Markets 
As nicotine pouches take off in parts of corporate America – with some tech employers handing them out to workers to boost productivity – one startup is expanding its roster of celebrity investors in the hope of taking on deep-pocketed industry leaders like Zyn.
Sesh – which touts itself as one of the few pouch-makers not backed by Big Tobacco – says Grammy-winning DJ Khaled has invested in the company and is promoting its new raspberry lemon flavor.
He joins A-list Sesh investors including Ashton Kutcher, Post Malone, Lance Armstrong, country musician Zach Bryan, electronic music star Diplo, the Jonas brothers and the Chainsmokers.
The celebs are partnering with the company as part of the $40 million it has raised from investors like venture firm 8VC and Troy Link, the chief executive of jerky giant Jack Link’s.
But looming in the background is the rise and fall of Juul, the e-cig company that had its business upended after it was slammed with hundreds of lawsuits accusing it of deliberately marketing to teenagers. Its aggressive social media promos featuring influencers came under heavy criticism.
Sesh says it is trying to avoid Juul’s mistakes, with a spokesperson describing the vaping brand as “the cautionary tale this whole category learned from.”
All of Sesh’s celeb partners are over 30, “with audiences to match,” the spokesperson added. None of the stars were available for comment.
“We built Sesh differently: no TikTok, no underage-skewing imagery, age verification at every point of sale. Our partners are investors who believe in the mission, not influencers hired to reach a young audience,” the spokesperson said.
DJ Khaled, known for hits like “I’m the One” and collaborations with artists including Rihanna and Lil Wayne, joins forces with Sesh as nicotine pouches appear to be having a cultural moment. In a video posted to his Instagram last month, Khaled speeds across tropical waters in a jet ski to deliver cans of Sesh to a waterfront mansion.
While the average Silicon Valley techie wouldn’t be caught dead smoking, corporate workers — especially in tech and finance — appear to be taking a liking to sleek nicotine sacs, saying they sharpen their focus during demanding tasks.
Users put the thumbnail-size pouches between their gums and their cheeks like traditional chew, though Sesh doesn’t contain tobacco. It is sold by the can for $5 to $7 and contains “synthetic nicotine” and “food-grade ingredients,” the company says.
Sesh made headlines earlier this year when companies including Palantir — whose co-founder Joe Lonsdale is also the founder of 8VC — installed branded vending machines stocked with the product in their offices.
The global nicotine pouch market is expected to grow from nearly $10 billion this year to $56.7 billion in 2035, according to the Global Markets report.
As of last year, Zyn controlled 26% of the market, Global Market Insights found. Meanwhile, Sesh wasn’t even listed as one of the 15 biggest players in the sector. The Sesh spokesperson declined to share Sesh’s revenue but said it grew 533% in the first quarter compared to the same period last year.
Sesh co-founder and CEO Max Cunningham says he believes nicotine pouches have so much potential that he quit his job as a liquor salesman and flew to Sweden to meet with the “godfather” of nicotine pouches, Thomas Ericsson, to develop a new formula for Sesh.
“That was back in 2021 before it had become the category it is now, with all this attention,” Cunningham said. “My goal was just – how do we get this product to market.”
As Sesh tries to gain ground, it faces challenges like New York State’s recently passed “Bro Tax,” which puts alternative nicotine products like it and Zyn under the same 75% tax as cigarettes. The goal is to make nicotine pouches too expensive for most teens.
The “Bro Tax” – which nods to nicotine pouches’ popularity with men in particular – was panned by convenience stores and business groups but cheered by some public health advocates, who call the pouches gateways to smoking.
“The governor’s proposal is a common-sense measure to improve public health at large, push back against manipulative tactics by big tobacco companies and increase necessary protections against life-threatening products,” said Kassandra White, a spokeswoman for Gov. Hochul.
Cunningham hopes other states don’t adopt similar measures.
“I think it’s unfortunate because, while I understand they need the revenue, I hope that it doesn’t impact the growth of this category. I just hope it doesn’t go that way everywhere else,” he said.
The Food and Drug Administration opened the door for the nicotine pouch industry last year when it granted approval for Zyn to sell its wares. The agency said last month it will allow Zyn to market its products as being less harmful than cigarettes.
In May, the FDA said it wouldn’t prioritize enforcement on marketing by nicotine pouch companies that have pending applications.
Sesh has permission to sell but is still waiting for FDA approval to market its products.
“It’s what keeps you up at night,” Cunningham said, noting that he has spent $15 million of the $40 million he has raised on seeking FDA approval.
Sesh is marketing itself as a product for existing nicotine users and as a counterweight to tobacco giants that have recently launched nicotine pouch products. Cunningham said Sesh’s pouches have a more steady release of nicotine as opposed to the upfront spike that Zyn offers.
“I think these are really important, I think it’s going to be good for public health,” Cunningham said.
Still, Dr. Michael Fiore, co-founder of the University of Wisconsin’s Center for Tobacco Research and Intervention, previously told The Post, “Individuals will often switch nicotine products.”
He warned that many tech workers are likely nonusers and that pouches “could be causing addiction in a population that’s not currently using it.”
Zyn is owned by Philip Morris International, and tobacco giants British American Tobacco, Imperial Brands and others operate their own nicotine pouch lines.
“Strong category leaders tend to attract attention and competition. And we support additional, better choices for adults 21+ who continue to use nicotine, if commercialized responsibly,” a Philip Morris spokesperson told The Post.
Cunningham said Sesh doesn’t have any formal marketing arrangements with its celebrity investors and so far, they’ve helped mainly with giving the company credibility with retailers and making some warm introductions to potential business partners.
“It’s more organic than anything – if they’re using the product, then hopefully that gets seen,” Cunningham said.
For its part, Juul has re-emerged with fresh regulatory approval and a focus on smoking cessation.
Read the full article here
