Philip Morris International’s Swedish Match Affiliate Adding 450 Jobs with $232 Million Investment in Kentucky

Rhea-AI Summary

Philip Morris International (PMI) announces a $232 million investment through its Swedish Match affiliate to expand production capacity in Owensboro, Kentucky. This expansion is expected to create 450 direct jobs and have an annual economic impact of $277 million. The facility produces ZYN nicotine pouches to meet growing demand from legal-age consumers switching from traditional tobacco products. The expansion will increase the plant's workforce by 40% and is targeted for completion by Q2 2025. This investment is part of PMI's mission to deliver a smoke-free future in the U.S. market, which it entered after acquiring Swedish Match AB in late 2022.

Positive

• $232 million investment to expand production capacity in Kentucky
• Creation of 450 direct jobs and 410 indirect jobs
• $277 million annual economic impact expected
• 40% increase in plant workforce
• Expansion to provide around 900 million cans of capacity for 2025
• Part of a larger $600 million investment in U.S. manufacturing

Negative

• None.

Insights

Financial Analyst

This $232 million investment by Philip Morris International (PMI) through its Swedish Match affiliate is a significant move that underscores the company's commitment to its smoke-free future strategy. The expansion in Owensboro, Kentucky, is set to increase the workforce by 40%, adding 450 direct jobs and potentially 410 indirect jobs. This growth is primarily driven by the increasing demand for ZYN nicotine pouches, a smoke-free alternative to traditional tobacco products.

The economic impact is substantial, with an expected annual contribution of $277 million to the regional economy. Moreover, the construction phase alone is projected to create 2,800 jobs with a $414 million economic impact. This investment, coupled with the recently announced $600 million facility in Colorado, demonstrates PMI's aggressive expansion in the U.S. smoke-free market.

For investors, this move signals strong growth potential in the smoke-free segment, particularly in nicotine pouches. The expanded capacity, expected to reach 900 million cans by 2025, positions PMI to capitalize on the shifting consumer preferences away from traditional tobacco products. This strategic investment could lead to increased market share and revenue growth in the rapidly evolving tobacco industry landscape.

Market Research Analyst

PMI's substantial investment in expanding ZYN production capacity is a clear indicator of the rapidly growing demand for smoke-free nicotine products in the U.S. market. This trend is reshaping the tobacco industry, with consumers increasingly seeking alternatives to traditional cigarettes. The move aligns with changing consumer preferences and regulatory pressures pushing for reduced-risk products.

The company's focus on responsible marketing practices, including age verification systems and restrictions on social media influencers, demonstrates an awareness of regulatory scrutiny and public health concerns. This proactive approach could help mitigate potential regulatory risks in the future.

Furthermore, PMI's diversification strategy, including the introduction of IQOS heat-not-burn devices, shows a comprehensive approach to capturing various segments of the smoke-free market. The FDA's authorization of IQOS as a modified risk tobacco product provides a competitive edge and potential for market expansion.

Investors should note that while this segment shows promise, it also faces challenges such as evolving regulations and potential shifts in consumer behavior. The success of this investment will largely depend on sustained consumer adoption and a favorable regulatory environment.

Legal Expert

PMI's expansion in Kentucky and its overall U.S. strategy present several legal considerations. The company's focus on smoke-free products aligns with evolving public health policies, potentially reducing legal risks associated with traditional tobacco products. However, the nicotine pouch and heat-not-burn markets are still subject to regulatory scrutiny.

The FDA's authorization of IQOS as a modified risk tobacco product is a significant legal advantage, but ongoing compliance with FDA regulations will be crucial. PMI's commitment to responsible marketing practices, including age verification and restrictions on advertising to youth, demonstrates proactive compliance with tobacco marketing regulations.

The company's involvement in initiatives like the "United to Safeguard America from Illegal Trade" coalition could help build goodwill with regulators and law enforcement. However, as the smoke-free market grows, it may face new regulatory challenges or legislative actions aimed at controlling nicotine products.

Investors should monitor potential changes in tobacco and nicotine regulations, as well as any legal challenges that may arise from public health advocates or competitors in this rapidly evolving market segment.

Expansion will support company’s U.S. mission to deliver a smoke-free future as it moves legal-age consumers who smoke to better alternatives

Expansion to deliver additional $277 million annually in regional economic impact*

New hiring to increase plant workforce by 40 percent

OWENSBORO, Ky.--(BUSINESS WIRE)-- Philip Morris International Inc. (PMI) (NYSE: PM) is announcing an investment of $232 million through one of its Swedish Match affiliates to expand production capacity of its manufacturing facility in Owensboro, Ky. The expansion is expected to create an additional 450 direct jobs with an ongoing annual economic impact of $277 million and an additional 410 indirect jobs* for the commonwealth of Kentucky. The facility produces ZYN nicotine pouches to help meet the growing demand from legal-age consumers switching from cigarettes or other traditional tobacco products.

