Demand for oral nicotine pouches growing fast, British American Tobacco says

Rising global demand for oral nicotine pouches are helping boost sales for cigarette maker British American Tobacco (BAT), which has nudged up its full-year forecast.

The Velo brand is growing the fastest within its so-called “new category”, which includes non-tobacco products like vapes, the business said.

The pouches come in a variety of flavours and strengths and are designed to be placed between the gum and lip so nicotine can be absorbed through the mouth.

Tadeu Marroco, BAT’s chief executive, said he was “excited” by the launch of loyalty scheme Velo Plus in the US.

“Globally, Velo continues to gain volume share in this fast-growing category, driven by the US and our continued leadership position in AME (Americas & Europe),” he said, highlighting a strong performance in the UK, Scandinavia and Poland.

BAT said it was expecting full-year revenues to grow between 1% and 2% following a stronger-than-expected half-year performance. It had previously forecast growth of 1%.

The company continues to make the bulk of its sales from traditional cigarettes, which include the Pall Mall and Camel brands.

It said the segment remained “under pressure” with the volume of sales about 9% lower across the industry over the year to date, but that it was gaining market share for brands including Lucky Strike.

Mr Marroco said BAT’s vape sales were being affected by “illicit” products in the US and Canada, which were driving down sales of legal devices.

BAT has previously warned that customers turning to illegal disposable vapes was hurting sales of its own vape product, Vuse, and urged a government crackdown on the market.