Philip Morris is one of the largest tobacco corporations in the world. Philip Morris, like the other tobacco giants in the world have a long history and a strong position in the market of manufacturing traditional cigarettes. But in the recent decades and years, most of the tobacco industry giants have recognized the need for broadening its offerings based on the understanding that traditional cigarettes will not exist forever. At least not to the extent that they exist today.

As we become more health conscious and as more and more countries are putting in place stricter regulations to reduce the rate of smokers, the use of cigarette will likely decrease in the years and decades to come.

With this in mind, the tobacco giants need to adapt to this new future by planning and adjusting its business model accordingly to continue to flourish in the decades to come. One of the biggest trend that we have seen in the last decade is the focus on alternative nicotine products that are less harmful than cigarettes.

With Philip Morris being one of the largest tobacco corporations in the world, it is naturally one of the leaders in the shift within the tobacco industry to focus more on alternative nicotine and tobacco products to traditional cigarettes.

Philip Morris has invested heavily into research and development of other products as well as carefully looking at alternativ products that can take the place of cigarettes in the long term. One such product that Philip Morris has doubled down on in recent years is nicotine pouches. In this article, we will take a closer look at Philip Morris and its relationship with nicotine pouches, as well as the nicotine pouch brands offered by the company.

To understand where Philip Morris is coming from, we need to start from the beginning.

Introduction to Philip Morris

Philip Morris International Inc., known as PMI, is a key player in the global tobacco industry. It is rooted in a rich history that dates back to the mid-19th century. The company was founded by Philip Morris, a British tobacconist who first opened a single shop in London in 1847. From these humble beginnings, the company expanded and transformed into a multinational corporation, with its products now sold in over 180 countries.

One of the most iconic products offered by PMI is the Marlboro brand of cigarettes, a name that has become synonymous with the company itself.

Due to the nature of the company’s business, Philip Morris has faced substantial criticism and legal challenges due to the negative health implications associated with their products. The public scrutiny, paired with the global trend toward healthier living and the decline in traditional smoking, has forced the company to pivot.

In 2021, however, Philip Morris took a major step with the strategic move toward developing and promoting “reduced-risk products” (RRPs). This includes products such as e-cigarettes, heated tobacco products, and of course, nicotine pouches, just to name a few.

PMI plans that this shift will replace the need for traditional cigarettes altogether in the coming decades or centuries and they strive to be at the forefront of this transition.

On their website, PMI states the following:

”We’ve built the world’s most successful cigarette company, with the world’s most popular and iconic brands. Now we’ve made the decision to go smoke-free. We are building PMI’s future on smoke-free products that—while not risk-free—are a far better choice than cigarette smoking. We understand the millions of adult smokers who smoke cigarettes. They are looking for less harmful, yet satisfying, alternatives to smoking. We will give them that choice. We have a commitment to our employees and our shareholders, which we are fulfilling by pursuing this path to sustainable success. We have a commitment to society, which expects us to act responsibly. We are doing just that, by delivering a smoke-free future.”

In this vision of a smoke-free future, PMI has researched and looked at a wide selection of alternatives and products. One product in particular that stuck with them was Swedish snus and nicotine pouches. Both of these products are extremely popular in Scandinavia and particularly in Sweden – a country which is set to become the world’s first smoke-free country. As such, it is proof to PMI that even though smoking is reducing drastically, there are still lucrative business opportunities for alternative products.

PMI has the plan to increase the revenue from its smoke-free products by more than 50% by 2025.

As such, PMI saw the opportunities that nicotine pouches (and snus) presented in their mission towards a smoke-free future.

Nicotine Pouches, as a smoke-free and tobacco-free nicotine alternative, offer undeniable benefits over cigarettes and are a much less harmful nicotine alternative.

Philip Morris acquisition of AG snus

The very first step taken by Philip Morris to enter the segment of nicotine pouches was the acquision of AG snus in 2021.

Philip Morris Acquired the Danish company AG snus AS from the Gundersen Family on May 7th 2021 at a purchase price of $28 million in cash with additional contingent payments of up to $10 million.

AG snus was founded in 2010 as a subsidiary of Assens Tobaksfabrik. The company had been managed and owned by the Gundersen family for five generations. AG Snus focused on traditional tobacco snus but had also launched a tobacco-free nicotine alternative by the name of Shiro.

The acquisition of AG Snus therefore became PMI’s first step into the market of nicotine pouches.

