NEW YORK—Philip Morris International (PMI) and Swedish Match have both confirmed they are exploring a deal in which PMI would acquire Swedish Match, maker of other tobacco products like ZYN nicotine pouches.
“The discussions are in progress and it is uncertain whether an offer will be made,” wrote PMI. “PMI intends to make no further comment regarding the discussions unless and until it is appropriate to do so.
“There can be no certainty that an offer will be made, nor as to the terms of any such potential offer,” wrote Swedish Match.
The deal could be valued at $15 billion of more, reports the Wall Street Journal, and would give PMI more exposure to the rapidly growing market of smoke-free brands. A deal could be made as soon as this week, but the discussions could still fall apart, according to the Journal.
The U.S. is Swedish Match’s largest market, and the company’s ZYN brand dominates a market that includes rival offerings from Altria Group Inc. and British American Tobacco PLC. Swedish Match posted double-digit sales growth last year, led by its smoke-free division.
Other tobacco products (OTP) has continued to be a space retailers and manufacturers look to for the future of the overall nicotine category, thanks to a larger variety of products and continued innovation.
“Besides being one of the top five in-store sales contributors, OTP is definitely a category where there are a lot of opportunities for the future of tobacco and nicotine products,” Jayme Gough, NACS research manager, told NACS Magazine. “There is a lot of innovation and myriad ways to consume nicotine and tobacco.”
NACS State of the Industry Report data found that in 2020, cigarette sales (the top contributor to in-store sales at convenience stores at 27.79%) grew 3.6%, while OTP sales (the fourth-largest contributor to in-store sales) grew by 5.7%.
“2020 was a good year for OTP, like many of the more indulgent categories in convenience,” said Gough. “People were home, so they could smoke or vape as much as they wanted to.”
Even as life returned to some form of normalcy, the three major OTP segments enjoyed double-digit growth: Nielsen data as of October 23, 2021, had total U.S. smokeless dollar sales up 12.5%, cigars up 12.3% and e-cigs up 21.6%.
Learn more about how some of those more diverse nicotine offerings performed over the past year in “Up, Up and Away,” in the January 2022 issue of NACS Magazine.
Watch for the release of the NACS State of the Industry Report of 2021 Data next month and exclusive coverage of the 2022 NACS SOI Summit plus SOI data for the tobacco and OTP categories in the June issue of NACS Magazine.