Date: April 3, 2025
Haypp Group established new Financial Targets for 2028:
– 18%-25% annual revenue growth (lower in 2025 due to the ZYN supply shortage; wide range is driven by the different growth scenarios in the key U.S. market)
– Adjusted EBIT margin of 5.5% +/- 1.5% (wide range to keep the flexibility to invest in growth)
– Double the revenue base and quadruple the profit by 2028
Key Notes:
– Hayyp will fail to achieve the previously set 2025 target of SEK5 billion net revenue due to ZYN supply shortage in the U.S.
– Haypp’s Business Model: a marketplace between the brand owners and consumers
– Haypp has more than 30% market share among the products launched in the U.S. in the last 12 months
– 7 million additional nicotine pouch users in Haypp’s footprint by 2028. Most of the new users will come from the U.S. market (+5.2 million): Haypp expects the number of pouch users in the U.S. to increase from 6.3 million in 2024 to 11.5 million in 2028 (+82.5%)
– Penetration of online in nicotine pouch sales is 3% in the U.S. versus 36% in Sweden => Haypp believes that there is a large room to grow
– Haypp aims to be the front-runner in setting the standards in online sales of nicotine products – in matters like age verification, product validation, etc.
– Haypp paused the expansion into new geographies in the EU until there is regulatory clarity
– All products sold in Haypp online stores are tested and validated by eurofins before listed
– Haypp has an increasing share of market (reaching 20%-40% range) among products launched in the key markets (US, UK, Sweden) in the last 12 months. The number of new launches are accelerating in the fast-growing US and UK markets. The market share among new launches is an early indicator of future market share (with some 18-24 months time gap)
– In trial generation, Haypp has 2x-4x share compared to its overall market share
– Haypp’s Media & Insights revenue is growing at 2x the rate of overall revenue growth and has now reached to a high single-digit percentage of the overall revenue
– Haypp offers 50% discount in Growth markets and 30% discount in Core markets to consumers when compared to c-stores while being up to 15% cheaper for the brand owners (in terms of selling costs). Price gap (versus offline retilers) accelerates migration to online. Lower margins in Core markets are supported with higher Media & Insights revenue
– 1pp-2pp of adjusted EBIT margin to be re-invested for growth through 2028
US Market:
– Around 50 million nicotine consumers in the U.S., of which 6 million use nicotine pouches (x3 vs. 2021). Number of nicotine pouch users in the U.S. is expected to double over the next 5 years
– Six large brand owners are present in the NP category. Accelaration of 2nd generation product launches is driving fragmentation
– Haypp has 2.5% share in the overall U.S. market, 85% share in the online channel. Haypp’s NP volume grew by +41% in 2024
– Haypp plans to implement a state-based pricing. Moreover, Haypp’s recently launched loyalty program already has 5,000 registered users.
Other Markets:
– UK: Expected to the 2nd largest NP market. Number of NP users to triple by 2028 (reaching 9% share in the total nicotine market). Haypp has 4% share in the overall U.K. market, 65% share in the online channel. Haypp’s NP volume grew by +97% in 2024. UK is the only market where Haypp carries a full NGP assortment (heated tobacco, vapes & nicotine pouches). Haypp plans to develop a store brand in the UK
– German-speaking Europe: German market could open with the EU TPD3 at the latest (key event to watch out). Switzerland is small in size, but highly profitable. A dedicated platform launched for the fast-growing Austrian market
Haypp’s 2028 Targets:
– 65% of the additional Haypp revenue through 2028 is expected to come from the U.S. market
Our take: Haypp’s future is predominantly dependent on its ability to establish itself as a niche leader (“online sales of nicotine pouches”) in the vast U.S. nicotine market (65% of the future growth). There are good reasons (e.g. Haypp’s track record, capabilities, infrastructure, business relations, etc.) to believe that Haypp can succeed in this endavor. It seems that investing in Haypp is equivalent to buying a call option (a leveraged investment instrument) on the transformation of the U.S. nicotine market: from traditional to new nicotine products, from offline to online sales.