In February 2022, PMI relaunched Shiro with a new design, updated recipe, and a wider selection of flavors, strengths, and formats. The grand plans for Shiro would however come to be rather short-lived. In mid-2023, PMI announced that the Shiro brand would be discontinued. This brings us to the biggest and single most important step for PMI into the nicotine pouch market – the acquisition of the leading snus and nicotine pouch manufacturer in the world – Swedish Match.

Philip Morris and Swedish Match: A Landmark Acquisition

In a bold and strategic move, Philip Morris International (PMI) acquired Swedish Match, a leading player in the global smokeless tobacco market. With PMI’s goal to become a leader in the smoke-free segment, the acquisition of Swedish Match makes perfect sense.

This acquisition is seen as a transformative step in PMI’s journey towards a smoke-free future, enhancing its product portfolio with several well-established nicotine pouch brands. Swedish Match has long history of making swedish tobacco snus and nicotine pouches. It is the leading manufacturer of tobacco-free nicotine pouches and is one of the most important players that has played a crucial role in the development of this new product segment.

Swedish Match, with its strong presence in the smokeless tobacco sector, was a logical acquisition for PMI. The company’s popular brands, including ZYN, VOLT, Swave, and XR free from Tobacco, complement PMI’s existing product range and align perfectly with its smoke-free vision.

So instead of starting from scratch by launching new products – or by acquiring smaller nicotine pouch companies, PMI, with its sheer size, decided to instead go for the biggest player there was in order to instantly becoming the leading player within this smoke-free segment. And they did so by acquiring Swedish Match.

PMI acquired 83% of Swedish Match in a $16 billion deal, short of the 90% they initially desired but enough to press on with this strategic acquisition. Even though PMI didn’t reach their 90% threshold at which it can start a compulsory purchase of remaining shares, they expressed confidence that this level could ultimately be achieved, bolstered by the acceptance of their bid by Swedish Match’s 10 largest shareholders.

The acquisition of Swedish Match has far-reaching implications for PMI. Primarily, it paves the way for PMI’s entry into the U.S. market, a territory where Swedish Match has rapidly grown its business and where PMI was notably absent within this new segment. This deal holds strong industrial logic, allowing PMI to tap into the U.S.’s lucrative nicotine market, converting existing smokers to Reduced Risk Products (RRPs) without cannibalizing its own revenues.

It’s clear that the acquisition of Swedish Match is a strategic move by Philip Morris International, signifying their commitment to a smoke-free future. It expands PMI’s nicotine pouch offerings and provides a solid foundation for their entry into the U.S. market. The next section will delve into the nicotine pouch brands owned by Swedish Match and now, effectively, by PMI.

With the rapid growth of nicotine pouches (and snus) in a market where more and more people are looking for less harmful alternatives, the acquisition of Swedish Match allows PMI to be at the forefront of this growing segment.

Which nicotine pouch brands does Philip Morris offer?

This is an interesting question. The fact of the matter is that Philip Morris only had one brand of nicotine pouches since its acquisition of AG Snus in 2021 – Shiro.

Shiro was the first nicotine pouch brand of PMI but all of this would come to change with the acquisition of Swedish Match.

Swedish Match, being a leader in the snus and nicotine pouch segment, owns a large number of brands of snus and nicotine pouches. And with the acquisition of Swedish Match, it basically means that all of Swedish Match’s brands are now PMI’s – dramatically growing the portfolio of PMI’s nicotine pouch brands.

On the same token, PMI decided to discontinue Shiro in 2023 following the acquisition of Swedish Match as they now already had a stronger brand in their portfolio – ZYN.

Shiro and ZYN are quite similar in many ways and PMI saw no reason to continue making Shiro when it now had a stronger brand in its portfolio. From 2023 onwards, Shiro will no longer be available on the market.

So, with the acquisition of Swedish Match, which nicotine pouch brands does Philip Morris offer? The answer is all of the brands that Swedish Match owned, meaning:

XR free from tobacco
ZYN
Swave
Volt

This is in addition to the enormous selection of tobacco snus brands that Swedish Match owns (which still is Swedish Match’s most important product).

ZYN is arguably the most recognized brand in Swedish Match’s nicotine pouch portfolio. It is also Swedish Match’s first brand of nicotine pouches, launched in around 2014-2015 in the US and in 2016 in Sweden and the rest of the world.

