Philip Morris Invests $232 Million to Supercharge ZYN Production

Manufacturing Leading tobacco manufacturer Philip Morris International has announced a large $232 million investment to increase ZYN nicotine pouch production at its Kentucky manufacturing facility. It is anticipated that this calculated action would boost the company’s ability to fulfill the rising demand for smokeless nicotine products.

Philip Morris’s Huge Investment 

In order to meet the high demand for ZYN nicotine pouches, Philip Morris International announced on Tuesday that it would invest $232 million to increase production capacity at its Owensboro, Kentucky plant. The money will be invested through one of PMI’s affiliates in Sweden Match, and it comes around one month after the tobacco giant declared it would invest $600 million to establish a ZYN manufacturing facility in Colorado.

ZYN shipments decreased to a 54% growth rate in the second quarter, which was announced in July. This was due to short-term supply chain restrictions caused by the product’s demand, which also affected volume growth. ZYN is a nicotine pouch that, in accordance with Philip Morris, is a substitute for conventional chewing tobacco products.

Context 

In 2022, Zyn’s parent company, Swedish Match, was acquired by Philip Morris for a whopping $16 billion, as tobacco corporations scurried to include non-tobacco products in their portfolios in light of increased health consciousness and regulatory measures. 

Following receipt of a subpoena from the District of Columbia seeking information regarding company compliance with D.C. ‘s 2022 ban on the sale of all flavored tobacco, PMI ceased online sales at ZYN.com nationwide in June. Concerns existed that, in the midst of supply shortages, illegal sales of ZYN may erode PMI’s results when the firm had its second-quarter conference call in July.

Next Up

The expansion of the Kentucky facility was under progress, and PMI anticipates finishing it by 2025’s second quarter. Starting in the fourth quarter of this year, the factory will run seven days a week, twenty-four hours a day, to increase production, according to PMI. The business had stated in July that it anticipated the development would give ZYN a capacity of about 900 million cans by 2025.

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