Philip Morris International Expands ZYN Production

(Reuters) – Philip Morris International (NYSE:PM) announced on Tuesday it will invest $232 million to expand production capacity for ZYN nicotine pouches at its Owensboro, Kentucky plant to meet robust demand.

The investment will be made through one of PMI’s Swedish Match affiliates, following a $600 million investment to open a ZYN manufacturing facility in Colorado about a month ago.

Why It’s Important

Shipments of ZYN experienced a 54% growth in the second quarter, reported in July, but short-term supply chain constraints impacted volume growth due to high demand.

ZYN serves as an alternative to traditional chewing tobacco products and is a nicotine pouch that, according to Philip Morris, does not contain tobacco.

Context

In 2022, Philip Morris acquired Zyn-parent Swedish Match in a $16 billion deal, as tobacco companies sought alternatives to traditional products amidst increasing health awareness and stricter regulations.

In June, PMI suspended online sales at ZYN.com across the U.S. after receiving a subpoena from the District of Columbia related to compliance with the 2022 ban on flavored tobacco sales.

Concerns were raised about illicit sales of ZYN impacting PMI’s numbers during the company’s second-quarter conference call in July.

What’s Next

Construction for the Kentucky facility expansion is currently underway, with expected completion by the second quarter of 2025. To boost production, the facility will operate 24/7 starting in the fourth quarter of this year. PMI estimates the expansion will provide around 900 million cans of capacity for ZYN by 2025.

(This story has been refiled to remove a picture)