Philip Morris expands ZYN production in Kentucky with $232 million investment

Philip Morris International announced a significant investment of $232 million to enhance the production capacity of ZYN nicotine pouches at its Owensboro, Kentucky facility. This decision comes in response to the increasing demand for ZYN, which is an alternative to traditional chewing tobacco and does not contain tobacco. The expansion is part of a broader strategy by PMI to diversify its product offerings amid growing health awareness and regulatory pressures on traditional tobacco products. The investment will be executed through one of PMI's affiliates, Swedish Match, which PMI acquired in a $16 billion deal in 2022. This expansion follows a previous announcement of a $600 million investment to establish a new ZYN manufacturing facility in Colorado. The company reported a 54% growth in ZYN shipments during the second quarter, although supply chain constraints have impacted volume growth. Construction at the Kentucky plant is already underway, with expectations to complete the expansion by the second quarter of 2025. To meet production demands, the facility will operate continuously, 24/7, starting in the fourth quarter of this year. The expansion is projected to provide an additional capacity of around 900 million cans of ZYN for the year 2025. In June, PMI faced challenges when it suspended online sales at ZYN.com due to a subpoena from the District of Columbia regarding compliance with a ban on flavored tobacco sales. Concerns about illicit sales amid supply gaps were also raised during the company's second-quarter conference call, highlighting the complexities of navigating the evolving tobacco market.