Philip Morris International (PM) is capitalizing on the surge in smoke-free nicotine products, especially with its Zyn brand.
The category’s rapid growth has prompted convenience stores like Casey’s (CASY) and Murphy USA (MUSA) to rearrange shelves to accommodate consumers seeking tobacco alternatives for their nicotine fix.
“This is a multiyear growth story … and there’s a lot of potential there,” CFRA analyst Garrett Nelson said in an interview. Zyn, which offers nicotine pouches without tobacco, became part of Philip Morris following its acquisition of Swedish Match in late 2022. The brand’s popularity in the U.S. surged so much that it led to a shortage starting in April 2024, which the company expects to resolve by the third quarter.
“They are still a market share leader,” Needham analyst Gerald Pascarelli said in an interview. “They’ve been capacity constrained because they were growing so rapidly … they simply couldn’t service the amount of demand.”
U.S. shipment volumes of Zyn rose from 132 million cans in Q1 2024 to 202 million in Q1 2025. Earlier this year, the FDA authorized marketing for 20 variants of Zyn, including 10 options with 3 mg and 6 mg nicotine strengths, with regulations aimed at ensuring advertising targets adults 21 and older. Each pouch weighs 0.4 grams, while a can totals 6 grams.
Philip Morris’ smoke-free portfolio also includes heated tobacco products like IQOS and e-vapor brands such as Veev. In the most recent quarter, these smoke-free products accounted for 42% of total net revenue.
On June 13, Philip Morris International stock closed at an all-time high of $184.33, up nearly 80% from a year ago. That’s well ahead of what Nelson calls its “closest” competitor, Altria (MO), whose shares rose over 30% and produces the On! brand.
Philip Morris International reported a 5.8% net revenue increase to $9.3 billion in Q1. Smoke-free products like Zyn grew 15% to $3.9 billion, while “combustibles” such as cigarettes remained flat at $5.4 billion. Gross profit rose 11.8% to $6.3 billion overall, with smoke-free products posting a 27.7% surge in gross profit to $2.7 billion.
CFO Emmanuel Babeau told investors the gross profit was “fueled by the rapid growth of Zyn.”
In the U.S., shipment volume of oral smoke-free products in pouches or pouch equivalents increased by 27.2%. Outside the U.S., nicotine pouch volume grew 53% in emerging markets including South Africa and Europe. “Nicotine pouches are relatively lightweight. You can ship a ton,” Pascarelli noted, adding that they are also inexpensive to produce.
Analysts say economic conditions—whether boom, bust, or in between—won’t be a major factor.
“When you have a product that people like and is addictive … consumers are willing to pay a premium,” Nelson said. “Tobacco companies [are] being able to push through price increases very easily.”
One cautionary note: could Zyn follow Juul’s controversial path? “There was a ton of people underage that were vaping,” Pascarelli said, noting the scrutiny Juul faced over flavored products that attracted younger users.
Zyn uses flavors like wintergreen, which are considered less problematic. “They’re not these novel flavors (like mango) that really took off with the vapers” who skew younger, he explained.
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