Bonnie Herzog：U.S. nicotine market seen at about $67B in revenue by 2035 as smoke-free expands

Mar.04

Goldman Sachs Managing Director Bonnie Herzog said the U.S. nicotine market is attractive and growing, with total revenue projected to reach about $67 billion by 2035. She expects cigarettes to account for a smaller share of revenue (47%) as smoke-free revenue expands and becomes a key driver of industry profit growth. Herzog said smoke-free products represent about 48% of U.S. nicotine volumes today and could rise to roughly 75% by 2035.

Key Takeaways

Goldman Sachs MD Bonnie Herzog projected U.S. nicotine revenue of about $67B by 2035
Cigarettes’ revenue share projected at 47% by 2035 as smoke-free expands
Cigarettes seen falling from about 70% of the operating profit pool today to about 50% by 2035
Smoke-free volumes projected to rise from about 48% today to about 75% by 2035
Illicit e-vapor penetration estimated at about 70% today; expected to decline through 2035
Nicotine pouches projected to nearly $11B in revenue by 2035; Zyn and Velo Plus referenced

2Firsts, March 4, 2026

According to CSP, New York-based Goldman Sachs Managing Director Bonnie Herzog said during a virtual session at CSP’s Convenience Retailing University in Austin, Texas, that the U.S. nicotine market is attractive and growing, with total revenue projected to reach roughly $67 billion by 2035. She said cigarettes are expected to make up a smaller portion of revenue (47%) while smoke-free revenue expands.

Herzog said that, given attractive unit economics, smoke-free products are expected to become the key driver of industry profit growth. She added that while cigarettes comprise about 70% of the operating profit pool today, their share is expected to fall to roughly 50% of profits by 2035.

On volumes, Herzog said smoke-free products make up roughly 48% of U.S. nicotine volumes today and she expects that number to rise to roughly 75% by 2035.

In the e-vapor category, Herzog said illicit e-vapor penetration is roughly 70% today and she expects it to fall through 2035. She said the continued prevalence of illicit e-vapor will keep weighing on growth of the formal/tracked channel within vapor, and she expects British American Tobacco to remain the largest branded player in e-vapor until there is greater enforcement on illicit products.

She also cited federal seizures in September, when HHS and CBP seized 4.7 million units of unauthorized e-cigarette products with an estimated retail value of $86.5 million.

Turning to nicotine pouches, Herzog said she expects the segment to grow to nearly $11 billion of revenue by 2035 and to become the second-largest category by volume in 2035, behind e-vapor.

She referenced Zyn, from Stamford, Connecticut-based Philip Morris International, as leading modern oral nicotine, and cited a Goldman Sachs fourth-quarter 2025 survey indicating Zyn gains were supported by promotions, including a free-can offering in September and multi-can discounts from October through November. She added that Velo Plus, from Winston-Salem, North Carolina-based Reynolds American Inc., a BAT subsidiary, has been a “fierce” competitor in the segment.

Image Source: CSP

References:

[1] U.S. nicotine market to reach roughly $67B in revenues by 2035

Also Read:

[1] Goldman Sachs: Chinese Brands Geek Bar and Breeze Surge in U.S. Market as Juul, Vuse Lose Share

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