Category Analysis: Caffeinated Pouches
Caffeinated pouches are recalibrating from being primarily nicotine alternatives to functional products that enhance energy and focus. Backed by affirmative testimonials from partners and consumers alike, pouches are poised to further earn consumers’ trust and build a reputation for delivering trustworthy and satisfying products that give a welcome jolt of energy to not only its loyal following of consumers, but to the overall caffeinated pouches category.
Grinds is intent on helping consumers realize caffeinated pouches are a functional alternative to traditional nicotine pouches. “The biggest challenge is redefining what the pouch format stands for,” said Grinds Co-Founder Matt Canepa. “Big tobacco has done a great job educating consumers on how pouches work the habit, the discretion, the convenience. That awareness is being built by big tobacco. Now the opportunity and the challenge are shifting the perception from ‘nicotine alternative’ to ‘functional alternative.’ We’re seeing that with a growing segment of our target consumers, we call ZUNIYs—Zyn Users Not Interested Yet—consumers who like the pouch format but are looking for benefits like energy or focus without nicotine. From there, it’s really redefining what that pouch can deliver.”
Manufacturers note that at one time, it made sense to merchandise caffeinated pouches in the same vicinity as tobacco and nicotine sections of stores. But now these companies are working with retailers to gain visibility throughout retail spaces in sections that attract more consumers—not just those who are trying to kick a dipping habit. “The most consistent challenge has always been space in stores, thus visibility,” said Jeff Gabler, COO for Smokey Mountain Brands. “We invented the non-tobacco products space in 1985 with Long Cut, then introduced the first ever pouch product in 2005. Until recently, the space to merchandise our products was within the tobacco sections, which made sense because our products were designed to assist adult dippers move away from tobacco/nicotine. But, five years ago, we began moving away from tobacco with our caffeinated pouch products to drive awareness that these products are for consumers beyond tobacco; coffee and energy drink consumers. Our competitors have also done a good job communicating with buyers, finding locations beyond tobacco, and helping drive awareness and grow the category.”
“Wip’s strategic focus for 2026 is to actively engage the two biggest categories in convenience: energy and pouch consumers,” said SVP of Sales, Joe Wichser. “Wip is redefining the energy category via product innovation that delivers what consumers want, without asking them to compromise when it comes to ingredients and convenience. Wip’s retail strategy is one that creates a win for both our category managers looking for incremental margin, and consumers looking for more options in their energy form factors.”
This year, Grinds’ goal is to continue gaining traction within the market. “Our focus in 2026 is very clear: grow Grinds into the No. 1 alternative pouch brand,” Canepa said. “And do it profitably. A lot of new entrants in this space are venture-backed or operating with deep-pocketed funding models. They can afford to chase shares at any cost. That’s not our model. We are not venture-backed. We’re a profit-driven company, and that discipline shapes every decision we make. In 2026, that means: Expanding distribution with the right retail partners; innovating with assortments that drive incremental dollars to retailers and us; continuing marketing efforts to grow our brand and category awareness and expanding our manufacturing capacity to match the forecasted demand.”
A recent brand refresh, coupled with affirming testimonials have positioned Smokey Mountain Brands for a strong start to the year. “We renamed our company ‘Smokey Mountain Brands (SMB)’—‘Where Tradition Meets Innovation’ to position our great company within our strategy, which is to be the ‘one stop shop’ for B2B and D2C,” Gabler said. “We recently received what we consider to be the greatest compliment, which came from the country’s largest CPG distribution company, who said, ‘Smokey Mountain is a trusted vendor, a company that always does the right thing, the right way.’ We are going to build from that and carry that message to make all distributors and retailers’ lives a lot easier when deciding what products to carry in this category, both now and in the future.”
Wip believes the next big thing in the category is functional energy on demand. “Consumers continue to look for more innovation within the category that meets their ever-changing lifestyles, and Wip is positioned to meet those needs,” Wichser said. “Consumers are moving away from oversized cans and toward more precise, portable formats that fit into their actual day. They want control over when and how they energize, whether that is before a workout, between meetings, or during an afternoon reset. At the same time, they are becoming more value-conscious. Wip delivers a cost-effective alternative to traditional energy drinks and daily coffee runs, offering a more affordable, controlled way to fuel up without paying for excess liquid, sugar, or packaging. It is premium functional energy, priced for everyday use. Additionally, expectations are rising. It is not just about caffeine anymore. Consumers want clear strength options, clean ingredients, and flavors they genuinely enjoy. That is where Wip is focused.”
Grinds believes the next phase of growth for the category should be built on responsible messaging and emphasizing proven functional benefits—not just buzz words.
“Energy is the right starting point, but the pouch format can deliver more: electrolytes, focus, and other functional benefits,” Canepa said. “However, real growth won’t come from flooding shelves with dozens of random functional claims. The category needs structure with clear benefit tiers, defined use cases, and innovation that is validated in retail with incremental sales. If new functions don’t drive incremental growth, they don’t build the alternative pouch category. The brands that win will be the ones that shape the category thoughtfully, prove incrementality, and grow the shelf the right way.”
