The Cure Sold as a Habit

In May 2022, Philip Morris International announced a cash offer for Swedish Match. Sixteen billion US dollars.

All this for a snus company you never heard of.

But the product name was ubiquitous.

The deal closed in November of that year, the stock got delisted, and PMI sat on a brand called Zyn that nobody in the senior tobacco exec’s golf club had been paying attention to.

Four years later, that brand is shifting hundreds of millions of cans a year in the US, growing at 50%, and is the reason PMI's smoke free business now does over $12 billion in annual revenue.

And while PMI was busy chasing this gap, a small D2C startup in Los Angeles was busy building a whole different kind of brand for people who only knew cessation as a pharmacy product.

Two different plays.

Same molecule.

Same form factor.

Completely different customer.

Both working on the demonized molecule, nicotine.

Swedish habits

Snus is a tobacco product Swedes were parking under their top lip since the 1800s.

Scandi’s worked out that you could get the nicotine hit without the lung damage if you just stuck the tobacco in your mouth and left it there.

The EU banned snus sales everywhere except Sweden in 1992, on the assumption it was just chewing tobacco with better marketing.

Sweden negotiated an opt out as part of joining the EU and kept it and Sweden ended up with the lowest smoking rate in Europe and the lowest tobacco related death rate in the EU.

Snus did what cigarettes could not. Same nicotine, no smoke.

But snus was still tobacco.

Brown, leafy, spitty in some formats, and culturally locked.

Nobody outside that region was lining up to put wet brown tobacco under their lip.

Swedish Match knew this. So in the early 2000s they started working on something different.

Take the tobacco out.

Keep the nicotine.

Put it in a clean white pouch the size of a postage stamp, with mint flavour and a sleek can that looked more like Tic Tacs than tobacco.

Zyn launched in the US through Swedish Match's North American business in 2014.

For years it did nothing.

The convenience store distribution was there.

The shelf space was there.

It just sat there.

Then it didn't.

A moment in time

Juul peaked in 2018 and got slaughtered over youth vaping panic, bubble gum vape flavour will do that to you.

Cigarette sales kept declining.

Vape regulations tightened.

State after state started taxing or banning flavoured e-cigarettes.

And right in the middle of all that, sitting quietly on the same shelf, was a small can of mint flavoured pouches that didn't burn, didn't vape, didn't smell, didn't stain teeth, and crucially, did not classify as tobacco in most of the world.

Because they have no tobacco in them.

Nicotine, yes.

Tobacco, no.

That single ingredient swap, taking the nicotine out of the tobacco leaf and putting synthetic or extracted nicotine into a cellulose pouch, walked Zyn around almost every piece of regulation Big Tobacco had spent fifty years lobbying against.

No smoke restrictions. No vape restrictions in most US states. No FDA approval needed pre 2021 because the FDA didn't have jurisdiction over nicotine that wasn't derived from tobacco until Congress closed that loophole in 2022.

By the time anyone in regulation looked up, Zyn was a phenomenon.

In 2022, US Zyn shipments were 237 million cans.

In 2023, 385 million.

In 2024, around 580 million.

PMI quarterly earnings calls now lead with Zyn numbers before they talk about cigarettes.

That's the company that owns Marlboro talking.

A regulatory treasure map

The thing PMI bought for $16 billion was not a product, in the typical sense, they found a new position, one much better than mission winnow.

A position on a map where some countries said yes, some said no, and the gap between the two was wide enough to drive a billion dollar brand through.

In the good ol US of A, the FDA granted PMTA authorization to 20 Zyn products. First nicotine pouch to clear that pathway.

PMI was back in front of the FDA's Tobacco Products Scientific Advisory Committee asking for Modified Risk Tobacco Product designation, which would let them market Zyn as a lower risk alternative to cigarettes.

That's a regulatory upgrade most of the tobacco industry has spent twenty years failing to get.

Europe.

A patchwork. The EU classifies nicotine pouches outside its Tobacco Products Directive, so each member state writes its own rules.

Sweden, obviously, yes.

Germany said no, ruled them unauthorised food products in 2022, then partially walked it back.

France banned them outright in 2025.

UK, legal, growing fast, government nervous, regulation coming.

Switzerland, legal, regulated.

Pattern across Europe is tightening but not closed.

Australia.

No.

The TGA classifies nicotine pouches as therapeutic goods, which means they need ARTG approval to be sold. Number of nicotine pouches approved by the TGA, ever. Zero.

You can legally import them with a prescription via the Personal Importation Scheme. You cannot sell them. You cannot advertise them. You cannot have a retailer in Sydney with a tin behind the counter.

In June 2024, the TGA published a statement saying there is “no strong evidence to support the use of nicotine pouches for smoking or vaping cessation.”

That's the regulator's polite way of saying not happening on their watch.

New Zealand.

Worse, in a way.

Medsafe says it is illegal to import oral nicotine products into New Zealand for distribution or retail sale unless they've been approved as a medicine or psychoactive substance. None have.

