I ordered a few times from them already. They delivered exactly what ordered and fast (and you get a little candy with it). The problem with the stock is that i don't see the long term moat.
The question i ask myself is: Would i order online if every supermarket or gas station would have a wide array of nicotine pouches to offer? In Germany nicotine pouches are forbidden in retail, but you can order them legally from Sweden, Denmark etc. in normal quantities.
I understand why a German like me orders there (no legal alternative), but not why someone from Denmark, Sweden, Poland etc. orders online (more choices of flavors?).
If they would be sold at every supermarket, corner store, gas station etc. Would i not just simply buy them there while filling up my car?
I don t know one person ordering cigarettes online. Prices are fixed and you get them in every small village via vending machines ( ok, no niche brands. But brands like Marlboro, Lucky Strike, Camel, Pall Mall etc.).
Physical retail has limits due to their footprint and the economics of stocking additional NP SKUs vs maintaining wide arrays of other products to maximize foot traffic and cross-selling opportunities within stores. There are also additional costs with physical, wholesaler markup, and distribution must take product to thousands of stores. While convenience stores are very convenient, all of those costs lead retail ASP to be significantly higher than Haypp's prices. Conversely, as Haypp grows, it can not only maintain lower prices but drive them down even further, ideally widening gross while still sharing some of the savings with the consumer. Additionally, most store clerks aren't ultra knowledgeable about the product category and they are dealing with lines of customers they need to service quickly. Online, you have immense information concerning all product nuance. The migration from physical to online is not exclusive to NP. It actually mirrors dynamics within the premium cigar space, as I covered in my Scandinavian Tobacco Group thesis. Consumers want better prices and want to explore wider variety as they become more knowledgeable - online is the place that happens.
I understand the additional costs of phyisical retail. But in Germany we have the rule of same prices for cigarettes, cigarillos, pipe tobacco etc. everywhere. They cost the same at every gas station, convenience store etc. nationwide. A pack of a pack of Marlboro is the same everywhere. It s forbidden to sell Marlboro cigarettes cheaper at the Internet.
Why should the government not do the same to nicotine pouches?
It s very likely that the government is going to rule for a fixed price for these products too.
As of right now, its online sales cannot be shipped from within Germany, so Haypp sells and ships from Sweden. I know they have also added express shipping options to speed up time to delivery within Germany. Certainly there are risks as specific parties within the EU have taken very different approaches to next-gen nicotine products. But Haypp has highlighted drafted legislation in Germany that would treat the pouch category favorably relative to other product categories. Within the EU, there will also be potential changes from TPD3 and the tobacco excise directive. We'll have to see exactly how that all shakes out.
Also, is the US market (most important) going to have fixed prices? I know they vary a ton here especially by state but also my intuition is that people still don’t order much online
There are no fixed prices in the US. Several brand owners have engaged in discounting and various promotional strategies to spur consumer trial and adoption. It remains to be seen exactly how NGP prices evolve, largely contingent on the extent the FDA authorizes new products. You are correct that online sales are a low % of total NP category sales in the country. Something interest to consider is that, if retail prices were to rise, whether from manufacturers taking prices or excise taxes increasing, consumers would become more price-conscious and would likely transition to online channels at a faster pace.
If I understand slide 9 of their latest presentation correctly, in the US they represent 55% of nicotine pouches online sales and 3% of all nicotine pouches sales. This would imply about 6% of nicotine pouches are sold online in the US.
For comparison, in Norway more than 20% of pouches are sold online, and in Sweden that’s more than 30%.
Correct! So you can have a view on the category growth rate country by country, as well as potential shift from physical to online to determine Haypp's NP trajectory. It only takes a small additional shift to online layered on top of the category growth rate to come up with some fairly radical numbers.
Hallo Ulrich. Hinzukommt, dass Zyn zb bereits einen eigenen Online shop hat. Warum sollten die big tabaccos einen externe shop präferieren...
