When tucked between lip and gum, a small white pouch of Zyn is intended to give the user a pleasant nicotine hit. Its maker is getting a lift, too. Shares in Philip Morris International (PMI), the world’s largest publicly traded tobacco company, are at record highs. Investors’ enthusiasm, which has surged since a bumper earnings report in early February, has little to do with sales of Marlboro or PMI’s other cigarettes. It is fuelled by the firm’s booming “smoke-free” products (broadly, anything but burning tobacco)—and chiefly by Zyn.
In 2024 shipments of Zyn rose to 644m cans (of 15-20 nicotine pouches each), up by more than half from the year before. In America, where Zyn has become something of a MAGA favourite, PMI has struggled to keep up with demand. It plans to expand a factory in Kentucky and to build a new one in Colorado. In January America’s Food and Drug Administration (FDA) permitted Zyn to be marketed to adults, on the basis that it is safer than cigarettes (though not risk-free).
There is much for investors to like about smoke-free products. Margins are fatter than for cigarettes, and widening. They also offer protection against an existential threat to tobacco companies: falling demand for their core product. Globally, tobacco use has plunged by about a quarter since 2010, thanks to health campaigns and stricter government policies. Some rich countries are even flirting with all-out bans. The attraction of alternatives that consumers like and regulators tolerate is clear.
Few tobacco companies have been as vocal as PMI in pursuing smoke-free products. Jacek Olczak, its chief executive, is full of bad things to say about smoking. He once recounted telling a hopeful suitor to ditch smoking or “you will never date my daughter.” The company has pledged to make two-thirds of its revenues from smoke-free sources by 2030. It chose to stay largely out of vapes, the industry’s main alternative to cigarettes, but says it has spent billions developing IQOS, a device that heats rather than burns tobacco. And in 2022 it spent $16bn on a majority stake in Swedish Match, Zyn’s inventor.
Might Zyn’s success become a source of trouble? Nicotine pouches are growing in popularity among teenagers. The latest National Youth Tobacco Survey reports that 1.8% of American middle- and high-school children (aged 11-18) have taken up the habit; only vaping, at 5.9%, was a more popular source of nicotine. “Zynfluencers” post videos of themselves using the pouches on TikTok. For now, the FDA seems relaxed. In January it said the risk to children using pouches did not outweigh the benefit to adults switching from cigarettes.
Yet smoke-free products have brought big tobacco headaches before. In 2018 Altria, another big tobacco firm, snapped up a stake in Juul, then a leading vape-maker, for $12.8bn. Within four years Juul was nearly bankrupted by lawsuits blaming it for adding to the craze in vaping among the young. That should serve as a cautionary tale. ■
Correction (February 27th): January’s decision by the FDA to allow Zyn to be marketed to adults does not permit the firm to claim that the product is safer than cigarettes, as the original version of this article suggested.
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