The illicit nicotine pouch market is growing

Rapid growth in the consumption of nicotine pouches has created significant opportunities for illicit trade networks, non-compliant manufacturers and criminals, new research from Tamarind Intelligence says.

A report from Tamarind Intelligence identifies several reasons for this growing illicit market, including:

• Consumer demand.
• Lack of enforcement.
• Low barriers to entry – nicotine pouches are relatively simple products to manufacture.
• Small, easy-to-transport products.

However, it warns, not all illicit products are illicit in the same way, and “it is a mistake to see the illicit market as consisting purely of large-scale, deliberately criminal activity in which the entire chain from manufacturer to consumer is illegal”. Some products, it says, might even be accidentally illicit.

An illicit market could include: 

• Counterfeits – illegal copies of legitimate products.
• Smuggled goods.
• Products without necessary authorisations.
• Products on which tax has not been paid.
• Products with illegal features (for example, banned flavours or excessively high nicotine content).
• Products sold through prohibited retail channels. 

Adding to the challenge, pouches may not yet be comprehensively regulated in a particular jurisdiction, and “even where pouches are adequately regulated, enforcement agency familiarity with the category may be limited”.

Tamarind Intelligence says it is hard to measure the global illicit market, but there is strong evidence of large-scale illicit activity.

• For example, in Finland, online traffic to pouch retailers did not decrease significantly even after an online sales ban, “suggesting a significant illicit market”, according to Tamarind. “Finland’s case suggests that once illicit sales are common in a local market it may take many years to eradicate them.”
• In Denmark, where pouch products are heavily restricted, and Poland, where the tax rate is high, “the number of products in the market far exceeds the number of products notified locally to the regulatory authorities”. Again, this suggests that many of them are illicit.
• And in Hungary, “we see a significant disparity between the tax expected to be collected based on the size of the nicotine pouch market, and the actual fiscal revenues collected by the tax authorities”, implying that products are being sold without tax being paid on them.

Sellers of these illicit products benefit in the same way as legitimate businesses from rapid growth in consumer demand and low barriers to entry, the report says.

But they do not have the same compliance costs or obligations, “which enables them to sell products that are lower-priced than legitimate ones or offer features that legal products cannot”.

Tamarind’s research is published in its Global Illicit Nicotine Pouch Report 2026.