Wie hast du die Tabak Aktien gespielt? Ich tue mir schwer mit der Gewichtung. Zu viele Firmen haben zu viele einzigartige Nichen. Scandinavian Tobacco Zigarren, BAT IMP alte zigaretten, MO usa play, PMI neue Produkte,...
I hold BAT, Scandinavian Tobacco and bought Imperial today.
BAT and Imperial are worldwide and i think dynamics and regulation will differ from country to country. They trade at 6 to 7 times Free Cashflow, so i think there is a big margin of safety.
With Scandinavian i see a lot of potential with their cigar business. Plus pipe tobacco and cigars are treated different by the regulator (no tobacco tax for cigars in some US states). Scandinavian doesn't have to print horror picture on cigar and pipe tobacco packaging in Germany. So i think Scandinavian has not so much headwinds as the big cigarrete players.
> The question i ask myself is: Would i order online if every supermarket or gas station would have a wide array of nicotine pouches to offer? In Germany nicotine pouches are forbidden in retail, but you can order them legally from Sweden, Denmark etc. in normal quantities.
Something to consider: In Switzerland, nicotine pouches have been abundant for a few years - you can find them at every Kiosk across the country. And the thing that converted me to use snusmarkt.ch after (re-)reading this article yesterday is that the ecommerce pricing is less than 50% of what I pay to offline retail.
To wit, VELO pouches cost 8.00 CHF offline, 3.99 (for a ten-pack) online. Free shipping above orders for CHF 50, so I get at least double the quantity if I can manage to wait three days for UPS delivery from Sweden.
This is, in fact, cheaper than buying them in airports duty-free. I wish I'd known about this two years ago!
On the Haypp Group website, in the Excel spreadsheet entitled "Selected-KPIs-and-financial-statements-Q120-Q423", in the tab entitled "5_BSheet", under net debt, the line entitled "Bank Overdraft" is relatively large each quarter, with an ending balance on 31 Dec '23 of SEK136Mn. In the same Excel spreadsheet, in the tab entitled "6_CF", under "Cash flow from financing activities", the line entitled "Change bank overdraft" is also quite large, with quarterly amounts [in SEK millions] of -41.9, -43.3, -24.9 and 21.8. Why does Haypp overdraft its account(s)? What are the constraints on such overdrafts and how long may they continue?
I can not speak to specifics on the constraints and limits, but this is largely related to managing working capital. Sales are high-velocity, with rapid inventory turnover.
Understood. Would not working capital, however, generally be financed with factoring finance, other debt, equity, or some combination thereof? Does use of bank overdraft(s) here, in material amounts over an apparently extended period of time, come together with certain constraints on such use?
I don't see concerns regarding liquidity, if that's what you're getting at. There are costs, but the very low working capital ratio provides efficiency benefits, and again, it's high turnover and non-cyclical, so very predictable. If there are specific concerns, I'd encourage you to reach out to IR - they would likely provide wonderful context.
just awesome. Do you think that all the big guys will have their own Online Shop like Zyn.com etc?
It would be great to do a blog post about position sizing in this tobacco market. There are cigars (Scandinavian Tobacco), New Products (PMI), cigarettes (BAT, IMP), online retailer (Haypp). How do you size the position when each of these "Tobacco" companies have a unique niche/position?
Swedish Match (now under PMI) actually partners with Scandinavian Tobacco to operate the ZYN ecom platform. It isn't farfetched to see all kinds of other partnerships spring up to leverage existing infrastructure footprints and teams with the technical abilities. Haypp is unique in that it has its robust Insights data and solutions tailored for product trials, launches, etc, and connecting with adult consumers in a way that other platforms can't. They are an important partner for brand owners, and that importance grows as they grow.
Regarding Germany; it´s officially illegal to buy in physical stores, yes. However, most people I know get them from small stores (kiosk / Späti) anyway. I wonder if consumption would fall if German legislators decide to forbid this "illegal" otc selling and consumers would have to order online. Definetly not the driving force of the thesis, but I believe good to have in mind.
