually gained popularity in markets such as Europe and America in recent years, quickly leading the market trend. According to the 2024 Global Nicotine Pouch Market Blue Book released by 2FIRSTS, global nicotine pouch sales reached US$5.86 billion in 2022 and are expected to soar to US$17.26 billion by 2028, with an annual compound growth rate of up to 31%.
Industry insiders believe that the sudden rise of nicotine pouches is due to stricter global tobacco control measures and increased tobacco taxes leading to a decrease in traditional tobacco consumers, prompting them to seek alternatives. At the same time, major tobacco companies have already invested heavily in the market, laying the foundation. Additionally, as policy pressures increase, the e-cigarette market is shrinking, leading overseas e-cigarette distributors and industry practitioners to seek new product alternatives, further driving the rise of nicotine pouches. This huge market potential has attracted many well-known e-cigarette companies to enter the market, while companies that have not yet entered are actively seeking opportunities.
Currently, the main consumer market for nicotine pouches is concentrated in Europe and America. In the American market, Philip Morris International (PMI) dominates with its ZYN brand, while in the European market, the leading brand is VELO under British American Tobacco (BAT). Now, many Chinese e-cigarette brands like ELFBAR, HQD, and OXBAR are also entering this race.
However, as the market rapidly develops, the complexity of risks such as counterfeit goods and compliance risks associated with it are increasingly highlighted.
Fake ZYN and VELO products found in multiple markets
When searching for “nicotine pouches” (also known as nicotine bags) on popular Chinese e- commerce websites Taobao and Pinduoduo, numerous products from international brands such as VELO, ZYN, and WHITEFOX can be found, with prices mostly ranging from RMB50-60 per box. However, in the IQOS store at Dubai airport, the same brand of ZYN nicotine pouches can be purchased for only RMB24 per box, less than half of the price in the domestic market.
Despite the much higher prices in the domestic market than in specialty stores, not all of these products are necessarily genuine. A senior professional in the nicotine pouch industry revealed that among the well-known nicotine pouch products sold in the Chinese market, there are both authentic and counterfeit versions. He stated that last year, it was still possible to purchase genuine products from well-known brands, but this year it is almost impossible to find authentic items. On the e-commerce platform, 2FIRSTS discovered that merchants commonly described the source of nicotine pouches as “authentic purchased products” or “imported from Hong Kong.” When asked for verification from customer service representatives, they also confirmed that these products were “authentic imports from Europe (or Hong Kong)”.
2FIRSTS purchased a nicotine pouch from a seller claiming to offer “authentic purchasing” services. After professional examination, the product was suspected to be a counterfeit. However, when 2FIRSTS attempted to inquire with the seller, they initially denied that the product was sold from their store. After further questioning, the seller admitted that the product did indeed come from their store and argued that “VELO has multiple versions and does not have anti-counterfeiting labels”.
A veteran in the nicotine pouch industry told 2FIRSTS that the most basic way to distinguish between genuine and fake products is not only to compare product quality, but also to observe the “back seal” – the sealing part on the back of the nicotine pouch. He pointed out that genuine products typically have serrated cut edges on both ends, while the vast majority of counterfeit products have straight cuts and the back seal is directly heat-sealed using a heat press machine, resulting in a smooth and textureless surface. In contrast, genuine products have a grid-like texture on the back seal, which is created by a rolling wheel with patterns. These differences are caused by the variance in domestic and foreign equipment, with most counterfeit products being produced by domestic equipment. Therefore, by examining the characteristics of the back seal, it is currently possible to effectively determine the authenticity of a product.
Counterfeit nicotine pouch products have not only appeared in the Chinese market, but also in Europe, the main market for nicotine pouch consumption. On the internationally renowned social network platform Reddit, many users have reported purchasing what they believe to be counterfeit nicotine pouches. In these complaints, the VELO and ZYN brands are frequently mentioned. Some users even bluntly point out that Europe has become the most rampant region for counterfeit nicotine products.
According to industry insiders, in addition to the afore- mentioned regions, the US and Australia are also hotspots for counterfeit nicotine pouches.
Where do counterfeit goods come from?
The main production location of nicotine pouches was originally in Sweden, but in recent years there has been a trend of gradually spreading to China. According to a person familiar with the nicotine pouch market, there are now nearly 60 domestic production companies in China, with Beijing Shi Qiao Bio- pharmaceutical Co., Ltd. being the most well-known nicotine pouch processing factory.
