The UK tobacco and nicotine market is in excess of £22 billion annually (Statista 2024) and remains a significant part of the convenience and wholesale channel.
The key sub-categories are conventional cigarettes (approx. £13bn), roll-your-own (RYO) tobacco (approx. £6.3bn), vaping and e-cigarettes (approx. £2.5bn), cigars and cigarillos, heat-not-burn (approx. £450m) and oral nicotine products (approx. £900m) (Statista 2024).
“Consumers continue to seek value across many FMCG categories, and tobacco is no exception. We are seeing sustained demand for value and mid-price products as adult smokers look to manage household budgets while maintaining their preferred purchasing habits,” comments Chris Carr – Sales Director at NEAFS.
“Retailers and wholesalers should ensure they have a balanced range that reflects local shopper demographics and purchasing patterns.”
Nicotine pouches continue to attract interest from adult nicotine consumers, supported by growing awareness and availability. They remain more of a niche product than categories such as heat-not-burn or vaping because they represent an entirely new way of consuming nicotine, and some consumers can experience initial discomfort when using them.
The upcoming Vaping Products Duty will see any product containing e-liquid attract a flat excise duty of £2.20 per 10ml, irrespective of whether the product contains nicotine. This comes into effect on 1 October 2026.
Products that do not contain e-liquid in liquid form will be exempt from the duty and are therefore likely to remain more price stable.
“We’re seeing notable trends across the category, including increased awareness of alternatives to smoking, alongside stronger value-seeking behaviour. As we get closer to the Vaping Products Duty coming into effect, we expect to see more clearance offers from manufacturers passed down to retailers on commercially ineffective products such as big-puff pod kits, which will attract significantly higher levels of duty than smaller pod kits,” adds Carr.
“It makes sense for retailers to start running down the stock they currently hold of larger puff-count products and take control of the product transition that is naturally coming beyond October 2026, rather than leaving it until the last minute.”
NEAFS’ flagship innovation is TEO-X, developed after many years of research and development. TEO-X is the UK’s first entirely tobacco-free heat-not-burn product, delivering an experience and taste profile similar to a conventional cigarette.
In addition to TEO-X, NEAFS also offers UNO+, a 700-puff pre-filled pod vape kit, and our UltraSlim nicotine pouches, which are the thinnest-format nicotine pouches currently available in the UK. They provide a more comfortable and satisfying user experience and have an RRP of just £1 per pack.
Across the product portfolio, NEAFS delivers a minimum of 50% POR for retailers.
“Maintaining a balanced range is critical. Retailers and wholesalers should focus on stocking leading brands while ensuring they also offer value options,” advises Carr.
“They should also be wary of investing heavily in clearance stock that is likely to become commercially unviable after 1 October 2026 as the market adjusts to the Vaping Products Duty. Instead, they should begin transitioning towards smaller pod formats and smaller e-liquid bottles sooner rather than later.”
This year, NEAFS is supporting its brands through a continued partnership with Elonex, one of the UK’s leading Digital Out of Home media companies, as part of its Elonex Everyday initiative, which brings advertising for major brands directly into neighbourhood convenience stores.
This will be activated by installing point-of-sale systems within participating stores and working closely with retailers to educate and inform customers about the benefits of switching to a non-tobacco alternative nicotine system.
“Wholesalers should focus on availability, visibility and range optimisation. However, they should also not be afraid to educate customers on the benefits of emerging nicotine alternatives, such as our products and nicotine pouches, to ensure they are meeting the needs of a broad shopper base,” suggests Carr.
“You would be surprised how many retailers still think nicotine pouches are a form of nicotine replacement therapy, similar to gum or patches, and are unsure what they look like or how they work.”
Paul Dufourne, Director of Commercial Operations at Philip Morris Limited (PML) in the UK and Ireland, comments: “The traditional cigarette market is declining, and demand for smoke-free alternatives is growing in the UK amongst adult nicotine users who would otherwise continue to use nicotine products. The best thing any adult smoker can do is quit nicotine entirely, but those who are choosing not to quit nicotine are driving the smoke-free category, now currently worth £1.85 billion in the UK (Third Party Data).
“Adult nicotine users want a variety of options that meet every need, supporting them in the switch away from cigarettes for good. We are proud to be an organisation that offers 3 premium smoke-free options – with two global leaders in their respective categories – to support adult smokers, who don’t want to quit nicotine, make that switch from cigarettes.”
Around 95% of convenience retailers already stock at least one smoke-free alternative to cigarettes (Philip Morris). Heat-not-burn devices and nicotine pouches are taking a significant share of gantry space (Philip Morris), because retailers can see they drive repeat purchase and loyalty.
The smoke-free category continues to grow as the cigarette market declines. Adult smokers are looking for smoke-free alternatives on their journey to switching away from cigarettes, which is supporting the growth of the category. Almost three-quarters (74%) of retailers are expecting consumer demand to increase in 2026 and 84% of this group plan to broaden their smoke-free range to meet this rising interest (Philip Morris).
So, growth is strongest where retailers can offer real choice across categories and price points. In fact, offering a wider choice is now cited as the number one driver of growth in this category (Philip Morris). When adult nicotine users feel informed and supported, they buy with confidence, and they come back.