Great observation. I think that ultimately total usage would decrease and growth would slow, but a good chunk would migrate to online channels, likely to the benefit of Haypp.
Illegal stuff is already illegal. They could come down harder on the kiosks but realistically they're gonna tackle shipping instead - and if they're serious about getting rid of pouches, that would also kick Haypp out.
Thank you Devin. You mention that they carefully select the suppliers they want to work with. Doesn’t it bother you that they stock products like Elf Bar in the UK?
I'll admit that my initial reaction to the announcement of branching into vape and seeing Elf Bar listed on respective sites was not positive. However, my perspective on Elf Bar is largely warped from my US-centric understanding. Is the Elf Bar parent company wholly responsible for its disproportional underage usage prevalence? There are importers, wholesalers, and the retailers themselves that have distinct responsibilities. A great deal of volume also appear to be counterfeit, which further muddies the waters. If a brand owner is looking to become more responsible, working with Haypp is an ideal start due to their transactions being 100% age verified. I'm still on my toes about it but trust management to continue to do what is in the best interest of the company and shareholders.
Elfbar is very popular in Germany. Some vapes even advertise with famous rap stars on their package ( the FDA would love that ^^).
Tobacco regulation is very different from country to country. For example in italy you can t buy cigarettes at supermarkets. You only can buy them at small stores and bars that have a special tobacco licence.
As i know in the United States every state has it s own tobacco taxes and so prices differ. In Germany for example you have the same price for the same cigarettes. A pack of Lucky Strike is 9 Euro. In all 16 states and it s the same price in online stores. But i can only speak for Germany. But the state seems to not want any bargain prices in the market.
Devin, at their 2023 CMD, they show that NPs are ideal e-goods based on 5 characteristics (slide 10). They compare that to pharmaceuticals which also score well on the same characteristics. You’ve been covering Logista extensively. IIRC Logista has been expanding into pharmaceuticals. Couldn’t Logista expand into NPs? Maybe I’m confusing B2B (Logista) with B2C (Haypp).
Logista is expanding into all NGPs, but they are recorded in its "tobacco and related products" reporting. AFAIK, the company has not spoken about the product category specifically, but has mentioned both HTP and Vape market growth as being highly beneficial for their business.
As others have commented, this is a fantastic piece. The H215 letter is a nice touch. I hadn’t heard about Haypp (my brain keeps reading “Happy”!) Thank you Devin.
There is one thing I can't wrap my head around. I can't think of many other products which we buy repeatedly, with only small variations like flavour, where the standard way to buy is regular delivery from online. I guess coffee and razor blades are the two closest examples, but in both cases it's really a premium option. I can't think of a product where it's the cheapest option. That's because the supermarket model has proven itself to be by far the cheapest way of getting this type of good to the consumer. What makes the economics nicotine pouches SO different that they will be the only product of this sort where the cheapest way to buy is regular online deliveries?
I would guess your first answer will be the massive range of SKUs that make it uneconomic to stock enough of them to satisfy the wide range of customer desires and their thirst for innovation. But I'm not convinced that this represents anything other than an industry in its infancy. I can't imagine there is really much difference between the nicotine pouches of various brands, after all.
Not only is it uneconomic to stock all potential SKUs (limited space, displacing other lucrative product categories is problematic for total traffic), but think of the costs associated with distributing products to thousands of retail outlets. Not to mention the cost of PoS displays and a field force to manage those relationships. Online purchasing leans to those that already have an established habit and who are older. I think Haypp's middle of the road customer is in their late 30's. They generally pre-plan purchases and have the income to purchase in large quantities, thus driving down per-unit price and making shipping attractive. There are no bulk discounts at physical retail beyond promotional 2-for-3's etc. Nothing that compares to buying 25, 50, or more cans online.
