Philip Morris International said Tuesday it plans to invest $600 million to open a manufacturing plant in Colorado to meet surging demand for its Zyn nicotine pouches.
The tobacco giant said it expects the plant to be operational by 2025, creating 500 jobs in the state.
The tobacco maker acquired Zyn’s owner, Swedish Match, in late 2022 for $16 billion.
Since then, the Zyn pouch has become popular among young people and teens, thanks in large part to social media.
Philip Morris, best known for cigarettes including brands such as Marlboro and Virginia Slims, has been promoting a “smoke-free future” to improve its image.
The Swedish Match acquisition is one of the company’s latest efforts to expand its tobacco-free business, and it appears to be paying off.
Zyn Pouch Shipment volume increased by approximately 80% Philip Morris International said first-quarter sales rose 1.5% from the same period a year ago.
Adjusted net revenue increased 11% and operating profit increased 22.2%, both of which the company attributed to increased Zyn sales volume.
The company claims Zyn is tobacco-free, but in June it suspended nationwide sales on its website after receiving a subpoena from the District of Columbia seeking information about the state’s compliance with its ban on the sale of flavored tobacco.
Health and child advocacy groups are warning parents about the dangers of Zyn pouches.
Philip Morris has been hit with a series of lawsuits this year for failing to adequately warn consumers about the risks of nicotine addiction from using Zyn.
Zyn pouches look like small teabags filled with nicotine and users place them between their lips and gums, allowing the drug to be absorbed directly into the bloodstream.
They come in a variety of flavors, including mint and bubblegum, and are reminiscent of e-cigarette products that are also popular among teenagers.
Use of nicotine pouches has increased sharply since 2016, with most users being 18-24 year olds. According to Tobacco Free Kids.
The pouch is discreet, can be tucked under the upper lip, and doesn’t produce smoke, making it easy for teenagers to hide.
However, users face the same risks of nicotine addiction and gum recession as with any other product.
Philip Morris is also facing opposition to the planned launch of its flagship product, IQOS, which heats tobacco rather than burning it, resulting in a “smoke-free” product.