Philip Morris International's Swedish Match affiliate is adding 450 jobs at its Owensboro facility to expand capacity to help meet increasing demand for smoke-free products. (Photo: Business Wire)

“Philip Morris International’s Swedish Match affiliate has been an important partner and job creator in this region for many years, and I’m excited to see this incredible new investment and the 450 great job opportunities it is creating for families in Owensboro and the surrounding region,” Kentucky Gov. Andy Beshear said. “Our economy continues to set records, and today’s announcement shows we’re bringing jobs to our people instead making our people move to the jobs. I want to thank and congratulate company leadership for doubling down here in the commonwealth and look forward to many more years of prosperity.”

“Smoking cigarettes is the most harmful way to consume nicotine. We are accelerating our mission toward a smoke-free future, working with our U.S. affiliates to move adults away from cigarettes and other traditional tobacco products by providing better alternatives,” said Stacey Kennedy, CEO of PMI’s U.S. business. “This investment in U.S. manufacturing capacity will increase the Kentucky plant’s workforce by about 40 percent, providing good-paying jobs and helping to meet the increasing demand for smoke-free products.”

Construction of the expanded facility is already underway—including the addition of more production space—with progressive production increases expected during the project. Completion is targeted by the second quarter of 2025. The construction phase of the project alone is expected to create nearly 2,800 jobs with about $414 million in economic impact.* Career opportunities at the facility will cover a wide range of skill levels including positions such as engineers, production staff, technicians and quality control. Career opportunities can be found here.

In addition to facility expansion and ongoing optimization of processes to increase capacity progressively over the coming quarters, the Kentucky facility will move from a 24-hour, five-days-per-week schedule to a 24-hour, seven-days-per-week schedule to boost production starting in the fourth quarter of this year. The Swedish Match Owensboro facility currently has about 1,100 employees. The ongoing expansion of the facility in Kentucky is expected to provide around 900 million cans of capacity for 2025.

In July, PMI announced an investment of $600 million over the next two years through its U.S. affiliate to open a nicotine pouch manufacturing facility in Aurora, Colo. The Aurora facility and Owensboro expansion together are designed to provide capacity needed in the near- and mid-term to meet the current growth rate of ZYN with U.S. legal-age nicotine consumers.

PMI first entered the U.S. market following its subsidiary’s acquisition of Swedish Match AB in late 2022. Swedish Match’s ZYN oral nicotine pouches have been on the market in the U.S. for more than a decade and are designed as a better option for legal-age consumers who smoke or use other traditional tobacco products and wish to continue using nicotine.

PMI is headquartered in Stamford, Connecticut, and its U.S. affiliates have more than 2,300 employees. PMI is on a mission to improve public health by providing the nearly 30 million legal-age U.S. consumers who smoke and other legal-age nicotine users with innovative products that are better alternatives to continued smoking. Since 2008, PMI has invested $12.5 billion globally to develop, scientifically substantiate, and commercialize innovative smoke-free products for legal-age nicotine consumers. PMI’s U.S. affiliates operate smoke-free product manufacturing facilities including the Swedish Match North America Owensboro, Ky., plant that makes ZYN nicotine pouches and a facility in Wilson, N.C., that produces HEETS, the consumable for the IQOS heated tobacco device. Swedish Match North America has a regional office in Richmond, Va.

U.S. marketing practices support 21+ access only

PMI’s U.S. affiliates are committed to responsible marketing practices focused on limiting access to adults 21 years of age and older. PMI’s U.S. affiliates do not use social media influencers in the U.S. or people under the age of 35 in marketing materials. They also employ independent age-verification systems like “Double Verify” to direct digital advertising to those over 21, and owned digital platforms are age-gated at the point of access and restricted to current nicotine users of legal age. Swedish Match North America is a Manufacturer Advisory Council member of the We Card Program, a national nonprofit serving retailers of age-restricted products, and a founding board member and investor in TruAge®, a free retail technology that provides stores a more accurate way of age verification, including the ability to detect fake IDs to ensure 21+ access only.

Smoke-free mission in the U.S.

