By Timothy S. Donahue

Top Takeaways:

• Bans Backfire: Germany and France retain estimated nicotine pouch markets worth $195 million and $34 million.
• Online Trade: Foreign websites account for 90% of German pouch-related web traffic.
• Lost Revenue: Hungary collected less than 40% of estimated potential nicotine pouch excise taxes in 2025.

Governments can ban nicotine pouches, but they can’t ban demand. A new global report suggests that the tougher the restrictions, the greater the opportunity for illicit sellers.

Research released Oct. 26 by TobaccoIntelligence finds that some of the world’s most heavily restricted nicotine pouch markets continue to generate substantial sales, even as consumers turn to foreign websites, higher-strength products and potentially untaxed supplies.

The Global Illicit Nicotine Pouch Report 2026 examines how bans, nicotine limits, online sales restrictions, and differing tax rates are shaping illicit trade in a category the researchers estimate is worth about $10 billion worldwide.

Germany, where nicotine pouches face a de facto ban, remains the world’s ninth-largest market, valued at an estimated $195 million. France, which implemented a ban in April, ranks 22nd at $34 million.

Together, the two countries account for an estimated $229 million in annual nicotine pouch sales, despite restrictions intended to prevent legal sales.

The report estimates that Germany has about 614,000 adult pouch users who consume 658 million pouches annually, while France has 200,000 users who consume 114 million.

The researchers caution that the illicit market is difficult to measure precisely because products can violate regulations in various ways, including tax evasion, counterfeiting, unauthorized sales, and noncompliance with changing requirements.

“The illicit market is not a distinct, wholly illegal industry that acts as a shadow of the legitimate sector – the two can be intertwined,” the report states.

The findings also suggest that consumers may not always know when products become illegal. In France, only 43% of surveyed nicotine pouch users knew in March that a ban was approaching. When researchers surveyed users again in July, three months after implementation, awareness had changed only slightly, rising to 44%.

The report notes that enforcement becomes more difficult when consumers do not realize that the products they purchase are prohibited.

Online purchasing patterns offer another indication of how restrictions influence consumer behavior. In 2025, 90% of nicotine pouch-related website traffic in Germany went to foreign websites, compared with 10% in Sweden, where the products are legally available. Finland recorded 94% foreign traffic, Italy 92%, and Belgium 90%.

“Online retail bans across Europe are not showing much success,” the report states, pointing to continued activity in countries where online sales or the entire product category are prohibited.

The researchers concluded that countries that restrict online sales often retain illicit online activity while losing legitimate domestic online commerce.

However, website traffic is not the same as completed sales, and the figures do not establish that every foreign website visit led to an illegal purchase.

Nicotine-strength restrictions pose another challenge.

In Norway, 68% of consumers surveyed in March reported using products that exceeded a proposed limit of 12 milligrams of nicotine per gram. TobaccoIntelligence modeling suggests that introducing the limit could increase the share of duty-not-paid products from 17% to 34%.

The projection includes products obtained through illicit channels and duty-not-paid purchases from Sweden, so the entire category should not be treated as confirmed illegal trade.

The report also identifies ultra-strong nicotine pouches, containing up to 50 milligrams of nicotine per pouch, as particularly common in markets with bans or very restrictive nicotine limits.

Researchers argue that when products exceeding a regulatory threshold are already prohibited, illicit suppliers have little incentive to adhere to lower nicotine strengths.

Taxation poses a separate problem, particularly in Europe, where national excise rates vary widely.

According to the report, about two-thirds of EU member states have introduced excise duties on nicotine pouches, with the highest rates more than 20 times the lowest.

In Hungary, authorities collected 731 million forints in excise revenue from nicotine pouches in 2025, compared with TobaccoIntelligence’s estimate of 1.89 billion forints if a tax had been paid on all products consumed.

That leaves an estimated gap of 1.16 billion forints, although the researchers acknowledge that legal cross-border purchases and uncertainty in market estimates complicate efforts to determine the extent of tax evasion.

“Large divergences in tax rates across borders may also encourage a good deal of illicit cross-border sales,” the report states.

The findings come as nicotine pouches become one of the fastest-growing segments of the global nicotine market.

TobaccoIntelligence estimates that more than 20 million consumers worldwide will see a compound annual sales growth rate of 44% between 2021 and 2026. Despite that expansion, nicotine pouch sales remain small compared with the global cigarette market.

“Illicit nicotine pouches are a by-product of rapid growth, fragmented regulation and limited enforcement, and they affect consumers, governments and compliant businesses alike,” said TobaccoIntelligence founder Tim Phillips. “This report is an attempt to define the nature and scale of the problem. Our role is to provide independent data and analysis, and we hope it supports a better-informed debate.”

The 40-page study was prepared by Tamarind Intelligence and commissioned by British American Tobacco (BAT). Tamarind states that its research and conclusions reflect its independent analysis and do not represent BAT’s opinions.

The commissioning relationship is significant because tobacco manufacturers with established, compliant nicotine pouch brands have a commercial interest in stronger enforcement against unauthorized competitors. Nicotine Insider has not independently verified the report’s estimates and conclusions, and its findings establish associations between restrictive regulations and illicit activity rather than proving that specific policies caused particular levels of illegal sales.

The report also acknowledges that some noncompliance can stem from misunderstandings of complex or rapidly changing regulations rather than from deliberate criminal activity. “There are many ways in which a nicotine pouch may be deemed illicit,” the researchers explain, noting that the same product may be legal in one jurisdiction and prohibited in another.

As the European Union considers new nicotine pouch provisions through revisions to its Tobacco Products Directive and Tobacco Taxation Directive, the researchers recommend more consistent national rules, simpler compliance requirements, better market data, and stronger cooperation among enforcement agencies.

They warn that overly restrictive regulations can create opportunities for illicit operators, particularly when neighboring countries apply markedly different rules.

TobaccoIntelligence expects nicotine pouch consumption to continue growing at double-digit rates over the next five years, regardless of the regulatory environment. “The question is whether a substantial part of this growth remains illicit,” the report states.