BAT to Launch Velo Plus: Pioneering Synthetic Nicotine in the U.S. Market

British American Tobacco (BAT) is poised to make waves in the U.S. market with the introduction of a new version of its popular Velo nicotine pouches, incorporating synthetic nicotine. The product, named Velo Plus, is scheduled for a 2025 release, according to David Waterfield, president of BAT’s U.S. subsidiary, Reynolds American. This launch marks a significant step for BAT, as it represents one of the first major uses of synthetic nicotine by a leading tobacco company.

During a recent capital markets event, Waterfield elaborated on the move to synthetic nicotine, explaining that this lab-created version is chemically identical to nicotine derived from tobacco plants. “From a chemical perspective, there is no difference between tobacco-derived nicotine and synthetic nicotine,” Waterfield said, highlighting the innovative shift in BAT’s approach.

The adoption of synthetic nicotine aligns with manufacturers’ efforts to navigate the evolving regulatory landscape in the United States. Initially, synthetic nicotine gained popularity due to its ability to bypass the U.S. Food and Drug Administration (FDA) approval process, which was traditionally applied only to tobacco-derived nicotine products. However, in April 2022, a legislative change extended the FDA’s authority to include synthetic nicotine, bringing such products under similar regulatory scrutiny.

Despite the new regulations, BAT’s Velo Plus product holds a unique position in the market. The product was initially submitted for FDA approval by its previous owner before the May 2022 deadline, allowing it to remain available while awaiting final approval. This gives Velo Plus a competitive advantage as it prepares for its official launch.

Looking ahead, Waterfield expressed optimism about the growth potential of alternative nicotine products in the U.S. market. BAT projects significant increases in revenues from vape and nicotine pouches, with the U.S. vape industry expected to grow from approximately £9 billion ($11.7 billion) to as much as £14 billion by 2030. Likewise, the nicotine pouch market is forecasted to expand dramatically, from £1.7 billion to £7 billion within the same time frame.

Despite the promising outlook for alternative nicotine products, BAT is facing challenges in its traditional tobacco business. U.S. combustible tobacco revenues have seen a notable decline of about 9%, which Waterfield described as an “abnormal” drop. However, the company anticipates that the broader U.S. tobacco industry will stabilize, with modest growth of around 1% projected for the rest of the decade.

As BAT moves forward with the launch of Velo Plus, it is strategically positioning itself to meet the increasing demand for nicotine alternatives in a rapidly changing market. With the shift to synthetic nicotine and a focus on innovation, BAT is set to play a pivotal role in shaping the future of nicotine consumption in the U.S.

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