Saudi State-owned Badael: First Company to Locally Produce Nicotine Pouches in Saudi Arabia

In the recent 2023 Global Nicotine and Tobacco Forum (GTNF) held in Seoul, South Korea, which attracted international giants of the tobacco industry and several electronic cigarette companies, a notable presence was Badael, a nicotine pouch company hailing from Saudi Arabia. Representatives from Badael, including their Marketing and Sales Director, Joe Sakr, engaged in in-depth discussions with 2FIRSTS about the company's vision, background, and the future of reduced-harm tobacco in Saudi Arabia.

Nicotine pouches, an emerging alternative to traditional tobacco products, allow users to obtain nicotine by placing a pouch under their lips, eliminating the need for conventional tobacco consumption. The primary goal of these products is to assist smokers in quitting while offering a more convenient and discreet method of nicotine intake.

Launched in May 2023, Badael, meaning "alternatives" in Arabic, claims to be a wholly-owned subsidiary of Saudi Arabia's Public Investment Fund (PIF). Public Investment Fund (PIF) is Saudi Arabia's sovereign wealth fund, one of the largest in the world with estimated assets of $776 billion, designed to make investments on behalf of the Saudi government and chaired by Crown Prince Mohammed bin Salman since 2015.

Joe Sakr shared insights into the stakeholders behind Badael, emphasizing their investment from the Public Investment Fund (PIF) to help contribute to Saudi Arabia’s national vision of improving people's quality of life. The company's mission is to mitigate the harm caused by cigarette smoking and provide a healthier alternative.

Badael swiftly introduced its own brand of nicotine pouches, known as "DZRT," shortly after its establishment. The product was initially launched on their website www.DZRT.com and is now available in retail stores. Sakr revealed that the response from consumers and retailers to DZRT nicotine pouches has been overwhelmingly positive. He reiterated the company's mission to transition smokers away from cigarettes to better alternatives, which aligns with the purpose of nicotine pouches.

One of the major challenges the company faces is the understanding of this new category so that   these new nicotine products are considered a distinct product category rather than equating them with traditional cigarettes. Sakr stressed that this approach would provide more choices and enable smokers to access a better and more convenient nicotine delivery system, thereby reducing their dependence on harmful cigarettes.

"We would like to see all stakeholders better understanding this category, so that they view these products as novel products that can help in reducing the harm caused by cigarettes as not all nicotine delivery systems are created equal" Sakr stated.

2FIRSTS questioned whether nicotine pouches could serve as the ultimate solution for nicotine products. Sakr responded by highlighting that traditional cigarettes could always have a presence. The World Health Organization defines a "smoke-free nation" as one with a smoking rate of less than 5%. Sweden is expected to achieve this goal next year, but it does not mean that nobody would smoke within the country. According to Sakr, while nicotine pouches may not completely replace cigarettes, every cigarette replaced by a pouch is beneficial to public health.

Another topic of discussion was the regulation of nicotine pouches. Currently, in some countries, nicotine pouches are considered consumer products, such as in Canada. However, more markets are starting to regulate them as they clearly contain nicotine. Sakr expressed their support for reasonable regulations to ensure that nicotine pouches are not accessible to minors or non-smokers while maintaining sensible rules that allow those in need to understand and use these products.

"We advocate for reasonable regulation of nicotine pouches as an alternative to cigarettes," he said.

Sakr also shared Badael's market plans. Currently, they only sell their products in Saudi Arabia, but they plan to gradually expand to neighboring countries. The company intends to export DZRT nicotine pouches to Gulf Cooperation Council (GCC) countries such as the United Arab Emirates, Kuwait, Bahrain, and might even consider to further expand from the Middle East to the global market.

However, Saudi Arabia has no history of producing nicotine pouches. As a company primarily focused on nicotine pouches, how will Badael address the issue of sourcing materials locally? Sakr explained that they currently manufacture nicotine pouches and packaging in Saudi Arabia but import the mixture of nicotine from abroad. They plan to localize the production of the mixture in the near future, ensuring the entire supply chain is completed in-house.

The nicotine pouch product offers three different nicotine concentrations: 3mg, 6mg, and 10mg. Furthermore, Badael provides eight different flavors. Currently, the company primarily imports the nicotine mixture from Sweden, but they plan to localize production in Saudi Arabia.

"We aim to completely manufacture our products locally in Saudi Arabia," Sakr said.

Sakr emphasized that the convenience and discreet nature of nicotine pouches make them an attractive choice for smokers, especially in situations where smoking is prohibited, such as during air travel, train journeys, or in meeting rooms. He believes that smokers will gradually experience the positive effects of nicotine pouches and transition towards them, with some successfully quitting smoking altogether.

For more information about Badael and DZRT please visit ww.Badaelcompany.com and www.DZRT.com