The vape, vapor, and e-cigarette industry is witnessing a significant shift in the nicotine pouch market, with VELO emerging as a strong contender against established brands like ZYN. According to the latest report from market research firm Nielsen, VELO has seen a remarkable surge in sales, capturing 10% market share in the most recent week ending February 22, 2025. This growth is driven by the increasing consumer acceptance of VELO Plus and the brand’s aggressive retail expansion. Meanwhile, ZYN, once the dominant player, is experiencing a slowdown in growth, raising questions about the future of nicotine pouch competition in the US market.

This article explores the factors behind VELO‘s rise, the challenges faced by ZYN, and the broader implications for the vape and nicotine pouch industry.

VELO’s Remarkable Growth: A Closer Look

Market Performance

• Four-Week Sales Growth: VELO’s sales surged by 185% year-over-year in the four weeks leading up to February 22, 2025.
• Market Share: The brand’s market share reached 7.9% over the same period, with the latest week hitting 10%.
• VELO Plus: The newly launched VELO Plus has been a game-changer, contributing 5.4% to the brand’s market share in just 12 weeks since its introduction.

What Sets VELO Plus Apart?

VELO Plus has gained popularity due to its unique features:

• Larger and Softer Pouches: Compared to traditional “dry” ZYN and regular VELO products, VELO Plus offers a more comfortable user experience.
• Higher Moisture Content: The increased moisture level enhances the flavor and nicotine release, appealing to consumers seeking a more satisfying experience.
• Retail Expansion: VELO’s strategic placement in retail stores has made it more accessible to consumers, further driving its growth.

The success of VELO Plus aligns with the earlier statements from British American Tobacco (BAT), the parent company of Reynolds American, which owns the VELO brand. BAT has been actively investing in innovation and marketing to strengthen VELO’s position in the competitive nicotine pouch market.

ZYN’s Slowing Growth: What’s Happening?

Market Performance

• Year-Over-Year Growth: ZYN’s sales grew by 13.2%, significantly lower than VELO’s 185%.
• Market Share: ZYN’s category share has dropped to 55%, according to NielsenIQ data.

Discrepancies in Data

While NielsenIQ reports a decline in ZYN’s market share, Philip Morris International (PMI), the owner of ZYN, claims that its category share is 10 percentage points higher (approximately 65%) based on data from Circana. PMI also argues that ZYN’s growth rate outpaces the overall nicotine pouch category in the US.

Possible Reasons for Slowdown

• Market Saturation: As the first major player in the nicotine pouch market, ZYN may be facing saturation, with fewer new customers to capture.
• Increased Competition: The rise of VELO and other brands has intensified competition, diverting consumer attention and loyalty.
• Innovation Gap: ZYN’s traditional “dry” pouch format may be losing appeal as consumers gravitate toward newer, more innovative products like VELO Plus.

The Broader Implications for the Vape and Nicotine Pouch Industry

1. Shifting Consumer Preferences

The success of VELO Plus highlights a growing demand for innovative and user-friendly nicotine products. Consumers are increasingly seeking alternatives to traditional smoking and vaping, and nicotine pouches offer a discreet and convenient option.

2. The Role of Innovation

VELO’s rapid growth underscores the importance of product innovation in staying competitive. Brands that invest in research and development to create superior products are more likely to capture market share and retain customer loyalty.

3. Retail Strategy Matters

VELO’s aggressive retail expansion has played a crucial role in its success. By making its products widely available, the brand has increased its visibility and accessibility, driving sales and market penetration.

4. Regulatory Landscape

As nicotine pouches gain popularity, regulators may turn their attention to this category. Brands must stay ahead of potential regulations by ensuring product safety, transparency, and compliance with local laws.

The Future of Nicotine Pouches in the US

The nicotine pouch market is poised for continued growth, driven by consumer demand for smoke-free and vape-free alternatives. However, the competition is becoming increasingly fierce, with brands like VELO challenging established players like ZYN.

Key Trends to Watch

• Flavor Innovation: Consumers are drawn to a variety of flavors, and brands that offer unique and appealing options are likely to gain an edge.
• Health-Conscious Products: As awareness of health risks grows, brands that emphasize harm reduction and product safety will stand out.
• Digital Marketing: Social media and online platforms will play a crucial role in reaching younger consumers and building brand loyalty.