Philip Morris International has emerged as the dominant force in the global tobacco industry’s ongoing transformation away from combustible cigarettes, with its smoke-free product portfolio now accounting for more than 40 percent of total company revenue and its ZYN nicotine pouch brand commanding close to two thirds of the US oral nicotine market by value.
The company’s trajectory reflects a broader shift underway across the tobacco sector, where traditional cigarette volumes are declining while alternative nicotine products including heated tobacco units, oral nicotine pouches, and regulated e-cigarettes are recording strong growth. Philip Morris posted a roughly 1.5 percent drop in cigarette sales volume during 2025, offset by a 112 percent rise in heated tobacco unit sales over the same period.
Full-year ZYN shipment volumes in the United States reached 794 million cans in 2025, with fourth quarter shipments alone hitting 196 million cans, an increase of over 19 percent. Offtake volume grew 23 percent as measured by Nielsen. ZYN is now available in 55 markets globally, having launched in several new territories during the year, and has achieved close to two thirds value share of the US nicotine pouch category.
Philip Morris paid $2.7 billion to acquire the rights from Altria to market its IQOS heated tobacco device in the United States, launching the product in Austin, Texas in March 2025. The company is currently awaiting FDA authorisation for the IQOS Iluma, the latest generation of its heat-not-burn device, which would significantly expand its US commercial footprint. Philip Morris reports an approximately 72 percent success rate in converting smokers to IQOS.
Rival Altria, whose FDA-authorised on! PLUS nicotine pouch received regulatory clearance in early 2026, has been working to close the gap in the smoke-free category but continues to lag well behind ZYN. Altria initiated a limited US commercial launch of on! PLUS in September 2025 ahead of receiving formal FDA authorisation, and has since resumed orders in Florida, North Carolina, and Texas.
British American Tobacco’s VELO nicotine pouch brand also expanded its product range during the period, with the company reporting 32 percent year-on-year shipment volume growth. Despite the gains, ZYN’s dominance in the category remains substantial, with competitors working to establish meaningful share in a market the segment leader continues to grow rapidly.
Philip Morris has also been streamlining its portfolio to focus resources on smoke-free expansion. The company agreed in March 2026 to sell its stake in Swedish Match do Brasil to Ignis FIP, a Brazilian private investment fund backed by businessman Marcos Fernando Garms. The divestment includes the Fiat Lux match brand and Swedish Match da Amazonia, and reflects the company’s broader strategic decision to exit non-core assets following its 2022 acquisition of Swedish Match for $16 billion.
With smoke-free products now central to the company’s commercial identity, Philip Morris has positioned 2026 as a potential inflection point, using its established regulatory track record and manufacturing infrastructure to lead what it describes as the transition toward a smoke-free future for the global nicotine industry.