Key Points
- Domestic industry pivots sharply: After explosive expansion in 2024, Chinese nicotine pouch manufacturing saw widespread production cuts and exits by mid-2025, with cooling evident across the upstream and mid-stream supply chain.
- Global demand remains robust: Brands such as ZYN, VELO and on! continued to post strong growth in the U.S. and Europe, with multinational tobacco companies reporting sustained gains in nicotine pouch performance.
- Supply chain restructuring accelerates: Driven by rising international demand, some Chinese manufacturers have begun shifting production plans overseas. Southeast Asia is absorbing capacity through its established manufacturing ecosystems, while Europe is gaining strategic attention due to its proximity to core consumer markets.
2Firsts, November 21, 2025 —In 2024, China’s nicotine pouch industry experienced rapid expansion. A large number of e-cigarette brands, pharmaceutical companies, packaging suppliers and equipment manufacturers entered the sector, seeking to capture what was widely seen as the next major opportunity. From non-woven substrates to filling systems to pouch-forming and packaging equipment, the supply chain took shape quickly.
However, entering mid-2025, the domestic market began to shift. Many nicotine pouch manufacturers reduced capacity or suspended operations, and both upstream and mid-stream segments cooled collectively. Industry activity and the number of active players declined sharply from the previous year.
In contrast to the contraction on the domestic manufacturing side, the global nicotine pouch industry continued expanding at a fast pace. Financial disclosures from multinational tobacco companies and rising consumption in emerging markets show nicotine pouches spreading from the United States and Nordic countries to broader regions worldwide, becoming one of the fastest-growing categories within the tobacco alternatives sector.
Between these two diverging curves, a quiet migration of the supply chain is taking place.
According to early research and long-term observation by 2Firsts, China’s nicotine pouch boom first appeared in late 2023 and peaked in mid-2024. At that time, nearly every major e-cigarette manufacturer considered or entered nicotine pouch production, and almost all mainstream vaping brands launched their own pouch products.
On the supply chain side, multiple equipment manufacturers showcased nicotine-pouch machinery at Shenzhen-area atomization supply chain exhibitions, making it one of the most visited sections of the show that year.
But this momentum reversed quickly in 2025.
“Factories started closing in May, and by the second half of the year almost everything had stopped,” recalled a long-time industry participant who entered the category during its early phase. He is among the earliest group involved in domestic nicotine pouch manufacturing. Now, he said, the number of companies engaged in pouch production has fallen sharply.
While domestic production cooled, the global nicotine pouch sector remained active.
Financial reports from several international companies (Q3 2025 and FY2025 results) show continued strength in nicotine pouch businesses:
· PMI: nicotine pouch shipments doubled; ZYN U.S. sales +39%
· BAT: VELO annual shipments reached 5.36 billion pouches, +33.6% year-on-year
· Altria: on! shipments +14.8% year-on-year; U.S. market share 16.6%
· Imperial Brands: ZONE expanded to around 100,000 U.S. retail points
· TPB: nicotine pouch revenue up 627.6% year-on-year
· Haypp Group: nicotine pouches accounted for 68% of all oral nicotine sales
From supply to retail, and from the United States to Europe, both multinational tobacco companies and mid-sized firms have positioned nicotine pouches as a core growth engine.
Against the backdrop of domestic cooling and continued overseas demand, several companies have begun accelerating their overseas production planning.
In Southeast Asia, Indonesia and Malaysia have attracted companies conducting site visits or exploring cooperative manufacturing. Some industry sources noted that Batam, Indonesia, has become a landing point for a small number of manufacturers due to its free trade zone conditions. In Malaysia, local licensed manufacturers stated that several Chinese companies have sought cooperation, using entrusted or contract manufacturing to begin production on a shorter timeline.
In Europe, markets such as Poland and Nordic countries have drawn attention because they sit close to major consumer markets, offer established supply chain capabilities, and hold higher levels of industry credibility. According to 2Firsts’ research, these regions have become key considerations for some Chinese companies exploring long-term overseas layouts.