Tobacco based oral nicotine products can be imported for personal use. Synthetic nicotine pouches sit in a more awkward space.

You can buy them yourself, in small quantities, for your own face. You cannot run a business selling them.

Which means in ANZ, the $580 million can a year Zyn machine simply doesn't run.

The product that minted PMI's smoke free future in the US is functionally a black market import here.

You can get them. Nobody in ANZ is making real money off them.

Meanwhile, over in the pharmacy

While Zyn was quietly waiting on a regulatory gap in the US, the rest of the legal nicotine industry had been doing the same thing it had done since the 1980s.

Selling cessation product. From behind a pharmacy counter. To people trying to quit.

Nicorette launched in 1984 as the first nicotine gum, originally a pharmaceutical company called Pharmacia. Now owned by Haleon, the consumer health spinoff GSK floated in 2022.

Habitrol, originally Ciba-Geigy, now bouncing between owners. Patches, gum, lozenges.

NicoDerm, sold by Haleon in the US, distributed in ANZ alongside Habitrol.

These products were not built to be enjoyed.

They were built to be tolerated.

The whole pharmaceutical model assumed nicotine was a vice you were trying to escape. So the product was deliberately clinical. Bitter. Pharmacy box. Side panel listing every possible warning. Available next to the haemorrhoid cream.

Industry calls them NRT.

Nicotine Replacement Therapy.

Therapy.

As in, you're sick, here is the treatment, take it for ten weeks and stop.

The marketing went with the framing.

Stop smoking.

Quit today.

Beat your addiction.

Print ads showing miserable people in their forties wanting to be free of the cigarette they couldn't put down.

Step one programs. Step two programs. Pharmacist counselling.

Every part of the experience said this is medicine and you are a patient.

Which worked for the original market.

Smokers in the 1990s and 2000s who genuinely wanted to quit and would put up with terrible taste because the alternative was lung cancer.

But that market shrank every year. Smoking rates collapsed across the developed world. The customer base for cessation products kept ageing and getting smaller.

And the entire incumbent industry kept doing the same thing.

Same boxes. Same flavours. Same pharmacy distribution. Same clinical aesthetic.

Right up until 2019, when three former Soylent executives walked in from a completely different angle.

Selling Cessation? Nah, sell habit.

Lucy was founded in 2016 by David Renteln (ex Soylent CMO), John Coogan (ex Soylent CTO) and Samy Hamdouche (ex Soylent Head of Research).

Three CPG operators from the silicon valley meal replacement world. Not pharma. Not tobacco. Not cessation.

Their public origin story is that Renteln promised his wife he'd quit smoking and hated every nicotine product he tried. Too clinical. Too pharma. Too embarrassing to buy.

Which is fine as origin stories go.

The real founder insight is that they looked at the nicotine market the same way Soylent had looked at the meal replacement market.

Bad existing product. Clinical packaging. Pharmaceutical aisle aesthetic. Big market with a huge underserved demographic the incumbents weren't even trying to reach.

Nicorette was talking to smokers who wanted to quit.

Lucy was talking to a whole new audience.

Twenty something men listening to podcasts.

Founders in the gym.

Coders in front of a monitor at 11pm.

Crossfit people who already took five supplements before breakfast.

The Bro Jogan demographic.

People who had never smoked a cigarette in their life and had no interest in quitting anything, but had started hearing on podcasts and on Twitter that nicotine was, in moderation and without the tobacco, a pretty interesting nootropic.

Focus. Reaction time. Cognitive performance. The whole performance enhancement story.

Andrew Huberman talked about it. Lex Fridman talked about it. Naval talked about it. Tim Ferriss talked about it.

Nicotine without tobacco was being repositioned in real time from vice to tool.

Lucy walked into that conversation with product that looked like a lifestyle brand.

Sleek can. Mango and espresso flavours. D2C subscription model. Influencer marketing. Founder podcast tours. Higher nicotine strengths than Nicorette ever sold.

And, crucially, a Breakers product with a flavour capsule you crush with your teeth, which has zero medical purpose and exists purely because it's enjoyable.

Nicorette has never made a product designed to be enjoyable.

It would feel wrong to them.

Lucy raised around $15 million from Greycroft, RRE, Y Combinator and Vice Ventures. CPG and consumer tech VC money. Not Big Tobacco.

They didn't try to compete with Zyn at the gas station. They didn't try to compete with Nicorette in the pharmacy. They built an entirely separate channel for a customer the incumbents on both sides didn't know was there.

Cool kids who don't smoke but believe the guru telling them nicotine sharpens their focus.

It works because the product is genuinely better than Nicorette and it works because the customer was already pre sold by a different category, the podcast nootropics scene, before they even saw the can.

Everyone else picked an angle

Once Zyn proved the convenience store category and Lucy proved the D2C lifestyle category, the rest of the playbook was sitting there.

On! Owned by Altria. Smaller pouch format, higher dose per gram, retail focused. Picked up 7% retail share in 2024. Strategy is simple. Be the cheaper, smaller pouch on the shelf next to Zyn.