“For retailers, the trend is clear. Stocking a comprehensive range of smoke-free products will capture the full value of adult nicotine user spend. Choice unlocks value. At Philip Morris we pay close attention to what adult nicotine users are asking for. Right now, one of the clearest trends in nicotine products is dual/poly-use. Adult nicotine users are switching between products depending on where they are, who they are with, or what they are doing. A heat-not-burn device at home. A pouch on the go. Vaping during social settings,” adds Dufourne.
“That’s why products like IQOS and ZYN are so important to stock. Together, they cater to different needs. IQOS for those who still want a behavioural ritual close to smoking, and ZYN for those looking for discreet, convenient nicotine satisfaction. Stocking multiple categories allows retailers to meet customers at the different nicotine moments and maximise sales, rather than forcing them into one box.”
Independent research conducted by KAM on behalf of Philip Morris Limited further highlights that legal age nicotine users seek variety. Findings show that 68% of independent retailers believe that success will hinge on offering a varied product portfolio – one that includes a full range of e-cigarettes, heat-not-burn products, and oral nicotine pouches, rather than relying on a single category as they may have done so previously with disposables.
“Adopting a multi-category product approach is critical if retailers are going to continue to meet different legal age nicotine users tastes and preferences amid changing legislation,” says Dufourne. “Retailers have the opportunity to offer previous adult disposable vape users an alternative smoke-free option, preventing them from reverting back to cigarettes while also protecting their stores’ bottom line. However, it must be supported by comprehensive information and education of the benefits of switching from cigarettes to better alternatives.”
The latest iteration of heated tobacco device IQOS ILUMA i takes heated tobacco technology to the next level with enhanced smart functionality designed to make the experience more intuitive. The range includes IQOS ILUMA i, IQOS ILUMA i PRIME and IQOS ILUMA i ONE.
This year, PML announced the launch of DELIA, the latest addition to its growing portfolio of heated tobacco and zero-tobacco sticks exclusively compatible with the IQOS ILUMA range.
Joining the existing TEREA tobacco and LEVIA zero-tobacco sticks, DELIA has been developed to broaden consumer choice and better cater to adult smokers seeking a more classic tobacco experience, while maintaining the simplicity and ritual many users value.
The DELIA range features three distinct SKUs, spanning Full Flavour, Balanced and Menthol variants, ensuring clear and intuitive options for adult users. With simple, non-aromatic flavour profiles, the range has been carefully developed to complement the existing portfolio.
DELIA also introduces a streamlined, cigarette-inspired pack format, designed to minimse disruption in routine and create easy navigation for adult smokers, supporting ease of purchase. Positioned at an RRP of £6, DELIA offers a new price tier within the IQOS ILUMA consumables portfolio, helping to retain existing users while appealing to more price-sensitive adult smokers.
As part of the core ZYN portfolio, Menthol Ice 16.5mg has been developed to support retailers with a full-strength range, helping position ZYN as a go to brand for both new and existing adult nicotine pouch users. Product choice is the number one driver of purchase in convenience stores (Philip Morris), and this brand-new variant adds to ZYN’s expanding portfolio, giving retailers a wider range of options to meet the evolving needs of adult nicotine pouch users.
The new Menthol Ice variant delivers an intense cooling taste of eucalyptus and menthol, offering adult nicotine users a long-lasting flavour experience at ZYN’s highest strength level. The launch also broadens the brand’s existing mint and fruit flavour range, giving retailers a clear opportunity to cater to a wider range of adult preferences.
IQOS stands as the world’s leading heat-not-burn device (PMI). As a brand, IQOS owns the heat-not-burn category, generating 95% of volume sales in the UK (Third Party Sales Data). Nearly 50% of UK nicotine users recognise the IQOS brand (Third Party Sales Data), and this level of awareness has led to more adult smokers switching to IQOS ILUMA (PMI). The UK is at a pivotal moment in its journey towards a smoke-free future; a downward trend in demand for combustible tobacco indicates a steady, but continuing decline in smoking itself.
ZYN is the world’s No.1 nicotine pouch brand (PMI) and has seen particularly significant momentum in the UK. Sales volume increased by 400% between December 2024 and December 2025 (Third Party Sales Data), reflecting growing consumer demand for nicotine pouches.
“There is no “one-size-fits-all” approach to smoke-free retailing, which is why having a portfolio of products that deliver on quality is an opportunity convenience stores can capitalise on. For example, in the UK, 73% of the six million adult smokers have tried vaping, but only 18% have quit cigarettes for good with vapes (ASH). That’s where our multi-category approach plays a role. By offering a range of formats and price points – even within the same category – we make smoke-free products accessible to all legal-aged nicotine users who want to continue using nicotine, supporting them in making the switch from cigarettes,” advises Dufourne.
“Recognising that no single smoke-free product can cater to every smoker’s preference, embracing a multi-category approach becomes indispensable for those investing in their smoke-free portfolio. Building a range that reflects the diversity of adult nicotine users today is vital. That flexibility is what will protect businesses and keep them continually relevant as the market changes. Our multicategory range of alternatives is leading the charge in making this vision a reality.”
