Credit: By SimonDes – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=58518243
Philip Morris International (NYSE: PM) is riding a wave of investor confidence, driven largely by the explosive success of its smokeless nicotine product, ZYN. On February 6, 2025, PMI reported stronger-than-expected earnings and revealed bullish forecasts for the year ahead, sending its shares up nearly 10% in a single day. The company’s fourth-quarter net sales soared 7.3% to $9.71 billion, beating analyst estimates of $9.44 billion.
The biggest tailwind? Demand for ZYN nicotine pouches. PMI expects ZYN shipments to the US (its largest market) to rise by up to 41% this year. With adjusted annual earnings projected between $7.04 and $7.17 per share, outperforming Wall Street expectations, investors are eyeing PMI not just as a tobacco giant but as a frontrunner in the next generation of nicotine delivery. But what exactly is ZYN, and is this momentum sustainable or just a short-term buzz?
What Is ZYN and Why Is It So Popular?
ZYN nicotine pouches are smokeless, tobacco-free products designed to meet the rising demand for alternative nicotine experiences. Developed under the Swedish Match brand, which Philip Morris acquired in 2022, ZYN nicotine pouches deliver nicotine via oral absorption, without combustion or inhalation. The pouches come in a variety of strengths and flavors, and they’re designed to be discreet: users simply place a pouch under their upper lip, where it gradually releases nicotine.
Launched initially in US states like Colorado and Montana, ZYN rapidly gained traction with consumers looking for a cleaner, more socially acceptable way to consume nicotine. According to Prilla, the brand’s popularity in America sparked its expansion into international markets. Yet ZYN’s appeal isn’t limited to its novelty; convenience and image are key to its success. With marketing that emphasizes simplicity, discretion, and modernity, ZYN has successfully distanced itself from the legacy image of tobacco. Ads from 2021 to 2023 highlighted these features at a time when pouch use among youth and adults surged, cementing ZYN’s place as the market leader in this emerging category. While the brand stops short of promoting health benefits, it leans into terms like “tobacco-free” and “smoke-free” — phrases that resonate with users aiming to avoid the social stigma and health concerns of traditional cigarettes. The US Food and Drug Administration’s January 2025 license to formally market ZYN as a reduced-risk product gave Philip Morris a powerful regulatory boost, strengthening its foothold in the American nicotine space.
Why Philip Morris Is Dominating the Smoke-Free Pivot
Philip Morris’s strategic pivot away from combustible cigarettes toward smoke-free alternatives has been years in the making, but the ZYN explosion is making it pay off. Alongside ZYN, the company also markets IQOS, a heated tobacco system that’s already achieved notable success in Europe and Asia. Together, these innovations now make up a significant portion of PMI’s earnings, signaling a fundamental shift in its revenue base.
Gaurav Jain, an analyst at Barclays, noted that PMI’s 2025 profit and volume projections (particularly for ZYN and IQOS) were well ahead of expectations. That’s notable, given PMI’s historical conservatism when issuing forecasts. It suggests confidence not only in the popularity of its products but also in the supply chain and regulatory landscape supporting them.
Philip Morris’s acquisition of Swedish Match gave it both brand equity and production infrastructure to scale ZYN. The company added new production lines in 2024 to meet growing US demand. Its expansion strategy of balancing innovation with aggressive marketing keeps competitors like British American Tobacco and Altria on their heels. According to recent studies, while other pouch brands like On!, Velo, and Rogue also saw growth, ZYN remains the undisputed leader, thanks in part to its savvy product positioning and distribution.
This evolution is a financial success. In a saturated and heavily regulated cigarette market, growth avenues are limited. But smoke-free alternatives offer Philip Morris a path to not only retain customers but reach entirely new ones, including nicotine users who never smoked to begin with.
What to Consider Before Buying PMI Stock
For all its momentum, Philip Morris stock isn’t without risk.
While the company is outperforming expectations, investors should assess several key variables before jumping in. First, regulatory scrutiny of nicotine products, including pouches, remains high. The FDA’s endorsement of ZYN may set a precedent, but increased youth usage could trigger future crackdowns or tighter advertising restrictions. Second, while smoke-free products are the future, Philip Morris still earns a significant portion of its revenue from traditional cigarettes, especially in developing markets. Any global shift in smoking regulation or consumer sentiment could impact its long-term profitability. The company has indicated that its cigarette business will “continue to deliver” in 2025, but investors should view this as a short-to-medium term stabilizer, not a growth engine. Third, competition is heating up. Altria, which holds rights to IQOS in the US, and British American Tobacco are both investing in nicotine pouch portfolios and may capture market share with new innovations or pricing strategies. That said, Philip Morris enjoys a first-mover advantage and brand dominance, where its ZYN shipments are projected to rise between 34% and 41% this year alone.
Philip Morris’s all-time high valuation reflects investor belief in its pivot to smoke-free products. But high valuation can also signal overbought conditions, especially if growth starts to plateau. And while Philip Morris’s diversification efforts are impressive, it must continue to innovate and navigate public health pushback to stay ahead. Still, for investors focused on long-term growth in the nicotine sector, PMI remains a compelling option. Its aggressive smoke-free transition, regulatory wins, and impressive execution make it a modern nicotine tech powerhouse — and one that may just continue to reward shareholders.
Conclusion
Philip Morris International’s transformation is well underway, and the market is responding. ZYN’s runaway success has propelled the company’s stock to new highs, and its dual play in heated tobacco and nicotine pouches is giving it an edge in a transforming industry. While regulatory and competitive risks remain, the upside potential supported by aggressive growth forecasts and savvy brand strategy makes PMI a stock worth watching.