The US Nicotine Market (by Product & Distribution Channel): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)

The US Nicotine Market (by Product & Distribution Channel): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)

Market Insight:

Nicotine is a chemical that is present in all tobacco products as well as some e-cigarette liquids. It is a highly addictive substance found in tobacco plants. Using any tobacco product can lead to nicotine addiction. When nicotine enters the body, it stimulates the production of endorphins, which are chemicals that help to relieve stress and pain and improve mood.

Given the increased marketing of various unique goods such as cigars and cigarillos, as well as next-generation products, demand for nicotine products is predicted to expand steadily over the next five years. The US nicotine market is expected to reach US$91.78 billion in 2023, growing at a CAGR of 4.78%, during the forecast period. Furthermore, the US nicotine market by volume is anticipated to reach 18.22 billion pieces in 2023.

Segment Covered:

• By Product: In terms of product, the report provides insights of the US nicotine market into five segments: cigarette, vaping products, moist snuff tobacco (MST), cigar & cigarillos and nicotine pouches. In terms of both value and volume, cigarette segment held a maximum share in the market, followed by vaping products. The future of the vaping market looks promising with the rising awareness about vaping products being safer than traditional cigarettes, especially among the younger population. On the other hand, the nicotine pouches segment is expected to grow at a significant CAGR in the forthcoming years owing to the growing interest in alternative products.
• By Distribution Channel: The report further provides the bifurcation of the market into two segments based on the distribution channel: Offline and online. The offline segment held a largest share in the market. Both small and large-scale companies sell their products through offline retail channels due to a large consumer base such as in grocery stores. The online channel is expected to register the highest CAGR during forecasted years owing to increase in spending on advertising and promotion by leading players operating in the market, thus offering significant growth to the segment in the forthcoming years.

Top Impacting Factors:

Growth Drivers

• Upsurge in Working Population
• Growing Popularity of E-Cigarettes
• Shift Towards Next Generation Products
• Peer Influence on Youngsters

Challenges

• Increasing Taxes on Tobacco Products
• Harmful Effects of Nicotine

Trends

• Increasing Influence of Social Media
• Escalating influence of Partying and Pop Culture
• Strong Penetration of Organized Retail Network
• Rising Popularity of Tobacco Free Oral Nicotine
• Driver: Upsurge in Working Population

A huge demand for nicotine products comes from people falling in the 15-64 years age brackets. This is because this range of demographics consists of people with diversified tastes, high purchasing power and exclusive preferences. As the lifestyles are centered around work and offices, stress and anxiety levels are growing among working individuals, which leads to growing consumption of stress relieving agents such as nicotine. Moreover, various nicotine products such as vaping products and moist snuff tobacco can be used indoors as these do not do not produce tar or carbon monoxide, two of the most harmful elements in tobacco smoke. Thus, an upsurge in working population indicates increase in demand for nicotine products, which in turn, provided a boost to the overall market growth.

• Challenge: Harmful Effects of Nicotine

Nicotine addiction is a primary cause of preventable death in the United States. The Center for Disease control estimates that nearly 480,000 premature deaths can be attributed to tobacco abuse in the US every year. Tobacco is addictive largely due to one of its active substances – nicotine. Nicotine is a parasympathomimetic substance that is found in cultivated tobacco plants (Nicotiana tabacum) and is as addictive as cocaine and other illegal substances. The only difference here is that nicotine is not illegal. Nicotine addiction includes properties such as Psychoactive effects, Compulsive use, Quick relapse, Drug-reinforced behavior, Tolerance, Physical dependence. Nicotine can act as both as a stimulant and a sedative, depending on the quantity one ingest. Nicotine has adverse effects on every bodily system. Some of these develop over time but some are present with every dose of nicotine one take.

• Trend: Rising Popularity of Tobacco Free Oral Nicotine

A novel class of oral nicotine pouches that contain a nicotine powder instead of tobacco leaves has recently emerged; these pouches often contain non-tobacco flavors (e.g., fruit) with known appeal to youth. These products have become popular among youth after e-cigarette. A survey of more than 3,500 high school students in Southern California found that flavored chewing gum, lozenges, gummies and other oral products that contain nicotine but not tobacco were the second most popular nicotine items among adolescents, after e-cigarettes. In addition to gummies and lozenges, the oral products included tablets and nicotine pouches (small bags of powder placed under the lip.) The products come in flavors like cherry, fruit medley, and pomegranate, and are labeled tobacco-free. But they aren't approved or advertised as alternatives to help people quit smoking. The popularity of oral tobacco free nicotine gummies and lozenges is expected to sustain during projected years thus, maintaining a stable demand in the coming years.

The COVID-19 Analysis:

With rising number of deaths creating a havoc and people forbidden to leave their homes except to obtain basic necessities and healthcare, lockdown policies across the US created a lot of stress and anxiety in the minds of people. This lead to a rise in smoking among people owing to the negative impact of COVID-19 on mental health of individuals because of job loss, rising number of deaths and all day confinement inside the house. People started consuming nicotine through next generation products such as vaping and heated tobacco products.

Analysis of Key Players:

The US nicotine market is concentrated due to the presence of a relatively small number of market participants. Altria is the market leader in Tobacco products and held a dominant share of the total nicotine industry. The key players in the US nicotine market are:

• Imperial Brands PLC
• British American Tobacco P.L.C. (BAT)
• Philip Morris International Inc. (PMI)
• Altria Group Inc. (Altria)
• Turning Point Brands Inc.
• Scandinavian Tobacco Group
• Swedish Match AB
• Swisher
• Vector Group Ltd.
• JUUL Labs, Inc.

Altria is the US market leader with through its leadership in the cigarettes and MST segment. The Altria’s share is expected to decline during forecasted years due to an unfavorable shift within the market to segments where Altria under-indexes, such as vaping, and some loss of share within the cigarettes and MST segments. The Vapor category has experienced rapid changes in share and market leadership, with JUUL's leadership position eroded since its 2019 peak by strong BAT share gains led by Vuse Alto. On the other hand, JUUL by comparison is expected to witness its value share of the market to rise by 2025 despite losing share in the US vaping segment.