Dive Brief:
- Philip Morris International (PMI) is investing $232 million into a Zyn production facility in Owensboro, Kentucky, which will result in about 450 jobs with the company, according to a Tuesday press release.
- The tobacco-free Zyn nicotine pouches are owned by PMI subsidiary Swedish Match. Zyn’s production was unable to keep up with demand this summer, leading to supply shortages, according to a report from Goldman Sachs.
- This news follows PMI earmarking $600 million over the next two years to boost Zyn production at the company’s Aurora, Colorado, facility.
Dive Insight:
As tobacco sales continue to fall, companies like PMI have increasingly turned to other classes of items. Smokeless products are the second-largest category in the nicotine space, according to Goldman Sachs.
Zyn is the leader in the nicotine pouch space, with more than $2.4 billion in annual sales for the year ended Aug. 10, according to NielsenIQ. These products are small, dissolvable pouches of nicotine that users place between their lips and gums.
The changes at the Owensboro facility are expected to boost Zyn production by about 900 million cans in 2025, PMI said in the press release.
Construction is scheduled to be complete in Q2 of 2025. Once up and running, the site will transition to operating seven days a week instead of only five.
This is the latest shift PMI has made away from traditional combustible cigarettes, which saw unit sales decline 9% for the 12-month period ended Aug. 10, according to NielsenIQ data. The company has also focused on its heated tobacco product IQOS, which is expected to launch in the U.S. in the fourth quarter.
“Smoking cigarettes is the most harmful way to consume nicotine. We are accelerating our mission toward a smoke-free future, working with our U.S. affiliates to move adults away from cigarettes and other traditional tobacco products by providing better alternatives,” said Stacey Kennedy, CEO of PMI’s U.S. business.