Being one of the first brands within the nicotine pouch segment, it’s easy to see how ZYN has established a very strong position on the market. Combine this with the fact that Swedish Match has a century long history of manufacturing oral nicotine pouches and therefore a vast expertise within this area, the products naturally hold a very high quality.

ZYN is loved by consumers for its diverse range of flavors and nicotine strengths. Post-acquisition, PMI has continued to foster ZYN’s growth, keen to leverage the brand’s dominance in the Modern Oral Tobacco market, particularly in the U.S.

ZYN’s nicotine pouches offer a smokeless, spitless, and tobacco-free alternative to traditional nicotine consumption methods, aligning perfectly with PMI’s smoke-free vision. ZYN’s popularity, coupled with its compatibility with PMI’s objectives, makes it a crucial asset in PMI’s portfolio.

VOLT, Swave, and XR free from Tobacco: Diversifying the Portfolio

In addition to ZYN, the acquisition of Swedish Match also brings other popular nicotine pouch brands under PMI’s umbrella, including VOLT, Swave, and XR free from Tobacco. These brands further expand and diversify PMI’s product portfolio, offering consumers a wide range of options to choose from.

VOLT is known for its bold and intense flavors, appealing to consumers seeking a stronger taste experience. Swave, on the other hand, is characterized by its innovative design and unique flavors, while XR free from Tobacco is recognized for offering a high-quality, tobacco-free nicotine experience that is inspired by General tobacco snus – making it suitable for those who want a tobacco-free experience with the flavor of traditional snus.

The Impact of the Acquisition on PMI’s Nicotine Pouch Offerings

The acquisition of Swedish Match has significantly broadened PMI’s product portfolio in the smokeless tobacco sector. The addition of brands like ZYN, VOLT, Swave, and XR free from Tobacco has not only expanded the variety of products PMI offers but has also reinforced PMI’s commitment to providing consumers with smoke-free alternatives to traditional tobacco products.

Enhancing PMI’s Market Position

With the acquisition, PMI now holds a dominant position in the Modern Oral Tobacco market, especially in the U.S., courtesy of ZYN’s market leadership. This allows PMI to compete more directly with other tobacco giants like Altria Group, particularly in the oral pouch category. Given ZYN’s significant market share and strong profitability, PMI is poised to further grow this brand worldwide.

Paving the Way to a Smoke-Free Future

The acquisition of Swedish Match solidifies PMI’s commitment to a smoke-free future. By incorporating nicotine pouch brands with a strong market presence, PMI is effectively transitioning from traditional tobacco products to alternative, smoke-free nicotine products. This move not only aligns with PMI’s vision but also responds to the changing demands of consumers, who are increasingly seeking healthier alternatives to smoking.

In essence, the acquisition of Swedish Match and its nicotine pouch brands has had a transformative impact on PMI’s product offerings and market positioning. It has enabled PMI to diversify its portfolio, strengthen its market position, and navigate towards a smoke-free future, despite the financial challenges associated with the deal.

Philip Morris International (PMI) has been steadfast in its commitment to a smoke-free future. The company has been actively diversifying its product portfolio with reduced-risk products (RRPs), including smoke-free alternatives such as nicotine pouches and vapor products. This strategic shift is central to PMI’s ambition to transform the tobacco industry and create a future without cigarettes.

Conclusion

The world of nicotine products is rapidly evolving, with an increasing number of consumers seeking smoke-free alternatives. Philip Morris International’s strategic acquisition of Swedish Match marks a significant milestone in this evolving landscape and also shows the future potential of the relatively new tobacco-free nicotine pouch segment.

By acquiring a portfolio of established nicotine pouch brands, PMI has not only expanded its product offerings but also reaffirmed its commitment to creating a smoke-free future and its belief in the growing trend of nicotine pouches.

The addition of brands like ZYN, VOLT, Swave, and XR free from Tobacco to PMI’s portfolio has broadened the range of options available to consumers and strengthened PMI’s position in the competitive market. Despite the immediate financial implications of the acquisition, PMI’s strategic move promises long-term benefits, including a stronger market presence, diversified product portfolio, and increased profitability.

While the nicotine pouch market continues to evolve, PMI’s acquisition of Swedish Match’s brands positions the company favorably to lead the industry’s transformation. As we look towards the future, PMI’s expanded portfolio signals a promising era for smoke-free nicotine products, making PMI a potential global juggernaut in the nicotine industry. This journey reflects a bold stride towards a healthier and smoke-free future – a vision that PMI and its newly-acquired brands now collectively pursue.