Because adult nicotine consumer preferences differ, PMI’s U.S. affiliates are working to offer a range of smoke-free options. This effort includes investing in expanded production for nicotine pouches and beginning targeted 21+ consumer activations of its innovative IQOS heat-not-burn device in select U.S. markets this year. IQOS is the first electronic nicotine device authorized by the U.S. Food and Drug Administration (FDA) as a modified risk tobacco product with reduced exposure claims. The FDA found that such authorization is appropriate for the protection of the public health. Although not risk-free, studies show that because IQOS heats tobacco instead of burning it, the device significantly reduces the production of and exposure to harmful and potentially harmful chemicals compared to combustible cigarettes for adults who smoke who switch to IQOS completely.

Commitment to corporate social responsibility

PMI’s U.S. affiliates have contributed approximately $25 million to charitable causes since 2022 and look to accelerate and amplify the good work of organizations already active within communities through both financial contributions and volunteering. Three key focus areas include supporting military veterans, empowering women and funding hyperlocal solutions. PMI’s U.S. affiliates also helped form “United to Safeguard America from Illegal Trade” (USA-IT), a coalition of nearly 100 national and state brand enforcement experts, law enforcement agencies, academics and leading business organizations working to combat illegal trade. USA-IT has trained more than 36,000 law enforcement officials.

Philanthropic partnerships in Kentucky

PMI’s U.S.-based affiliates have donated nearly $2.25 million to Kentucky area philanthropies over the past two years including $500,000 for tornado and disaster relief and to organizations such as Lady Veterans Connect, Disabled American Veterans Charitable Service Trust, Fresh Start for Women, Veterans Empowered Together, Owensboro/Daviess County Habitat for Humanity, Boulware Mission, Daniel Pitino Shelter and Oasis Owensboro Area Shelter Information and Services.

*Estimates provided from economic impact analysis study conducted by EConsult Solutions, a Philadelphia-based economics consulting firm.

Additional multimedia assets

To learn more about the Swedish Match Owensboro, Ky., manufacturing expansion, view the video assets here: Video News Access Link.

Philip Morris International in the U.S.: Delivering a Smoke-Free Future

Philip Morris International and its U.S. affiliates are working to deliver a smoke-free future. Since 2008, PMI has invested $12.5 billion globally to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke with the goal of transitioning legal-age consumers who smoke to better alternatives. In 2022, PMI acquired Swedish Match – a leader in oral nicotine delivery – creating a global smoke-free champion led by the IQOS and ZYN brands. The U.S. Food and Drug Administration has authorized versions of PMI’s IQOS electronically heated tobacco devices and Swedish Match’s General snus as Modified Risk Tobacco Products and renewal applications for these products are pending before the FDA. For more information, please visit www.pmi.com/us/ and www.pmiscience.com.

Forward-Looking and Cautionary Statements

This press release contains projections of future results and goals and other forward-looking statements, including statements regarding expected operational performance; capital expenditures; and business plans and strategies. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI.

PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing and regulatory restrictions that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products in certain markets or countries; health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco and/or nicotine use and intellectual property; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; the impact and consequences of Russia's invasion of Ukraine; changes in adult smoker behavior; the impact of natural disasters and pandemics on PMI's business; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost, availability, and quality of tobacco and other agricultural products and raw materials, as well as components and materials for our electronic devices; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to introduce, commercialize, and grow smoke-free products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; if it is unable to attract and retain the best global talent, including women or diverse candidates; or if it is unable to successfully integrate and realize the expected benefits from recent transactions and acquisitions. Future results are also subject to the lower predictability of our smoke-free products performance.

PMI is further subject to other risks detailed from time to time in its publicly filed documents, including PMI's Annual Report on Form 10-K for the fourth quarter and year ended December 31, 2023, and the Quarterly Report on Form 10-Q for the second quarter ended June 30, 2024. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240827299400/en/

Philip Morris International

PMI U.S. Communications

Matt Sheaff

+1 (203) 524-9146

matthew.sheaff@pmi.com

Source: Philip Morris International

FAQ

What is Philip Morris International investing in Kentucky?

PMI is investing $232 million through its Swedish Match affiliate to expand production capacity of its manufacturing facility in Owensboro, Kentucky, which produces ZYN nicotine pouches.

How many jobs will PMI's expansion in Kentucky create?

The expansion is expected to create 450 direct jobs and 410 indirect jobs in Kentucky.

What is the expected economic impact of PMI's Kentucky expansion?

The expansion is expected to have an ongoing annual economic impact of $277 million for the commonwealth of Kentucky.

When is PMI's Kentucky facility expansion expected to be completed?

The expansion is targeted for completion by the second quarter of 2025.

What product does PMI's Kentucky facility produce?

The facility produces ZYN nicotine pouches, which are designed as a better alternative for legal-age consumers who smoke or use other traditional tobacco products.