Saudi State-Owned Badael: Taking Nicotine Pouches from the Middle East to the World

The marketing and sales director of Badael, a wholly-owned company of Saudi Arabia's sovereign wealth fund, pointed out that nicotine pouches help provide more options, allowing smokers to obtain nicotine more easily, thereby reducing dependence on harmful cigarettes; the plan is to first spread the products from Saudi Arabia to the Middle East and eventually penetrate national markets.

Recently, at the 2023 Global Nicotine and Tobacco Forum (GTNF) held in Seoul, South Korea, international tobacco companies and several e-cigarette companies attended. Among the participating companies, a nicotine pouch company from Saudi Arabia—Badael caught attention. Badael's marketing and sales director Joe Sakur had an in-depth exchange with the team about the company's philosophy, background, and the future of tobacco harm reduction in Saudi Arabia.

Badael's marketing and sales director Joe Sakur poses for a photo with the team | Source: Badael

Nicotine pouches are an emerging alternative tobacco product, which users place inside their lips to obtain nicotine without using traditional tobacco products. This product aims to help smokers quit while providing a more convenient and discreet way to obtain nicotine.

“Breaking the Misconception that Everything Contains Nicotine”

Badael was established in May 2023, meaning “alternatives” in Arabic. According to its official website, Badael is said to be a wholly-owned subsidiary of Saudi Arabia's Public Investment Fund.

Public information shows that the Public Investment Fund (PIF) is Saudi Arabia's sovereign wealth fund. It is one of the largest sovereign funds in the world, with an estimated total asset of $776 billion, aimed at representing the Saudi government in investments. This wealth fund has been controlled by Saudi Crown Prince Mohammed bin Salman since 2015.

Sakur shared information about Badael's stakeholders, stating that their investments come from the Public Investment Fund (PIF), as they are committed to a shared vision of improving the quality of life for the population. The company's mission is to mitigate the harm caused by cigarettes and provide healthier options for smokers.

Badael's official website introduction | Source: Badael

Badael launched its own brand of nicotine pouches—DZRT shortly after its establishment. This product was first launched on the website and is now available in retail stores.

Sakur told the team that both consumers and retailers have responded very positively to the DZRT nicotine pouches. He also stated that the company's mission is to transition smokers from cigarettes to healthier options, which is precisely the purpose of nicotine pouches.

DZRT nicotine pouches | Source: DZRT

Sakur stated that one of the main challenges the company faces is educating regulators and stakeholders to better understand these new nicotine products and to view them as a distinct product category rather than simply comparing them to traditional cigarettes. He pointed out that this will help provide more options, allowing smokers to obtain nicotine more easily, thereby reducing dependence on harmful cigarettes.

“We want regulators and all these stakeholders to better understand the products and nicotine, viewing these products as new products, breaking the misconception that everything contains nicotine,” Sakur said.

“Cigarettes Will Always Exist”

The team asked: Can nicotine pouches become the ultimate solution for nicotine products?

Sakur replied that cigarettes will always exist. The World Health Organization defines a “smoke-free country” as one where the traditional cigarette usage rate is below 5%. Sweden is expected to achieve this goal next year, but that does not mean there will be no smokers in the country. He believes that while nicotine pouches may not completely replace cigarettes, even a small step is beneficial for everyone's health.

#p#分页标题#e#

In Sweden, the smoking rate among youth aged 16-29 is only 3% | Source: Swedish experience

Another topic of discussion is the regulatory issues surrounding nicotine pouches. Currently, nicotine pouches are considered consumer products in some countries, such as Canada. However, more and more markets are regulating them, as the product clearly contains nicotine. Sakur stated that they support moderate regulations to ensure that nicotine pouches are not accessed by minors or non-smokers, but at the same time hope to maintain reasonable regulations to ensure that those in need can learn about and use this product.

 “We advocate for reasonable regulation of nicotine pouches as a cigarette alternative,” he said. 

Achieving Complete “Made in Saudi Arabia” as Soon as Possible

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

However, Saudi Arabia itself has no history of producing nicotine pouches. As a company primarily engaged in nicotine pouches, how will Badael address the raw material issue?

In this regard, Sakur stated that they currently manufacture nicotine pouches and packaging in Saudi Arabia, but the mixture inside the nicotine pouches is imported from abroad. They plan to localize the production of the mixture in the future to complete the supply chain entirely in-house.

Nicotine pouches consist of synthetic nicotine, sweeteners, stabilizers, and other components | Source: Flavor Lightning

It is understood that the company's nicotine mixture is mainly imported from Sweden, but they plan to localize production in Saudi Arabia.

“Our goal is to produce products entirely locally in Saudi Arabia,” Sakur said. 

 Saudi Arabia Public Investment Fund (PIF) | Source: PIF

Sakur pointed out that the convenience and discretion of nicotine pouches make them an attractive choice for smokers, especially in situations where smoking is not allowed, such as on airplanes, trains, or in conference rooms, where using nicotine pouches is discreet yet allows timely access to the needed nicotine.

He believes that smokers will gradually feel the benefits of nicotine pouches and begin to transition to them, with some successfully quitting smoking with the help of nicotine pouches.