Episode summary
Philip Morris CEO Says Cigarettes Belong in a Museum as Zyn and IQOS Surge
Wall Street Week
· · Hosts: Chrystia Freeland, David Westin
Summary
Philip Morris International is betting that its future lies in smoke-free nicotine, not combustible cigarettes. The host frames tobacco as an industry that has repeatedly reinvented itself under regulation, and the company argues that removing combustion cuts the main source of harm. CEO Jacek Olczak says cigarettes should end up “in a museum,” and he describes PMI’s strategy as redirecting resources from cigarettes toward products that deliver nicotine with much lower exposure to toxicants.
The episode focuses on two pillars of that strategy: IQOS, PMI’s heated-tobacco device, and Zyn, the nicotine pouch business acquired through Swedish Match in 2022. The host says smoke-free products now account for about 40% of PMI revenue, with IQOS revenue now larger than Marlboro’s and Zyn shipments expected to more than double from 421 million in 2023 to about one billion in 2026. PMI has also opened a new Zyn plant in Aurora, Colorado, to meet demand.
Public-health researchers and former users push back on the company’s harm-reduction pitch. An analyst and a Johns Hopkins researcher argue that nicotine remains highly addictive and that long-term effects of these newer products are still unknown. The episode presents PMI’s core bet as simple: nicotine demand will persist even if cigarettes fade away.
Key takeaways
- Jacek Olczak says PMI is intentionally shifting investment away from combustibles and toward smoke-free products because cigarettes are a “losing proposition” businesswise.
- The host says smoke-free products account for about 40% of Philip Morris International revenue, with IQOS revenue now larger than Marlboro’s.
- Global Zyn shipments are predicted to rise from 421 million in 2023 to about one billion in 2026, supporting PMI’s Aurora, Colorado, expansion.
- A Johns Hopkins researcher argues nicotine products remain addictive and that long-term health outcomes for pouches are not yet known.
- PMI’s bet is that cigarette demand keeps shrinking while nicotine craving remains strong enough to sustain IQOS and Zyn growth.
Notable quotes
“-I think cigarettes should end up being in a museum”
“We almost eliminated entire investments behind the combustible cigarettes and we redirected all of these resources behind the product”
“These products still contain nicotine, which is one of the most addictive substances that can be commercially purchased in the United States and around the world”
“-The nicotine profit pool continues to grow because it's just an innate craving that consumers have to satisfy”
“-Absolutely. Absolutely. Absolutely”
How the episode opens
Westin: This is a story about the many faces of a single vice. For more than a century, tobacco has been one of the most regulated industries in the global economy. And with every new regulation, it's come back in a different form.
Now, tobacco firms are adapting again sidelining cigarettes in favor of smoke-free products. They call it "harm reduction. And are finding some business success.
But critics say the long-term health effects are still unknown. Our colleague, Michael McKee, takes us to Switzerland. -At a state-of-the-art facility in Neuchâtel, Switzerland, the world biggest tobacco company is building a new future.
-I think cigarettes should end up being in a museum. -Cigarettes are out and smoke-free products are in. Now consumed by more than 100 million people around the world.
-By 2030, we should have a total of the revenues coming from this product. -The products have also enjoyed a bit of a cultural moment. -Where there's smoke, there's...
-Just me vaping. -You guys Zyn? -What?
-Zyn. -No. -Everyone Zyns.
-Zyn is not a sin, that's the advertising campaign. -Really? -But the tobacco industry has been here before when cigarettes were cool until they weren't.
-It's camel time, camel time. -It's labor time for you. -So in the early days of cigarettes, it was hard to watch a movie without seeing somebody holding a cigarette and smoking it.
-Bond. James Bond. -It was just very common place.
-Shall we just have a cigarette on it? -Yes. -The level of awareness was just not there.
It was culturally acceptable. -Ken Shea is a Bloomberg analyst who has been covering the tobacco industry for more than 25 years. Back in the 1960s, roughly half of all U.S.
adults smoked. Today was down about 11%. -There's a definite, significant health hazard associated with cigarette smoking.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tobacco regulation
- smoke-free products
- nicotine pouches
- heated tobacco
- long-term health risks
Companies and tickers mentioned
- PM
- Philip Morris International
Watch the episode
Watch “Philip Morris CEO Says Cigarettes Belong in a Museum as Zyn and IQOS Surge” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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