So, where exactly do the counterfeit nicotine pouches come from? In discussions with several industry insiders, 2FIRSTS has learned that there is a consensus: one source of counterfeit nicotine pouches is China. Informed sources revealed that although there are nearly 60 companies in China producing nicotine pouches, including some that are publicly listed, a significant number of these companies do not have the qualifications to purchase or use nicotine.
The informant confirmed the above views to 2FIRSTS through a certain case. It is understood that a nicotine pouch production company in Bao’an, Shenzhen is currently under investigation, with over 800,000 boxes of nicotine pouch products being seized, including a large number of counterfeit products with international famous brand logos such as ZYN and VELO.
In addition, information provided by some insiders has also revealed the counterfeit practices of some Chinese companies. It is reported that some companies sell “white label” products – products that do not have any brand logos printed on them, allowing customers to label them themselves using label machines. This way, customers can freely choose which brand they want to imitate based on their own needs.
Unlike the diverse shapes of e-cigarettes, nicotine pouches are all packaged in uniform white circular boxes, and the internal spun fabric also has no noticeable differences in appearance. Therefore, different brands of nicotine pouches are only distinguished by the different labels on the outer box, which creates favorable conditions for the existence of “white box” products.
According to sources familiar with the matter, it has been revealed that there are even very well-known nicotine pouch contract manufacturing companies involved in producing “white label” products.
"White label” products also have a certain demand in the market. In a nicotine pouch industry exchange group, there are users looking for companies that can produce “white label” products, and indicating that they need at least 1 million units per month. At the same time, there are also mold manufacturers in the group promoting that they have produced molds for the ZYN brand.
It is understood that the OEM factories for both ZYN and VELO are located outside of China. In addition, the Class 34 trademark for VELO in China belongs to British American Tobacco (Brand) Limited, while the Class 34 trademark for ZYN is still in the application process, with Shenzhen Yinhuo Technology Co., Ltd. as the applicant. Therefore, unless officially authorized, ZYN and VELO products produced within China will be considered counterfeit goods.
According to industry insiders, the frequent occurrence of counterfeit goods is simply due to low costs, high profits, and a strong demand for nicotine pouches in the market, leading to tight supply. It is understood that the wholesale price of a counterfeit nicotine pouch is only RMB8-13, while its retail price can reach as high as RMB40-55, making the profit margin extremely lucrative.
Experts: industrial upgrading causes serious damage
However, is this “quick money-making” approach sustainable? An expert in the emerging tobacco industry warned that this practice would lead to severe mistrust overseas in Chinese-made nicotine pouch products, resulting in high-quality overseas equipment and raw material suppliers explicitly refusing to provide products to Chinese customers. This causes incalculable damage to the industry’s advancement and development.
Experts also indicate that this has caused significant damage to the reputation of well-known overseas brands, as consumers frequently purchase counterfeit products and lodge complaints, which in turn lowers the brand image and exacerbates the phenomenon of inferior goods driving out quality goods.
Counsellor: counterfeiters will face criminal risks
Tang Shunliang, a partner at Tianyuan Law Firm and a senior lawyer in the field of new tobacco products, stated that the actions of domestic nicotine pouch manufacturers imitating internationally renowned brands in the market severely infringe on the trademark rights of others (such as ZYN and VELO), constituting trademark infringement. These manufacturers may also face the risk of producing and selling goods with counterfeit registered trademarks.
Such behavior not only damages the brand’s reputation, but also poses a risk to consumers’ health due to potential issues with product quality, leading to consumer complaints or claims. However, as counterfeit nicotine pouches are primarily exported overseas and the entities being imitated are mostly foreign companies, it is not as easy for them to protect their rights compared to domestic companies.
Tang Shunliang also stated that currently, the tobacco administration enforcement department has begun to inspect the operation of nicotine pouches, mainly focusing on nicotine compliance and regulation, especially in terms of natural nicotine sources. In reference to e-cigarette regulation, there are also significant risks involved. When it comes to trademark infringement, once trademark holders gather evidence and file complaints, lawsuits, or criminal charges domestically, counterfeiters face significant risks. If a certain level of infringement is reached, trademark holders tend to pursue criminal charges, and counterfeiters will face criminal risks.
Overall, the production and sale of nicotine pouches in the domestic market currently face multiple legal risks, and the product attributes and regulatory methods are still unclear.