As for differences amongst brands, I assure you there are many factors that play into consumer preference. You can get a sense of some of those factors here:
I suppose my presumption is that in the long term, either pouches will become mostly a commodity product to customers, like vapes are now, with a reasonably wide range of standard flavours and loads of brands with little distinction between them; or there will be a couple big brands that are stocked in pretty much every store, like how chewing gum is (at least in the UK - Wrigley's Extra and Airwaves). I'd be surprised if consumer preferences remained both very fragmented between brands, and also strongly loyal to a brand - that's the only way that I think I could see Haypp managing to stay at a lower price point than Walmart.
Regarding the point about bulk-buying, again I don't really see what sets NPs apart from other products here. Cigarettes/tobacco could also be bought online in boxes of 25 or 50 packs, and yet they're not. Smokers pick up one or two packs when they're in a store, because it's cheaper and more convenient.
Thanks for sharing your detailed thesis on this company. I am a little confused on the online advertising portion of the thesis. When I search google for 'nicotine pouches' or 'cheap nicotine pouches' there are four sponsored results with Nicokick being the fourth. If you search 'buy nicotine pouches' there is no advertising and Nicokick and Northerner and 2nd and 4th. I tried searching "nicotine pouches' from my wife's Google profile and the sponsored results in order were Nicokick, Black Buffalo, Rogue Nicotine, Zyn. I was surprised to see that Zyn had a sponsored result. It looks like Google is allowing advertising on a few of these terms (at least currently). Prilla also seems to be in the number one spot on most searches. I wonder if this is just a temporary issue allowing these adwords or if this a shift by Google.
Good article as always,
I ordered a few times from them already. They delivered exactly what ordered and fast (and you get a little candy with it). The problem with the stock is that i don't see the long term moat.
The question i ask myself is: Would i order online if every supermarket or gas station would have a wide array of nicotine pouches to offer? In Germany nicotine pouches are forbidden in retail, but you can order them legally from Sweden, Denmark etc. in normal quantities.
I understand why a German like me orders there (no legal alternative), but not why someone from Denmark, Sweden, Poland etc. orders online (more choices of flavors?).
If they would be sold at every supermarket, corner store, gas station etc. Would i not just simply buy them there while filling up my car?
I don t know one person ordering cigarettes online. Prices are fixed and you get them in every small village via vending machines ( ok, no niche brands. But brands like Marlboro, Lucky Strike, Camel, Pall Mall etc.).
I wish you all a good start to the week :).
Greetings Ulrich
Physical retail has limits due to their footprint and the economics of stocking additional NP SKUs vs maintaining wide arrays of other products to maximize foot traffic and cross-selling opportunities within stores. There are also additional costs with physical, wholesaler markup, and distribution must take product to thousands of stores. While convenience stores are very convenient, all of those costs lead retail ASP to be significantly higher than Haypp's prices. Conversely, as Haypp grows, it can not only maintain lower prices but drive them down even further, ideally widening gross while still sharing some of the savings with the consumer. Additionally, most store clerks aren't ultra knowledgeable about the product category and they are dealing with lines of customers they need to service quickly. Online, you have immense information concerning all product nuance. The migration from physical to online is not exclusive to NP. It actually mirrors dynamics within the premium cigar space, as I covered in my Scandinavian Tobacco Group thesis. Consumers want better prices and want to explore wider variety as they become more knowledgeable - online is the place that happens.
I understand the additional costs of phyisical retail. But in Germany we have the rule of same prices for cigarettes, cigarillos, pipe tobacco etc. everywhere. They cost the same at every gas station, convenience store etc. nationwide. A pack of a pack of Marlboro is the same everywhere. It s forbidden to sell Marlboro cigarettes cheaper at the Internet.
Why should the government not do the same to nicotine pouches?
It s very likely that the government is going to rule for a fixed price for these products too.
As of right now, its online sales cannot be shipped from within Germany, so Haypp sells and ships from Sweden. I know they have also added express shipping options to speed up time to delivery within Germany. Certainly there are risks as specific parties within the EU have taken very different approaches to next-gen nicotine products. But Haypp has highlighted drafted legislation in Germany that would treat the pouch category favorably relative to other product categories. Within the EU, there will also be potential changes from TPD3 and the tobacco excise directive. We'll have to see exactly how that all shakes out.
