(Reuters) – Philip Morris International (NYSE:) said on Tuesday it would invest $232 million to expand production capacity for ZYN nicotine pouches at its Ownesboro, Kentucky, plant to meet strong demand.
The investment will be made through one of PMI’s Swedish Match branches and comes about a month after the tobacco giant announced a $600 million investment to open a ZYN production facility in Colorado.
WHY IT’S IMPORTANT
ZYN’s shipments slowed to 54% growth in the second quarter reported in July, as near-term demand for the product created supply chain constraints and impacted volume growth.
ZYN, an alternative to traditional chewing tobacco products, is a nicotine pouch, which according to Philip Morris does not contain tobacco.
CONTEXT
Philip Morris bought Zyn parent Swedish Match in 2022 in a $16 billion deal as tobacco companies competed for alternatives to traditional tobacco products in their portfolios amid increased health consciousness and stricter regulations.
In June, PMI suspended online sales at ZYN.com in the US after receiving a subpoena from the District of Columbia requesting information on compliance with DC’s 2022 ban on the sale of all flavored tobacco.
There were also concerns that ZYN’s illegal sales – amid supply shortages – could hurt PMI figures during the company’s second-quarter conference call in July.
WHAT NEXT
Construction for the Kentucky plant expansion was underway and PMI expects to complete it in the second quarter of 2025.
To boost production, the factory will operate 24 hours a day, seven days a week from the fourth quarter of this year, PMI said.
The company had said in July that the expansion was expected to add about 900 million cans of capacity to ZYN by 2025.
(This story has been refiled to remove a photo)
