Key Points
- Market size: Multiple studies suggest hookah-related markets are already worth several billion dollars globally, though forecasts vary widely by scope and methodology; despite those differences, they point to continued expansion.
- Listing test: AIR is pursuing a public listing through a SPAC deal and is trying to recast hookah as a more mature consumer category.
- OOKA pivot: AIR argues that OOKA’s charcoal-free, closed-system model could reshape how hookah is consumed and commercialized.
- Regulatory gap: AIR says heated hookah may eventually be treated differently from charcoal-based formats, but that case has not been accepted by regulators.
- Industry signal: The bigger question is whether this is only AIR’s capital-markets narrative, or an early sign of change across the hookah trade.
2Firsts
April 2, 2026
Hookah has long occupied an unusual place in the global nicotine and tobacco economy: culturally entrenched, commercially meaningful, yet too fragmented to sit comfortably within formal capital markets, standardized governance frameworks or clearly differentiated regulatory systems.
Recent market studies put hookah-related markets in the multi-billion-dollar range globally, even if estimates vary widely depending on scope and methodology. Business Research Insights estimates the broader tobacco-and-hookah market at about $4.82 billion in 2026, rising to $13.67 billion by 2035, while Verified Market Research estimates the more narrowly defined hookah shisha tobacco market at about $2.02 billion in 2024, rising to $3.00 billion by 2032. Despite those differences in scope, both point to the same underlying trend: the market is still expanding, driven by social consumption, flavor innovation and regional demand, even as it remains constrained by tighter regulation and persistent health concerns.
That is why the category is drawing closer attention from investors, regulators and industry players alike.
To examine whether waterpipe is beginning to move beyond that fragmented tradition, 2Firsts interviewed Stuart Brazier, chief executive of Advanced Inhalation Rituals (AIR), which is seeking to enter public markets through a SPAC transaction with Cantor Equity Partners III. Through that move, AIR is asking investors to read hookah not as a niche trade, but as a scalable, profitable and increasingly formalized consumer category.
Its case rests on four pillars:
● Strong margins and cash generation in the core business;
● A device platform, OOKA, that could change where and how hookah is consumed;
● A belief that heated hookah may eventually be treated differently from charcoal-based formats;
● A broader ambition that reaches beyond traditional hookah.
Some parts of that case are supported by disclosed figures and identifiable products. The broader category argument, however, will require more evidence and wider validation before it can be fully established.
A Public-Markets Test for a Fragmented Trade
A 40 percent adjusted EBITDA margin helps explain why AIR believes hookah can be presented to public-market investors as something more than a fragmented trade.
Brazier rejected the idea of waterpipe as a “niche, fragmented cottage industry,” pointing instead to AIR’s economics. The company said its core business delivered an adjusted EBITDA margin of about 40 percent in 2024, alongside more than 115 percent net operating cash conversion. If those numbers prove durable, they help explain why AIR believes hookah deserves to be read differently from the way investors have traditionally treated it.
In Brazier’s account, hookah is also often misread when compared with cigarettes: it is social and intermittent rather than daily, and even regular users average no more than two sessions a week. That framing is central to AIR’s argument. A product associated with ritual, hospitality and intermittent use invites a different commercial conversation from one tied to habitual daily consumption.
The SPAC deal fits into that broader effort. AIR said access to public markets would provide permanent capital, acquisition currency, institutional credibility and greater flexibility to accelerate partnerships, expansion and product rollout, especially in the United States, which it identified as a priority market.
The harder question is whether this amounts to a category shift or simply a company-level repositioning exercise. AIR is clearly presenting hookah in terms that public markets understand: margins, cash conversion, platform economics and scale. But some of its wider claims still rest on narrower foundations. Its assertion that the company is larger than its next four competitors combined is based on internal estimates. Its suggestion that Western markets are growing is important to the story, but not fully developed in the interview.
The question, then, is whether investors read that story as evidence of category change, or simply as evidence that one company has learned to package a fragmented trade for public markets.
OOKA and the Push to Redraw Consumption Boundaries
OOKA is AIR’s charcoal-free electronic hookah platform, built around a proprietary device-and-pod system that replaces much of the charcoal, setup and cleanup associated with traditional waterpipe use. In AIR’s public-markets and regulatory argument, it is more than a product launch: it is the company’s main attempt to make hookah more standardized, more portable and more legible to both investors and regulators.
OOKA matters less as a new device than as AIR’s attempt to remove some of the constraints that have long limited hookah’s reach.