Also, is the US market (most important) going to have fixed prices? I know they vary a ton here especially by state but also my intuition is that people still don’t order much online
There are no fixed prices in the US. Several brand owners have engaged in discounting and various promotional strategies to spur consumer trial and adoption. It remains to be seen exactly how NGP prices evolve, largely contingent on the extent the FDA authorizes new products. You are correct that online sales are a low % of total NP category sales in the country. Something interest to consider is that, if retail prices were to rise, whether from manufacturers taking prices or excise taxes increasing, consumers would become more price-conscious and would likely transition to online channels at a faster pace.
If I understand slide 9 of their latest presentation correctly, in the US they represent 55% of nicotine pouches online sales and 3% of all nicotine pouches sales. This would imply about 6% of nicotine pouches are sold online in the US.
For comparison, in Norway more than 20% of pouches are sold online, and in Sweden that’s more than 30%.
https://hayppgroup.com/app/uploads/2024/04/Haypp-LD-Micro-FINAL.pdf
Correct! So you can have a view on the category growth rate country by country, as well as potential shift from physical to online to determine Haypp's NP trajectory. It only takes a small additional shift to online layered on top of the category growth rate to come up with some fairly radical numbers.
Hallo Ulrich. Hinzukommt, dass Zyn zb bereits einen eigenen Online shop hat. Warum sollten die big tabaccos einen externe shop präferieren...
Wie hast du die Tabak Aktien gespielt? Ich tue mir schwer mit der Gewichtung. Zu viele Firmen haben zu viele einzigartige Nichen. Scandinavian Tobacco Zigarren, BAT IMP alte zigaretten, MO usa play, PMI neue Produkte,...
I hold BAT, Scandinavian Tobacco and bought Imperial today.
BAT and Imperial are worldwide and i think dynamics and regulation will differ from country to country. They trade at 6 to 7 times Free Cashflow, so i think there is a big margin of safety.
With Scandinavian i see a lot of potential with their cigar business. Plus pipe tobacco and cigars are treated different by the regulator (no tobacco tax for cigars in some US states). Scandinavian doesn't have to print horror picture on cigar and pipe tobacco packaging in Germany. So i think Scandinavian has not so much headwinds as the big cigarrete players.
Why not also MO pure play USA with BUD stake and on! nicotine pouches no2. In USA?
I Think the same. In my opinion BAT, IMP and scandinavian Tobacco are must haves.
Do you reinvest the dividend in these stocks ?
Moin,
> The question i ask myself is: Would i order online if every supermarket or gas station would have a wide array of nicotine pouches to offer? In Germany nicotine pouches are forbidden in retail, but you can order them legally from Sweden, Denmark etc. in normal quantities.
Something to consider: In Switzerland, nicotine pouches have been abundant for a few years - you can find them at every Kiosk across the country. And the thing that converted me to use snusmarkt.ch after (re-)reading this article yesterday is that the ecommerce pricing is less than 50% of what I pay to offline retail.
To wit, VELO pouches cost 8.00 CHF offline, 3.99 (for a ten-pack) online. Free shipping above orders for CHF 50, so I get at least double the quantity if I can manage to wait three days for UPS delivery from Sweden.
This is, in fact, cheaper than buying them in airports duty-free. I wish I'd known about this two years ago!
Cheers,
Johannes
On the Haypp Group website, in the Excel spreadsheet entitled "Selected-KPIs-and-financial-statements-Q120-Q423", in the tab entitled "5_BSheet", under net debt, the line entitled "Bank Overdraft" is relatively large each quarter, with an ending balance on 31 Dec '23 of SEK136Mn. In the same Excel spreadsheet, in the tab entitled "6_CF", under "Cash flow from financing activities", the line entitled "Change bank overdraft" is also quite large, with quarterly amounts [in SEK millions] of -41.9, -43.3, -24.9 and 21.8. Why does Haypp overdraft its account(s)? What are the constraints on such overdrafts and how long may they continue?
