CCB International’s Charlie Chen sees nicotine pouch growth of 30% to 50% a year

Charlie Chen, research head at CCB International Securities, expects global nicotine pouch sales to rise 30% to 50% a year over the next few years, against mid-to-high single digits for vaping and heated tobacco.

Chen gave the ranges in an interview with 2Firsts, which also covered how enforcement shapes the market share and valuations of compliant companies.

Compliant vaping companies compete for a market where illicit products hold most of the volume

Chen estimates non-compliant products may account for 70% to 80% of the global vaping market.

His growth call splits the two: the overall vaping market grows at a mid-to-high single-digit rate, while the compliant segment could exceed 10% as enforcement removes illicit products.

US enforcement is the variable he watches. Chen says sustained action against non-compliant vaping products could improve the competitive position of legal businesses and shift how capital markets judge their growth prospects.

Removing illicit products does not move demand automatically, he adds. Whether compliant companies can supply products that meet demand, and whether they have the production and distribution capacity, decides how much of the legal market grows. The US market previously carried many non-compliant vaping products in a wide range of flavours; if legal companies offer no competitive alternative, demand need not switch, Chen says.

Chen says the global tobacco trade includes a large volume of illegal and non-compliant transactions, and that research houses measure market size on different bases, so forecasts are better expressed as ranges.

Nicotine pouch growth depends on how countries write the rules

Nicotine pouches start from a smaller base than vaping and heated tobacco, so rising consumer penetration could drive much of the growth. Chen also cites ease of use: the products are small, need no heating device and produce no smoke or noticeable odour.

Rules for the category are less developed than for vaping and heated tobacco in some markets, leaving room for product development and expansion, he says. He flags the risk that the discreet format draws more regulatory attention to underage use, nicotine limits and marketing requirements. Loose rules could create social problems, while excessive restriction could push the trade into grey channels, according to Chen.

Heated tobacco faces slower switching and a concentrated market

Chen is more cautious on heated tobacco. Much of its user base comes from cigarettes, and after years of marketing the rate at which smokers switch may be slower than in earlier years; with the smoking population shrinking, the consumer base may struggle to grow.

Concentration adds pressure. According to PMI’s financial reports, Philip Morris International accounts for about 80% of global heated tobacco volumes. Japan Tobacco and BAT have adjusted new heated products and pricing in recent years, and price competition could offset some of the revenue gain even if volumes keep rising, Chen says.

Regulatory shifts reach valuations through forecasts and multiples

Chen describes two channels: analysts revise future revenue and profit forecasts, or they change the multiple they apply. In a hypothetical example, a company forecast to grow revenue 15% a year over three years in one European market could be cut to 10% if the country tightens vaping policy.

CCB International’s May 2026 report valued RELX Technology on EV/EBITDA, BAT on price-to-earnings and Smoore International on a sum-of-the-parts basis. Chen explains the RELX choice by its balance sheet: at the end of 2025 the company held about RMB15.7 billion in cash, equivalents, deposits and wealth management products, equal to about 84% of the market value the report used, so cash needed separating from the operating business. Smoore’s vaping, heated and medical operations sit at different stages, so a single multiple did not fit.

Some suppliers now earn a share of the client’s sales

According to the May report, Smoore management described its heated tobacco work for BAT as different from conventional vaping contract manufacturing: revenue is not booked as sales of finished goods to the client but as a percentage of BAT’s heated product sales, a technology licensing fee. The report expects that arrangement to let Smoore’s related revenue grow faster than shipments as BAT’s glo Hilo volumes rise. The fee rate and revenue-sharing terms have not been disclosed.

For contract manufacturers and exporters in Shenzhen and nearby, that structure ties part of the revenue line to a client’s end-market performance rather than to unit volumes alone; licensing and split terms under negotiation, and the client’s launch schedule, feed straight into revenue forecasts (VapeBrief analysis). Chen makes a related point: suppliers still depend on brand clients’ strategy, and revenue can stall if a client has no new launches or expansion plans.

He separates two Chinese models: supply-chain companies built on R&D, technology and manufacturing, and companies with their own brands and channels. The first group has built advantages in vaping technology and scaled production, and some supplier-client relationships now extend into product development and regulatory filings. The second group is more flexible and can use capital and stock-market resources to acquire into overseas markets.

Chinese companies have less experience in engaging regulators abroad

Chen credits the large international tobacco companies with global distribution, long-standing consumer data and research and financial resources, but says their structures and risk management make them cautious on launches and brand communication; some products are ready but cannot reach the market promptly for regulatory or other reasons.

Those companies also take part in rule-making through trade associations, policy engagement and litigation, he says. Chinese nicotine companies have long operated under the domestic tobacco monopoly system and its regulatory framework, which shapes how they deal with authorities. As they expand abroad, adapting to local rules and building experience in policy engagement and legal affairs becomes a task, Chen says.

US enforcement, pouch rules and consolidation are the next tests

Chen names three things to watch: whether US vaping enforcement continues, how countries design nicotine pouch rules, and acquisitions and consolidation in the nicotine sector. He says the market remains fragmented and does not rule out mergers and acquisitions creating new large companies.

For retailers and distributors, the compliant share of the market depends on two conditions holding at once: enforcement continuing and legal supply keeping pace.

Questions readers ask

What growth does Charlie Chen expect for nicotine pouches?

Chen expects global nicotine pouch sales to grow 30% to 50% a year over the next few years, above his mid-to-high single-digit forecasts for vaping and heated tobacco. He puts 2026 nicotine pouch sales at about $5bn to $6bn ex-factory excluding tax and more than $10bn at retail.

How large is the illicit share of the global vaping market?

Chen estimates non-compliant products may hold 70% to 80% of the global vaping market. On his figures, legal sales are about $5bn ex-factory, while the market including illicit products is about $20bn ex-factory and around $40bn at retail.