Traditional waterpipe use comes with friction: charcoal, preparation time, venue restrictions and cleanup. AIR argues that OOKA strips out enough of that burden to move hookah into settings less compatible with burning charcoal, including indoor or more controlled environments. If that holds at scale, OOKA would do more than make hookah more convenient; it would change the conditions under which hookah can be sold and consumed.
This is a broader claim than product improvement alone. It suggests hookah could move from a format constrained by ritual and infrastructure into one that is more standardized, easier to distribute and potentially acceptable across a wider range of venues.
AIR insists this does not hollow out the category’s cultural core. In Brazier’s framing, users value the social ritual — gathering, conversation and shared flavor — more than charcoal preparation itself. If Brazier is right, technology could expand hookah by creating new occasions, new user groups and new commercial settings. If he is not, OOKA may prove to be a premium add-on rather than a tool that materially reshapes the market.
AIR said it has invested more than $115 million in innovation. The figure matters not only because of its size, but because of what it suggests about the company’s strategy. High margins in the legacy business give AIR room to finance a closed-system bet in a category that has historically been open, ritualized and hard to standardize.
Germany offers AIR an early example of where that logic may work, since venue and regulatory constraints can make charcoal-free formats easier to justify commercially. Whether that experience travels across markets remains uncertain. What is clearer is the model AIR is trying to build.
Its proprietary pod-and-device system is meant to do more than keep users inside one ecosystem. AIR said OOKA pods work only in its own devices, creating an IP-protected setup. That shifts part of hookah from an open trade toward a business with tighter repeat economics, higher switching friction and stronger defensive barriers. The device is one piece of the strategy. The larger move is the effort to turn part of waterpipe into a more controlled commercial architecture.
Science, Regulation and the Unanswered Questions
Regulation remains the unresolved variable in AIR’s story.
The company argues that heated hookah should be understood differently from charcoal-based formats. It describes OOKA as a heat-not-burn, closed-system product with controlled dosing and heating behavior, and cites a peer-reviewed paper published in December 2025 to support claims of reduced toxicants and pollutants in controlled settings compared with charcoal-heated waterpipe use.
The paper is the clearest support AIR offers for its differentiation argument. It is not the same as regulatory acceptance of that argument.
AIR itself acknowledged that policy moves more slowly than innovation, requiring evidence, peer review, consultation and political acceptance. That is more than a procedural caveat. It identifies the central risk in the company’s narrative. AIR may be positioning itself for a world of more risk-proportionate regulation, but it cannot yet show that regulators will adopt its preferred framing, or when.
If regulators eventually treat OOKA as meaningfully different from charcoal-based hookah, the platform gains more than a technological edge. It gains a compliance story that could deepen barriers to entry. If they do not, much of AIR’s premium thesis falls back on more conventional strengths: brand equity, distribution, product design, capital access and control over a proprietary ecosystem.
AIR appears to be preparing for that outcome as well. It pointed to Al Fakher, its flagship hookah brand, as a source of enduring strength in distribution, supply chain, marketing and consumer trust. The company also cited an industry assessment that it said gave it more than 60 percent share of the U.S. market. As presented, that remains attributed company evidence rather than an independently verified market fact.
AIR has established a differentiation thesis, not regulatory acceptance of it. That gap sits at the center of the investment case.
From Hookah Company to Inhalation Platform?
At the edge of AIR’s story sits a larger identity shift: whether a company rooted in hookah can credibly position itself as something broader. Brazier described AIR not simply as a tobacco business with devices attached, but as a “lifestyle tech company” built around “social inhalation rituals,” pushing the business away from a traditional hookah identity and toward something closer to a wider inhalation platform.
There is at least some product evidence behind that ambition. AIR said its innovation efforts extend beyond OOKA to premium vapes, nicotine pouches and VÂNT, which is marketed on its website as a nicotine- and tobacco-free “advanced inhalation system,” with pod-based experiences such as Boost, Focus, Zen and Dream. Taken together, those products suggest AIR is testing a broader inhalation thesis. They do not, on current materials, establish a proven second growth engine outside the company’s traditional core.
VÂNT is more useful here as evidence of strategic direction than as proof of commercial scale.
What That Could Mean for the Trade
That matters beyond one company. If AIR’s logic holds, hookah may no longer be led primarily by businesses that simply participate in a fragmented trade. It may increasingly favor companies able to combine brands with devices, pods, IP protection, regulatory science and access to capital. In that scenario, the category would begin to reward platform builders rather than just product suppliers.
AIR has not proved that transition. But it has helped frame the question more clearly than most: whether hookah can move from a culturally rooted, commercially fragmented trade into a category that is more governable, more scalable and more legible to investors, regulators and the wider industry.
That is the larger test now facing the trade itself, not just AIR.
Cover image generated by AI
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