I can not speak to specifics on the constraints and limits, but this is largely related to managing working capital. Sales are high-velocity, with rapid inventory turnover.
Understood. Would not working capital, however, generally be financed with factoring finance, other debt, equity, or some combination thereof? Does use of bank overdraft(s) here, in material amounts over an apparently extended period of time, come together with certain constraints on such use?
I don't see concerns regarding liquidity, if that's what you're getting at. There are costs, but the very low working capital ratio provides efficiency benefits, and again, it's high turnover and non-cyclical, so very predictable. If there are specific concerns, I'd encourage you to reach out to IR - they would likely provide wonderful context.
just awesome. Do you think that all the big guys will have their own Online Shop like Zyn.com etc?
It would be great to do a blog post about position sizing in this tobacco market. There are cigars (Scandinavian Tobacco), New Products (PMI), cigarettes (BAT, IMP), online retailer (Haypp). How do you size the position when each of these "Tobacco" companies have a unique niche/position?
Thanks so much!!
Swedish Match (now under PMI) actually partners with Scandinavian Tobacco to operate the ZYN ecom platform. It isn't farfetched to see all kinds of other partnerships spring up to leverage existing infrastructure footprints and teams with the technical abilities. Haypp is unique in that it has its robust Insights data and solutions tailored for product trials, launches, etc, and connecting with adult consumers in a way that other platforms can't. They are an important partner for brand owners, and that importance grows as they grow.
Thank you for this writeup.
Jason has an incredible knack for capturing these sorts of megatrends.
Glad you enjoyed it. Jason and his family are incredibly talented and are wonderful people all around.
Fascinating write up
Thank you, Vickram. Glad you enjoyed it.
Thanks a lot for publishing.
Regarding Germany; it´s officially illegal to buy in physical stores, yes. However, most people I know get them from small stores (kiosk / Späti) anyway. I wonder if consumption would fall if German legislators decide to forbid this "illegal" otc selling and consumers would have to order online. Definetly not the driving force of the thesis, but I believe good to have in mind.
Great observation. I think that ultimately total usage would decrease and growth would slow, but a good chunk would migrate to online channels, likely to the benefit of Haypp.
Illegal stuff is already illegal. They could come down harder on the kiosks but realistically they're gonna tackle shipping instead - and if they're serious about getting rid of pouches, that would also kick Haypp out.
Hello everyone.
Do you guys reinvest the dividend in these tobacco stocks or do you „cash out“ via the dividend and invest in other assets.
Thank you Devin. You mention that they carefully select the suppliers they want to work with. Doesn’t it bother you that they stock products like Elf Bar in the UK?
I'll admit that my initial reaction to the announcement of branching into vape and seeing Elf Bar listed on respective sites was not positive. However, my perspective on Elf Bar is largely warped from my US-centric understanding. Is the Elf Bar parent company wholly responsible for its disproportional underage usage prevalence? There are importers, wholesalers, and the retailers themselves that have distinct responsibilities. A great deal of volume also appear to be counterfeit, which further muddies the waters. If a brand owner is looking to become more responsible, working with Haypp is an ideal start due to their transactions being 100% age verified. I'm still on my toes about it but trust management to continue to do what is in the best interest of the company and shareholders.
Elfbar is very popular in Germany. Some vapes even advertise with famous rap stars on their package ( the FDA would love that ^^).
Tobacco regulation is very different from country to country. For example in italy you can t buy cigarettes at supermarkets. You only can buy them at small stores and bars that have a special tobacco licence.
As i know in the United States every state has it s own tobacco taxes and so prices differ. In Germany for example you have the same price for the same cigarettes. A pack of Lucky Strike is 9 Euro. In all 16 states and it s the same price in online stores. But i can only speak for Germany. But the state seems to not want any bargain prices in the market.
Wow! Good job!
Thanks for reading
Great discovery and writeup. Glad to be a subscriber! Thanks for your efforts.
Thank you. Never hesitate to reach out
This is like a good book I keep reading it
I appreciate the kind words. As always, feel free to reach out if you'd like to chat. You know how to reach me!
