Philip Morris International Inc. (PMI) is exploring a potential sale of its cigar business in the U.S. as it continues its shift toward smoke-free products, reported Bloomberg.
The company is “working with advisers to gauge buyer interest in the asset,” according to people familiar with the matter, Bloomberg wrote. “Philip Morris is seeking over $1 billion for the cigar business, they said. Deliberations are ongoing and there’s no certainty they’ll lead to a sale, the people said, asking not to be identified discussing confidential information.”
The cigar business was part of Swedish Match AB, which Philip Morris acquired in a $16 billion deal that was completed in 2023. That deal, which added Zyn nicotine pouches to its portfolio, helped “propel Philip Morris’s transition away from traditional cigarettes.”
“In 2024, we announced a strategic review of our U.S. cigar business. We have no updates at this time,” a representative for Philip Morris said in a statement.
A potential sale comes as tobacco companies continue to focus on smokeless tobacco and nicotine products.
Last month, NACS Daily reported that Philip Morris International saw quarterly shipments of HTU and oral smoke-free products exceed 40 billion units for the first time last quarter, with full-year net revenues increasing by 14.2%.
The smoke-free business accounted for 40% of PMI’s total net revenue and around 42% of gross profit (up by 0.7 percentage points and 0.9 percentage points respectively, versus fourth-quarter 2023), with 38.6 million estimated adult users of its smoke-free products (up by 5.3 million versus December 2023), which are now available in 95 markets, reported PMI.
In January, the U.S. Food and Drug Administration (FDA) authorized the marketing of 20 Zyn nicotine pouch products through the premarket tobacco product application (PMTA) pathway after an extensive scientific review, according to a press release from the FDA. This is “the first time the agency has authorized products commonly referred to as nicotine pouches.”