VELO. Owned by BAT. International first strategy. Strong in UK, Sweden, Pakistan, South Africa. What happens when the third biggest tobacco company watches its competitor pay $16 billion for a Swedish snus business and decides it needs an answer fast.

Rogue. Owned by Swisher International. Cheap and cheerful.

Notice the pattern.

Zyn is the only one of the top four convenience store brands that wasn't already owned by Big Tobacco before the category took off. Swedish Match was, until PMI bought them.

This is not a disruption story at retail.

This is a category every major tobacco company watched happen and then bought their way into.

The only true outsider in the top ten is Lucy.

And Lucy didn't go for the gas station counter. Lucy went for the screen of the 28 year old in Brooklyn who orders his nicotine the same way he orders his protein powder.

The next pouch isn't nicotine

If you strip it back, the thing Zyn really proved isn't that nicotine works in a pouch.

Snus showed that two hundred years ago.

What Zyn proved is that the pouch itself, the form factor, the ritual of placing a small object under your lip for 30 to 60 minutes, the discreet metal can, the absorption through the oral mucosa, is a viable consumer product chassis on its own.

The pouch is the platform.

Nicotine was just the first payload.

So now there's a wave of brands taking the exact same delivery mechanism, the exact same can, the exact same lip ritual, and swapping the payload.

Caffeine pouches. Nootropic pouches. Functional mushroom pouches.

The interesting one is Nectr.

Nectr launched in 2024. Swedish manufactured (same supply chain as the big nicotine players). Positioned explicitly as a Zyn alternative.

Zero nicotine. Zero tobacco. Cognizin citicoline as the headline ingredient. A nootropic compound with actual clinical data on attention and cognitive processing.

Their entire marketing position is “same pouch ritual, different molecule.”

You park it under your top lip the same way. The flavour curve is the same. The form factor is identical.

The pitch is “you wanted the habit, you didn't want the dependency.”

Other brands in this space. Ultra Pouches with paraxanthine (a caffeine metabolite). Grinds with their Focus line. Boost with adaptogenic mushrooms. Dialed In, Fully Loaded Alpha, Flowblend.

And Lucy themselves selling nicotine gum with a customer testimonial on their own website calling it “a microdose nootropic that keeps me humming along all day.”

Worth pausing on what's happening there.

The product category is repositioning itself from harm reduction to performance enhancement.

From quit smoking to lock in.

From dependency to productivity.

And the regulator hasn't worked out what to do with a pouch full of choline yet.

Because in most jurisdictions, it's just a supplement.

Which means a nootropic pouch in Australia, in New Zealand, in any market where nicotine pouches are restricted, is functionally legal.

Same supply chain. Same factories. Same form factor. Same retail playbook. Different molecule. Different regulatory regime. Different conversation.

The pouch is the platform.

So What.

Big Tobacco didn't win because they invented anything new, they won because they spotted a regulatory gap and bought their way into it.

Lucy didn't win the D2C side because they were the first to make nicotine gum. Nicorette had been making nicotine gum for forty years.

Lucy won because Nicorette was still selling to people who wanted to quit, while Lucy was selling to people who'd never started. Different customer. Different channel. Different framing. Same molecule.

Two completely different plays around the same product, in the same year, in the same country.

If you live in the US, you got both. Zyn at every gas station counter and Lucy in your Instagram feed.

If you live in ANZ, you got neither at scale. An import scheme nobody uses, a prescription pathway that exists on paper, and a black market that runs on grey channels.

Worth flagging though. Nicotine gum is legal in ANZ.

Nicorette, Habitrol, Nicabate all sit on pharmacy shelves with TGA and Medsafe approval as NRT. The pouches are blocked. The gum isn't.

Nobody in ANZ has done a Lucy on the gum.

Same product category, the same incumbents who haven't refreshed their branding in twenty years, the same demographic of podcast listening 28 year olds who'd absolutely pay $15 a pack for nicotine gum that didn't taste like a pharmacy and didn't make them look like their dad trying to quit in 2003.

I looked at this a few years ago, I won't go into detail here.

There is a business case for someone to figure out the right answer for ANZ. It probably doesn't involve nicotine pouches and it definitely doesn't involve waiting for the regulator to change their mind on those.

It involves the legal product that's already sitting on the shelf, rebranded for the customer the incumbents stopped paying attention to.

Or it involves a Swedish factory, a metal can, and a nootropic payload that the TGA and Medsafe haven't written a paragraph about yet.

Big Tobacco showed the gas station playbook. Lucy showed the D2C playbook.

Both are sitting there. Somebody get in touch to write the next one.

Shout out to all the legends I've ripped info from for this piece:

Philip Morris International | Swedish Match | FDA Tobacco Products | Therapeutic Goods Administration | Medsafe NZ | Lucy Goods | Y Combinator | Crunchbase Lucy | Nectr | Nicokick Pouch Report | Bloomberg on Lucy | Haleon (Nicorette owner) | PMI Q4 2023 8-K