Philip Morris International has successfully acquired the leading global manufacturer of snuff and nicotine pouches, Swedish Match. This move will expand the tobacco giant's footprint in the non-combustible tobacco and nicotine products market.
Philip Morris International (PMI) proposed the acquisition of Swedish Match in May, raising its offering price from SEK 106 (approximately USD 10.22) to SEK 116 per share. According to a report by Reuters on November 7th, 83% of investors have already accepted the proposal, resulting in a loss of approximately $16 billion for PMI. Several major investors fought against the deal for months but ultimately decided to sell.
PMI will continue to pursue the majority shareholder of Swedish Match until it reaches 90% ownership. At that point, remaining investors will be compelled to sell and PMI can make Swedish Match a fully owned subsidiary rather than operating as a separate company.
PMI will enter the US market through its acquisition of Swedish Match.
This deal will immediately position PMI in the American market, where nicotine pouches are a rapidly growing product category and Sweden's Match ZYN brand is the top seller. The company also plans to launch its heated tobacco product IQOS in the US by 2024, after regaining distribution rights from former partner Altria Group. Sweden's Match also provides PMI with an existing sales and distribution infrastructure in the US.
Philip Morris International is the world's largest tobacco company, second only to state-owned China Tobacco. The company was established in 2008, when the international division of US-based Philip Morris spun off and granted PMI the exclusive rights to sell Philip Morris products outside the US, while the original company (now known as Altria Group) sold the same products domestically. Although PMI is headquartered in Switzerland and currently doesn't sell any products in the US, technically its headquarters are located in New York City.
Buying Swedish matches is part of the PMI plan, which aims to shift more than half of its global revenue from combustible products to smoke-free products by 2025. Smoke-free products currently make up around 30% of the company's business, although IQOS almost entirely contributes to that revenue.
Philip Morris International (PMI) is planning to submit a pre-market tobacco application (PMTA) to the FDA next year for its electronic liquid electronic cigarette device, IQOS VEEV (the company's use of the IQOS name for its heated tobacco and liquid electronic cigarette products is confusing).
Swedish Match: Snus, Nasal Snuff, and Reducing the Harm of Tobacco.
Swedish Match is the world's largest tobacco company that does not sell cigarettes, although it does still own the White Owl cigar brand. In 1999, the company sold its remaining cigarette business to Austria's Tabak. Since then, Swedish Match has been praised for its leadership in promoting Tobacco Harm Reduction (THR) by encouraging smokers to switch to low-risk nicotine alternatives instead of cigarettes.
Swedish Match is the leading manufacturer of snus, a moist oral tobacco product sold in small pouches. In Sweden, the number of snus users now surpasses cigarette smokers, and the daily smoking rate among adults has dropped to around 5%. A similar trend is observed in neighboring Norway, where snus is also popular. When Sweden joined the European Union in 1995, it was given an exemption from the EU ban on snus.
While not a main tobacco product in the United States, several common brands of Swedish snus, a type of smokeless tobacco, were among the first tobacco or nicotine products authorized by the Food and Drug Administration (FDA) under the PMTA and MRTP pathways. (The IQOS device also received PMTA and MRTP authorization.) However, nicotine pouches are quickly gaining ground in the US market, with Swedish Match leading the way in this category with their ZYN brand.
The FDA has not yet made a decision on the PMTA submitted by the nicotine pouch manufacturer. The agency may reject electronic cigarette pouches entirely, as they are actually made with flavors such as mint, citrus, coffee, and fruit, and the FDA has indicated in its handling of PMTA for electronic cigarette products that it may not be willing to authorize any flavored "tobacco products.
Anti-nicotine and tobacco groups in the United States and Europe are opposing the sale of nicotine pouches, even if they do not contain tobacco and have risk characteristics almost identical to nicotine replacement therapy (NRT) products like nicotine gum. Nicotine pouches are legal in most European countries.
In some Asian and African countries, nasal snuff and nicotine pouches may be game-changing products, where many countries either have a strong tradition of oral tobacco use (especially in India and Bangladesh) or are relatively new to tobacco and nicotine use (smoking is only just becoming popular in many African countries). Nicotine pouches, in particular, are easy to manufacture and transport, and are heat and cold-resistant, making storage a simplified process.
Swedish Match produces products in seven countries, including the United States, and has offices in four other countries. The company's sales in 2021 were approximately $1.8 billion.
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