Tobacco giant doubles down on Zyn investments, turning away from cigarettes

International tobacco manufacturer Philip Morris doubles its investments in nicotine tobacco pouch production in the U.S., signaling a further departure from producing cigarettes.

Source: Business Wire

Author: Clayton DeMaine

One of the world’s largest tobacco companies is doubling down on investments in a nicotine pouch production plant in the U.S., committing $1.2 billion to expanding U.S. Zyn production, signaling a further shift away from cigarette manufacturing while Canada maintains its ban on the product.

Philip Morris International announced a $1.2 billion investment from 2024-2028 into a Zyn manufacturing campus in Aurora, Colorado on Monday, doubling the amount it committed to investing in the plant two years prior.

The investment is supported by an exclusive interview Juno News conducted with a spokesperson for the company earlier this year, who said non-smoke products such as nicotine pouches are better for nicotine consumers’ health than combustible tobacco.

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“Aurora represents an important milestone for PMI U.S. and our continued investment in our business here,” Stacey Kennedy, the CEO of Philip Morris International U.S., said in a statement about the investment. “This facility expands our production capacity, strengthens our supply chain, and enhances our ability to serve growing demand in the United States and around the world.”

The company says the massive investment into the site will create an estimated 500 jobs and career opportunities.

This influx of private funds into the U.S. economy comes as Canada still maintains bans on the commercial sale of nicotine pouches.

The ban persists despite Health Canada’s own research finding that half of those who quit smoking cigarettes in 2024 did so by using nicotine replacement products such as e-cigarettes, nicotine pouches or other products such as gum or patches.

Philip Morris International and its subsidiaries, like the Canadian Rothmans Benson and Hedges Inc., have been committed to an anti-smoking campaign since 2016, as evidence pointed towards smokeless nicotine products being better for consumer health than cigarettes.

One study, for example, found that more than 90 per cent of the most harmful or potentially harmful chemicals present in combustible tobacco were not present in nicotine alternatives.

In an exclusive interview, Philip Morris’ global communications leader Tommaso Di Giovanni spoke to Juno News earlier this year about the company’s move toward products such as Zyn and its desire to have cigarettes become a relic of the past.

“Nicotine is not risk-free and is addictive, but it’s not the primary cause of smoking-related diseases,” he said. “ That cause has to be found in the high levels of harmful compounds that are generated by burning and end up in cigarette smoke. So nicotine pouches, first and above, have significantly less and very minimal levels of those harmful compounds compared to cigarettes.”

Giovanni said that nicotine pouches are a much better alternative to smoking, but that ideally consumers don’t use any nicotine products.

“What we see through evidence is that in countries where alternatives are made available and adopted as alternatives to cigarettes, cigarette consumption decreases much more rapidly than before,” he said. “Countries like Japan, since the arrival of heated tobacco, cigarette consumption went down five times faster than before.”

He noted a World Health Organization (WHO) report calling for a ban on smokeless tobacco products and said an outright ban on the products could cause more smoking and not less.

“We think there needs to be regulation that encourages a shift towards those products. All the countries that have done that- name New Zealand, name Italy, name Japan- have achieved much better outcomes when it comes to the decline in cigarette consumption,” Giovanni said. “Countries that have followed very strictly the recommendations of the WHO, where cigarettes unfortunately continue to be the dominant product. And very often we don’t see a decline in smoking.”

He said WHO’s recommended bans have been tried in countries such as Brazil, Mexico and India and often don’t work, pushing consumers to black markets that have no quality controls.

“We see that cigarettes don’t decline; sometimes they even increase. And that there’s a significant adoption of these products to illegal channels, which means people who use them don’t know what they’re consuming because there are no quality controls,” he said. “ The government loses significant revenues because those are products that could be taxed. And in the end, public health doesn’t improve as much as it could.”

He said countries such as New Zealand opted to take a “pragmatic approach” to decreasing cigarette use where they discouraged people from using nicotine in general while at the same time encouraging those who won’t quit to switch to safer alternatives such as nicotine pouches.

“That pragmatic approach has brought New Zealand to a point where they have between 5 and 6% of smoking,” he said. “Contrary to the countries adopting those restrictions, where that number is often between 25, 30 and even higher.”