Can ZYN and IQOS Sustain Philip Morris' Smoke-Free Surge?

Philip Morris International’s PM smoke-free business is gaining scale, and the performance of its flagship products, IQOS and ZYN, is central to this trajectory. In the second quarter of 2025, the company’s smoke-free business (SFB) contributed 41% of total net revenues and more than 42% of total gross profit, marking significant progress in its shift from combustibles. SFB net revenues rose 15.2% year over year (14.5% organically), while gross profit surged 23.3% (21.5% organically), substantially outpacing the profitability growth of its combustible portfolio. 

IQOS, Philip Morris’ heat-not-burn device, saw adjusted in-market sales surge 11.4% globally in the second quarter. In Japan alone, PM now commands 31.7% market share in the category, while in Europe, adjusted market share for IQOS rose 1.2 points to 10.9%.

ZYN, the nicotine pouch leader, is staging a powerful rebound in the United States, with offtake growth hitting 36% in June and 26% in the second quarter. This recovery reflects the brand’s resilience and consumer appeal as in-store availability normalized and legal-age users regained access to the full ZYN portfolio. Globally, ZYN's shipments grew 43% year over year, fueled by strong U.S. momentum and an accelerating international rollout.

The synergy between these brands underpins PM’s broader shift from combustibles. As ZYN captures pouch demand and IQOS advances in heated tobacco, the two are carving a path that could redefine nicotine delivery globally. Whether this momentum can be sustained will depend on innovation, regulation and market execution, but for now, PM’s smoke-free vision looks firmly on track.

PM Competitor Snapshot in the Nicotine Pouch Race

Altria Group, Inc. MO is leaning heavily on its on! nicotine pouch brand to fuel smoke-free growth. In the second quarter of 2025, on! shipments climbed 26.5% year over year to 52.1 million cans, helping Altria grow its oral tobacco segment operating income by nearly 11%. The brand now holds an 8.7% retail share of the U.S. oral tobacco category and continues to expand visibility through targeted retail campaigns and experiential marketing. Altria is investing to solidify on!’s role as its primary reduced-risk growth driver.

Turning Point Brands, Inc. TPB is making an aggressive push into modern oral nicotine with its FRE and ALP pouch brands. In the first quarter of 2025, modern oral nicotine pouch sales were up nearly tenfold year over year, generating $22.3 million in revenues. Building on this momentum, Turning Point Brands raised its full-year nicotine pouch sales guidance to $80–$95 million. Turning Point Brands is focused on building distribution through major chains like 7-Eleven, expanding marketing reach and exploring U.S. manufacturing to improve profitability.

PM’s Price Performance, Valuation & Estimates

Shares of Philip Morris have lost 8.6% in the past month compared with the industry’s decline of 1.7%.

From a valuation standpoint, PM trades at a forward price-to-earnings ratio of 20.26X, up from the industry’s average of 14.56X.

The Zacks Consensus Estimate for PM’s 2025 and 2026 earnings implies year-over-year growth of 14% and 12%, respectively.

Philip Morris currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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