Devin, at their 2023 CMD, they show that NPs are ideal e-goods based on 5 characteristics (slide 10). They compare that to pharmaceuticals which also score well on the same characteristics. You’ve been covering Logista extensively. IIRC Logista has been expanding into pharmaceuticals. Couldn’t Logista expand into NPs? Maybe I’m confusing B2B (Logista) with B2C (Haypp).
Logista is expanding into all NGPs, but they are recorded in its "tobacco and related products" reporting. AFAIK, the company has not spoken about the product category specifically, but has mentioned both HTP and Vape market growth as being highly beneficial for their business.
As others have commented, this is a fantastic piece. The H215 letter is a nice touch. I hadn’t heard about Haypp (my brain keeps reading “Happy”!) Thank you Devin.
Thanks, Tian. This company is very different than most of the ones I cover, and is certainly special.
Great write up.
There is one thing I can't wrap my head around. I can't think of many other products which we buy repeatedly, with only small variations like flavour, where the standard way to buy is regular delivery from online. I guess coffee and razor blades are the two closest examples, but in both cases it's really a premium option. I can't think of a product where it's the cheapest option. That's because the supermarket model has proven itself to be by far the cheapest way of getting this type of good to the consumer. What makes the economics nicotine pouches SO different that they will be the only product of this sort where the cheapest way to buy is regular online deliveries?
I would guess your first answer will be the massive range of SKUs that make it uneconomic to stock enough of them to satisfy the wide range of customer desires and their thirst for innovation. But I'm not convinced that this represents anything other than an industry in its infancy. I can't imagine there is really much difference between the nicotine pouches of various brands, after all.
Thanks for your questions and thoughts, Matt.
Not only is it uneconomic to stock all potential SKUs (limited space, displacing other lucrative product categories is problematic for total traffic), but think of the costs associated with distributing products to thousands of retail outlets. Not to mention the cost of PoS displays and a field force to manage those relationships. Online purchasing leans to those that already have an established habit and who are older. I think Haypp's middle of the road customer is in their late 30's. They generally pre-plan purchases and have the income to purchase in large quantities, thus driving down per-unit price and making shipping attractive. There are no bulk discounts at physical retail beyond promotional 2-for-3's etc. Nothing that compares to buying 25, 50, or more cans online.
As for differences amongst brands, I assure you there are many factors that play into consumer preference. You can get a sense of some of those factors here:
https://invariant.substack.com/p/nicotine-pouches-the-us-front
I suppose my presumption is that in the long term, either pouches will become mostly a commodity product to customers, like vapes are now, with a reasonably wide range of standard flavours and loads of brands with little distinction between them; or there will be a couple big brands that are stocked in pretty much every store, like how chewing gum is (at least in the UK - Wrigley's Extra and Airwaves). I'd be surprised if consumer preferences remained both very fragmented between brands, and also strongly loyal to a brand - that's the only way that I think I could see Haypp managing to stay at a lower price point than Walmart.
Regarding the point about bulk-buying, again I don't really see what sets NPs apart from other products here. Cigarettes/tobacco could also be bought online in boxes of 25 or 50 packs, and yet they're not. Smokers pick up one or two packs when they're in a store, because it's cheaper and more convenient.
Thanks for sharing your detailed thesis on this company. I am a little confused on the online advertising portion of the thesis. When I search google for 'nicotine pouches' or 'cheap nicotine pouches' there are four sponsored results with Nicokick being the fourth. If you search 'buy nicotine pouches' there is no advertising and Nicokick and Northerner and 2nd and 4th. I tried searching "nicotine pouches' from my wife's Google profile and the sponsored results in order were Nicokick, Black Buffalo, Rogue Nicotine, Zyn. I was surprised to see that Zyn had a sponsored result. It looks like Google is allowing advertising on a few of these terms (at least currently). Prilla also seems to be in the number one spot on most searches. I wonder if this is just a temporary issue allowing these adwords or if this a shift by Google.