Philip Morris CEO Says Cigarettes Belong in a Museum as Zyn and IQOS Surge

Philip Morris International (PMI) is accelerating its pivot from combustible cigarettes to smoke-free products, with its CEO stating that traditional cigarettes belong in a museum. The company's focus is on nicotine pouches like Zyn and heated tobacco products like IQOS, which it claims offer a dramatically reduced health risk by eliminating combustion according to Bloomberg reporting. This shift aligns with broader regulatory and public health pressures against traditional smoking.

In 2025, smoke-free products contributed 41.5% of PMI's total net revenues, with over 43 million adult users across more than 105 markets according to financial analysis. These figures represent a significant increase from previous years and underscore the growing consumer base for alternative nicotine delivery methods.

The company's smoke-free strategy is not without challenges. Public health experts remain skeptical about the long-term safety of nicotine pouches and heated tobacco products. While PMI claims these alternatives reduce harm, critics argue that addiction risks persist and that the long-term health effects are still unknown according to Bloomberg reporting.

Why Did This Happen?

Regulatory pressure has long driven the evolution of the tobacco industry. As governments worldwide impose stricter smoking bans and health warnings, traditional cigarette manufacturers face declining consumer demand. PMI, which operates outside the U.S. (Altria handles Marlboro sales domestically), is repositioning itself as a leader in the smoke-free segment. The company's Zyn brand now accounts for a significant portion of its global nicotine pouch market share, particularly in the U.S. according to analysis.

In the U.S., Zyn captured 76% of the retail market for nicotine pouches in the third quarter of 2023 according to analysis. This dominance has been driven by aggressive marketing and regulatory approvals from the FDA, which authorized six nicotine pouch products in late 2025 according to analysis.

How Did Markets React?

The market response to PMI's strategy and recent dividend announcement has been mixed. On March 6, 2026, the company set its quarterly dividend at $1.47 per share, with the first payment scheduled for April 13 according to financial reports. However, the announcement was followed by a roughly 5% premarket decline in PMI's stock price. The dividend, based on a premarket price of $169.70 per share, yields about 3.5% annually according to financial reports.

The dividend decision signals PMI's commitment to maintaining strong returns to shareholders, even as it invests in smoke-free alternatives. The ex-dividend date is set for March 19 according to financial reports, and investors are closely watching whether the company can sustain dividend growth amid shifting consumer preferences.

What Are Analysts Watching Next?

Analysts remain cautious about the long-term sustainability of PMI's smoke-free strategy. While smoke-free products are expanding at a rapid pace, concerns persist over regulatory uncertainty and shifting consumer sentiment. The U.S. Food and Drug Administration's authorisation of nicotine pouches has provided some clarity, but future policy changes could impact PMI's growth trajectory according to analysis.

Public health groups have also raised concerns about the rising popularity of nicotine products among younger demographics. Anti-tobacco organisations have targeted Formula One, urging the sport to cut ties with tobacco-linked sponsorships, including PMI's Zyn partnership with Ferrari according to financial reports. The company has dismissed such criticism as "tired and lazy," but the debate continues to draw attention to the ethical dimensions of its marketing strategies.

Investors are also monitoring PMI's ability to maintain its dividend payouts as it transitions toward smoke-free products. While the company's smoke-free revenue grew 14% in 2025, any significant decline in cigarette sales or regulatory crackdown could impact cash flow and constrain future dividend increases according to financial reports.

For now, PMI remains a key player in the evolving tobacco landscape. Its push into nicotine pouches and heated tobacco products has positioned it as a leader in the smoke-free segment. However, the long-term success of its strategy will depend on consumer adoption, regulatory stability, and the ability to navigate public health scrutiny.