PMI is considering divesting its US cigar business, despite reporting strong performance in the segment in 2024. Photo credit: Pexels.
Philip Morris International (PMI) is advancing its efforts to become a smoke-free company. According to a Bloomberg report published in early March, the company is considering a potential sale of its US cigar business, which was acquired almost as an add-on through its US$16 billion acquisition of Scandinavia’s largest snus manufacturer, Swedish Match, in 2022. Reportedly, PMI is working with advisers to gauge interest, seeking over US$1 billion for the asset.
During its Consumer Analyst Group of New York (CAGNY) conference on February 19, 2025, PMI’s c.e.o., Jacek Olczak, highlighted that in 2024—ten years after the company began venturing into smoke-free products—smoke-free annual net revenues amounted to approximately US$15 billion, representing 38.7% of PMI’s total net revenues. PMI is now present in 95 international markets with its smoke-free products. Sales in this category were predominantly driven by PMI’s heated tobacco product (HTP) device, IQOS, whose annual net revenues surpassed those of the company’s flagship combustible cigarette brand, Marlboro, for the first time in 2024. For the full year, IQOS generated more than US$11 billion in net revenues, Olczak said.
According to presentation data, Zyn, the nicotine pouch brand PMI acquired through Swedish Match, has become the number one smoke-free brand in the US and the country’s fourth-largest nicotine brand, generating net revenues of US$1.9 billion in 2024. The company continues to invest heavily in Zyn: in July last year, PMI announced a US$600 million investment through one of its US affiliates to establish a manufacturing facility in Aurora, Colorado. Only a month later, the company revealed plans to expand production capacity at its Zyn manufacturing site in Owensboro, KY, with a further US$232 million investment through one of its Swedish Match affiliates.
While smoke-free alternatives continue to grow, US cigar sales—like those of other traditional tobacco products—are steadily declining. The category is primarily driven by large mass-market cigars, which generate over 93% of sales. During the Covid-19 pandemic, US cigar sales experienced a boom, peaking at US$15.5 billion in 2021, according to data from the Cigar Association of America. In 2023, cigar sales fell slightly below pre-pandemic levels, totaling just under US$12 billion. According to retail data platform Circana, the cigar market saw another 7.9% volume decline in 2024. However, this was offset by a 10% unit price increase, leading to an overall value sales growth of 1.4%.
Before its integration into PMI, Swedish Match’s cigar division held a significant position in the mass-market cigar industry, with well-known brands such as White Owl, 1882, and Garcia y Vega in its portfolio. In 2020, the business unit sold approximately 1.9 billion cigars, generating revenues of around US$493 million and operating profits of US$195 million, reflecting a compound annual growth rate of nearly 10% in both volume and revenue since 2015. In 2021, it ranked as the number two player in the US mass-market cigars category, holding approximately a 23% market share by volume. Nevertheless, in 2021, Swedish Match announced its intention to separate its cigar business via a spin-off to shareholders—aligning with its broader strategy to exit the manufacturing of combustible tobacco products entirely.
Little information has been made public about the cigar division since its acquisition by PMI. As of March 2025, specific data regarding the market position or current market share of PMI’s US cigar business was not available. However, in its 2024 full-year report, PMI highlighted a strong performance in its cigar segment. The company reported that gross profit for cigars grew significantly, driven by strong pricing strategies. This growth occurred despite a 14.6% decrease in cigar shipment volume, primarily attributed to prior-year trade inventory movements related to a price increase in April 2023.