Can Smoke-Free Products Power Philip Morris' Next Decade of Growth?
Air 2, LLC
Can Smoke-Free Products Power Philip Morris' Next Decade of Growth?
Philip Morris International Inc. PM is rapidly transforming its business model to align with the global shift toward reduced-risk products. In the first quarter of 2025, smoke-free products accounted for 44% of the company’s total gross profit — an impressive milestone that reflects its serious push to become a majority smoke-free firm.
At the heart of Philip Morris’ transformation is its multi-category strategy, led by IQOS, ZYN and VEEV. IQOS, a scientifically backed heat-not-burn device, continues to gain traction globally, delivering 9.4% HTU-adjusted IMS growth in the first quarter despite regulatory headwinds in Europe. Meanwhile, ZYN's performance in the United States has been exceptional, with shipments up 53% year over year to 202 million cans.
Article Summary:
- PMI's Smoke Free Vision.
With products available in 95 markets and almost 38.6 million adult users globally, PM’s smoke-free vision is materializing. Backed by scientific innovation, strategic partnerships and manufacturing investments, the company is on a clear path to achieving a majority smoke-free future. - PMI’s Competition in the Smoke-Free Category.
Altria Group, Inc. MO and British American Tobacco p.l.c. BTI are the key tobacco companies competing with Philip Morris in the smoke-free category. - PMI’s Price Performance, Valuation and Estimates.
Shares of Philip Morris have rallied 51.4% year to date compared with the industry’s growth of 38.5%. From a valuation standpoint, PM trades at a forward price-to-earnings ratio of 23.27X, above the industry’s average of 15.46X.
Nicotine pouches are taking a much larger role in the U.S. oral tobacco market as the category continues to shift toward the Nicotine Pouch format. In the second quarter of 2026, the overall nicotine pouch category accounted for 59.9% of the oral tobacco category, up 8.1 percentage points year over year and 1.8 points sequentially. So, who is leading this trend?
Watch this interview with Stacey Kennedy, Philip Morris' International, USA, CEO Stacey Kennedy, Philip Morris International U.S. CEO, details the $1.2 billion investment in their new ZYN nicotine pouch plant in Aurora, Colorado, highlighting its rapid construction and $550 million annual economic impact. Kennedy discusses ZYN's growing demand and recent FDA authorization, which she calls a 'most important endorsement' due to its reduced-risk health claims.
Why nicotine pouches, more than other available alternative options? But why pouches, more than other options? According to the report, it’s a mixture of practicality and “perceived health benefits.” Survey respondents viewed pouches as “healthier” (64 percent), “more discreet” (also 64 percent) and “less intrusive to others” (52 percent), compared to other nicotine products.
With Zyn and On! Plus earning marketing approval from the FDA, the category is becoming increasingly important in c-stores. As cigarette usage continues to decline in the U.S., smokeless tobacco is making its case as the new darling of the backbar.
Daily Nicotine Pouch Use... What is the true cost to our young adults? Is this prolific use of pouches and vapes among teens today the beginning of a new age of managing stress and anxiety for teens and young adults?
Palantir, Hello Patient and other tech companies are stocking offices with nicotine products to increase worker productivity.
New U.S. Wide Liquor Store Tax Hike on NA-Beer and 40-Proof Alcohol.
BAT rolls out VELO nicotine pouches in Argentina as social media buzzes about ZYN distribution.
Breaking News | China Deploys Full-Chain Crackdown on Illicit Tobacco; Enforcement Storm Looms for Illegal Tobacco and E-Cigarettes.
Is Altria ON!, or OFF? While on! held an 8.7% share of the total U.S. oral tobacco category, its position within the nicotine pouch segment slipped to 15.6%, down 4.1 points amid highly elevated competitor promotional activity.
