Philip Morris International is in talks to acquire Swedish Match, a smokeless tobacco product manufacturer. The multibillion-dollar deal would fit into PMI’s goal to pivot the company away from cigarettes and towards nicotine alternatives.
The Wall Street Journal broke the news of the discussions on Monday, reporting that insiders say PMI could buy Stockholm-based Swedish Match for around $15 billion.
Swedish Match is best known for its smoke-free tobacco and nicotine products. General is its brand of snus, an oral pouch made with moist powder tobacco, and ZYN is its oral nicotine pouch product, made with synthetic nicotine, not tobacco-derived. The company also sells chewing tobacco and cigars, but 66.8% of its sales last year came from its smoke-free products. Its biggest markets are Scandinavia and the U.S.
PMI—one of the pillars of Big Tobacco which sells Marlboro outside of the U.S.—was created in 2008 when Altria spun off its international tobacco business from Philip Morris USA. The company has invested some $9 billion in cigarette alternatives since 2008 and has an ambitious goal to eventually stop selling cigarettes. Jacek Olczak, the CEO of PMI, is working to pivot the company to smoke-free products. In 2021, PMI generated $31.6 billion in revenue. According to its annual report, net revenues from smoke-free products accounted for 29.1% of total adjusted net revenues. By 2025, PMI has a goal to derive 50% of its total revenues from the smoke-free category.
Leading PMI’s smoke-free strategy is the IQOS, a device that heats tobacco to produce vapor, which is already responsible for a third of the company’s annual revenues.
In an interview after he became CEO last year, Olczak told Forbes that “it’s a given” that PMI will eventually stop selling cigarettes. Without irony, Olczak said his company wants to “solve the problem of cigarettes” by converting the world’s 1 billion smokers, 150 million of which are PMI customers, to smoke-free customers.