Prianka Jhingan, Head of Marketing at Scandinavian Tobacco Group UK, comments: “Our latest data shows the total cigar category to be worth £350.8m in annual sales (IRI), and cigarillos are one of the four segments that make up that figure. In fact, the cigarillo segment is easily the largest of the four segments in terms of volume and not far off the other three combined in terms of value.”
Cigarillos are small, usually flavoured, cigars. They are shorter, usually about three to four inches long, and narrower than traditional cigars and typically take less time to smoke which can often appeal to adult smokers. Sales from the cigarillo segment currently account for just over £178m of that £350.8m total, while the three other segments combined (miniature, small and medium/large) account for £170.3m. The remaining £2.2m is made up of handmade cigar sales.
“Of course, the cost-of-living crisis has helped shape the category over the last few years with value brands and smaller pack sizes often increasingly in demand,” adds Jhingan. “It’s no surprise that price remains important because that search for value can often be a motivating driver of purchase for nicotine users. That’s one of the key reasons why we launched a new 17-pack of our Signature Action cigarillo brand last year.”
This latest addition complements the existing two ten-pack offerings, providing consumers with greater choice and value, but features the same menthol flavour that has been synonymous with the brand since its launch back in 2020. With an RRP of £9.89, including a price-marked version, the 17-pack delivers exceptional value to consumers, positioning it as the most competitively priced option in the market. It also offers an attractive margin for retailers, reinforcing STG’s commitment to supporting its trade partners with high-quality, high-demand products. In the pouches category, XQS offers consumers great value at £5.50.
“I think there are already many reasons consumers are switching to pouches, and the introduction of Vaping Products Duty may well become another one,” says Jhingan. “Last year’s disposable vape ban provided a further boost to pouch sales, but I firmly believe the main reason they are being enjoyed by a growing number of nicotine users is down to the great range of flavours and their discreet and portable nature which means unlike vapes, they can be consumed on public transport, at work, at sporting events or at the cinema. Pouches in general are a big opportunity for wholesalers as they’ve experienced massive growth over the last few years which shows little signs of slowing.”
Nicotine pouches users are motivated by flavour more than anything, which is one of the reasons STG feels so confident in the future for the XQS brand, as it offers pouch users exciting taste sensations through its high-quality and long-lasting flavour portfolio. The predominant trend in the category is definitely for a mint flavour, and STG recently introduced a new mint range into its XQS nicotine pouch portfolio. The four new SKUs include The Spearmint, The Peppermint and The Menthol (in two different strengths), and are available to retailers now, with an RRP of £5.50. The Spearmint may have the lowest strength, but it is perhaps the most superior in flavour, offering consumers a fresh, long-lasting spearmint experience with just 6mg of nicotine and is perfect for new entrants to the category. Next comes The Peppermint which offers a stronger nicotine hit at 10mg with a clean cooling sensation. Finally, The Menthol is aimed at mature pouch users who are looking for that additional kick, offering real nicotine intensity and effect time, and comes in two strengths of 11mg and 17mg respectively.
From the cigar portfolio STG’s most important brand is Signature, which comes in both miniature and cigarillo size. In the last few years distribution has improved, and sales have really shot up for the Signature Action cigarillo brand. In fact, its sales have gone up by 31% since the same time last year, with adult smokers appreciating the great flavour and cheaper price point, compared to other brands in the market. Other key brands in the portfolio worth stocking include Signature Blue, which is the fourth best-selling cigar overall and Moments Blue which is a popular brand in the value for money segment. Finally, the other ‘must-stock’ brand in the portfolio is Henri Wintermans Half Corona, which is by the far the UK’s best-selling medium / large cigar, and is particularly popular at Christmas time.
XQS is the number two brand in Sweden and was first launched into the UK back in May 2024, and since then has become an important part of the fast-growing UK nicotine pouch category. The brand is recognised for its long-lasting flavours and smaller pouch size, as well as the fact that it offers consumers great value at £5.50, which is usually £1 cheaper than other major brands in the market. Within the XQS portfolio the current best-sellers are the Tropical and Black Cherry flavours, which were two of the earlier flavours to launch, while Arctic Freeze and Strawberry Kiwi are also popular.
“It’s vitally important to stock the right range of cigars rather a big range, so we usually advise retailers and wholesalers to consider stocking the top two or three brands in each of the four main cigar segments, as the top ten biggest sellers overall account for well over 90% of total sales, so there’s no point tying up your cashflow with slow moving brands,” advises Jhingan. “With pouches it’s a fast-growing category so retailers and wholesalers need to try and strike the right balance between stocking new brands, flavours or strengths which drive interest and excitement, along with the established sellers which many of their customers will be looking for.”
Aside from offering them products that meet current trends and consumers want, STG regularly has meetings with all its wholesale partners, discussing the market dynamics and ensuring their product mix is what the consumers and retailers are asking for. The company also supports wholesaler to retail purchases of NPD through promotions and money off incentives. This can improve footfall into the wholesaler and potentially influence other purchases in depot, so a clear win for both parties.
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