As the nicotine industry continues its transformation so does the retail landscape for nicotine products globally. This report explores the latest developments in nicotine distribution including the performance of key channels such as small local grocers, convenience retail and discounters while looking forward to the potential future for distribution in the industry such as e-commerce or the evolution of the nicotine specialist store.
Delivery
This report comes in PPT.
Key findings
Nicotine retail landscape slowly evolves partially driven by product changes
The retail landscape for nicotine products is distinct from other FMCG industries, facing increasing legislation on point-of-sale displays and availability. The market is mainly physical and evolves slowly due to these constraints and impulse buying behaviour. However, there is a shift towards reduced-risk products (RRPs) and changing shopper trends in categories such as nicotine pouches. Companies such as BAT and PMI are adopting omnichannel strategies to combine physical retail with e-commerce for direct-to-consumer sales. Both formats also contend with challenges from illicit distribution, particularly within e-vapour products.
Convenience retail and discounters are the fastest growing channels globally
Convenience retailers saw modest growth, mainly driven by strong performance in Asia Pacific, particularly China and Vietnam, which experienced over 32% annual volume growth. Conversely, North America faced a 4% decline over the last five years. Convenience stores are shifting focus to RRPs instead of traditional tobacco products. Discounters thrived in Turkey and Poland, capturing 23% and 21% of volume, respectively, as consumers seek cheaper options amidst rising taxes. In contrast, small local grocers and supermarkets are losing volume as more sales shift to convenience stores and e-commerce, partially aligned with more broad retail trends where the combined share of these channels is decreasing.
E-commerce loses momentum due to regulatory pressures
E-commerce has seen rapid growth, although this has recently slowed due to regulatory pressures limiting product availability. Companies are shifting towards advanced e-commerce platforms and direct-to-consumer strategies while adapting to complex regulations, utilising age verification technologies and alternative supply chains. However, e-commerce has also been a key driver in illicit sales, particularly in the e-vapour market.
Key findings
Key facts to share
Coverage and definitions
Volume growth for the total industry, with positive tailwinds
Regional dynamics fuelled by socioeconomic tensions
Geographic expansion is a key component of growth
Channel shifts: Retail offline vs retail e-commerce
Modernisation is the key element in offline retail
Industry distribution realigns slowly
Asymmetrical landscape of tobacco product distribution
Convenience retail benefits from industry transformation
Balancing modern, traditional and specialist retailers
Netherlands and Saudi Arabia limit channels for Nicotine
Belgium: Tobacco products can no longer be displayed at points of sale
Regulation and consumer demand shape e-commerce growth
E-commerce growth correlates with new product categories
HAYPP Group: Expanding Scandinavian success beyond home turf
Q-commerce and s-commerce are the next frontiers for nicotine distribution
Key findings
Distribution and product landscape will be linked in the medium term
Nicotine data contains total nicotine volumes including e-vapour
Tobacco
Passport Tobacco covers the seven major tobacco categories: Cigarettes, Cigars & Cigarillos, Smoking tobacco (made up of Pipe tobacco and RYO tobacco), Smokeless Tobacco (snuff and chewing tobacco), E-Vapour Products (closed and open); Heated Tobacco; and Tobacco Free Oral Nicotine. Smoking paraphernalia such as pipes, rolling papers, lighters or matches, etc., are not included, nor are nicotine replacement therapy (NRT) products, which are part of Euromonitor's Passport Consumer Healthcare database.
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