ZYN and the American BusinessNarrow moat

Philip Morris International (PM) — moat facet

PMI spent about $19 billion in 2022 to build an American business, and in the first half of 2026 that business shrank 16%.

The United States is PMI's newest business and its weakest moat. The U.S. segment earned $3,216 million of net revenues in 20251, 7.9% of the company2, from ZYN and snus, cigars, IQOS in Austin and the wellness unit Aspeya3. PMI has spent more than $20 billion on American investments since 2022, about $19 billion of it in 2022 including Swedish Match4.

U.S. segment net revenues ($M)2,16920232,94420243,2162025PMI recast schedules, 8-K March 2026
Up 48% in two years, before the 2026 stall.

The segment grew fast after the purchase. Net revenues went from $2,169 million in 2023 to $2,944 million in 2024 and $3,216 million in 202556, and adjusted operating companies income from $676 million to $1,124 million78. American smoke-free revenue rose from $1,738 million to $2,858 million910.

In 2026 it went backwards. First-half net revenues fell 16.1% to $1,478 million and adjusted operating income fell 50.2% organically1112. ZYN shipments dropped 23.5% in the first quarter on channel destocking13, and the second quarter showed only a small recovery14.

The moat here is narrow. ZYN leads its category, with around two-thirds value share15, and holds the only modified risk order for a nicotine pouch16. But there is no device lock-in, rivals are growing faster, and PMI has cut the price per pouch to respond. The heated-tobacco franchise that works so well abroad is still confined to one American city.

The American footprint is physical as well as financial. PMI says it has invested more than $1 billion in American manufacturing since the Swedish Match purchase, with plants in Colorado, Kentucky and North Carolina employing more than 1,000 people directly17. The factories were built for a pouch market that was doubling; in 2026 they are serving one that paused.

The U.S. segment is where the thesis is most exposed. Its quarterly revenue deserves the closest eye, $856 million in the second quarter of 2026, down 0.7%18; a return to double-digit growth would restore the story, and another year of decline would mean the Swedish Match price was paid for a peak.

Moat trajectory: Narrowing

H1 2026 revenue -16.1%, adjusted OCI -50.2% organic.

The number that tests this moat
Reported
U.S. segment net revenues, latest quarter
$856M, -0.7% (Q2 2026)

The American growth engine; a second year of decline would mean the Swedish Match price bought a peak.

Source: PMI Form 10-Q, Q2 2026 ↗
Aspects of the moat
DIG DEEPER 01
Two-Thirds of American Pouches
ZYN holds about two-thirds of American nicotine pouches, but a pouch user can switch brands at the next purchase in a way an IQOS user cannot.
DIG DEEPER 02
The First Pouch With a Reduced-Risk Order
ZYN is the only nicotine pouch allowed to claim lower risk than cigarettes, an order no rival can copy by launching a similar can.
DIG DEEPER 03
Swedish Match: $16.8 Billion for ZYN
PMI paid about $16.8 billion for Swedish Match, and the U.S. business it anchors earns about 6.7% a year on that price before tax.
DIG DEEPER 04
IQOS in America: One City So Far
PMI paid Altria $2.8 billion for the American IQOS rights and, two years later, sells the device in one city.
⚠ Threats to the moat
⚠ THREAT 01
Reported U.S. Profit of $322 Million
On the reported basis PMI's American segment earned $322 million in 2025, two years after losing $325 million.
⚠ THREAT 02
Cigars: The Only American Combustible, Down 12.7%
PMI's only American combustible, cigars from Swedish Match, fell 12.7% in 2025, and the company says it will not sell cigarettes there.
References
  1. ReportedThe U.S. segment earned $3,216 million of net revenues in 2025, 7.9% of the company, from ZYN and snus, cigars, IQOS in Austin and the wellness unit Aspeya.
    Philip Morris International Form 8-K exhibit 99.1 - 2025 and 2024 results recast into the new segments International Smoke-Free, International Combustibles and U.S. — FY2025 · publ. 13 March 2026 · source ↗
  2. Moat Explorer calcThe U.S. segment earned $3,216 million of net revenues in 2025, 7.9% of the company, from ZYN and snus, cigars, IQOS in Austin and the wellness unit Aspeya.
    Moat Explorer calculation from Philip Morris International's reported figures ($ millions unless stated). Excise and revenue 2025: 53,211 / 40,648 = 1.31 dollars of excise per dollar of net revenue; gross of excise 53,211 + 40,648 = 93,859, excise share 53,211 / 93,859 = 56.7%; excise growth 2023-2025 53,211 / 49,404 - 1 = 7.7% against net revenue growth 40,648 / 35,174 - 1 = 15.6%. Product mix 2025: smoke-free 16,854 / 40,648 = 41.5%; combustible 23,794 / 40,648 = 58.5%; smoke-free 2023 12,840 / 35,174 = 36.5%, 2024 14,660 / 37,878 = 38.7%; smoke-free growth 2023-2025 16,854 / 12,840 - 1 = 31.3%; smoke-free revenue 2016 733 to 2025 16,854 = 23 times. Segments 2025: International Smoke-Free 13,996 / 40,648 = 34.4%; International Combustibles 23,436 / 40,648 = 57.7%; U.S. 3,216 / 40,648 = 7.9%; recast gross profit shares 9,576 / 27,304 = 35.1%, 15,523 / 27,304 = 56.9%, 2,206 / 27,304 = 8.1%. Growth 2025: ISF 13,996 / 12,126 - 1 = 15.4%; IC 23,436 / 22,807 - 1 = 2.8%; U.S. 3,216 / 2,944 - 1 = 9.2%. Growth 2024: ISF 12,126 / 11,102 - 1 = 9.2%; IC 22,807 / 21,903 - 1 = 4.1%; U.S. 2,944 / 2,169 - 1 = 35.7%. IC gross profit 15,523 / 13,972 - 1 = 11.1% against IC revenue 23,436 / 21,903 - 1 = 7.0% (2023-2025). Recast reported gross margins 2023: ISF 7,021 / 11,102 = 63.2%, IC 13,972 / 21,903 = 63.8%; 2024: ISF 7,831 / 12,126 = 64.6%, IC 14,687 / 22,807 = 64.4%. Segment sum 2024 12,126 + 22,807 + 2,944 = 37,877 against 37,878 reported. IC shares of net revenues 21,903 / 35,174 = 62.3% (2023), 22,807 / 37,878 = 60.2% (2024). U.S. revenue 3,216 / 2,169 - 1 = 48.3% (2023-2025). Q2 2026 shares: ISF 3,877 / 11,192 = 34.6%, IC 6,459 / 11,192 = 57.7%, U.S. 856 / 11,192 = 7.6%. U.S. gross margin Q2 2026 555 / 856 = 64.8% against 611 / 862 = 70.9%. Swedish Match: 14,460 + 1,495 + 883 = 16,838 total cash paid; U.S. adjusted operating companies income 1,124 / 16,838 = 6.7% pre-tax; reported U.S. OCI 322 / 3,216 = 10.0% of U.S. revenue; adjusted 1,124 / 3,216 = 35.0%. Goodwill and other intangibles 17,264 + 10,884 = 28,148, 28,148 / 69,185 = 40.7% of total assets. Volumes: cigarettes 607,367 / 616,827 - 1 = -1.5% (2025), 607,367 / 612,949 - 1 = -0.9% (2023-2025); heated tobacco units 155,133 / 139,743 - 1 = 11.0% (2025), 139,743 / 125,263 - 1 = 11.6% (2024); HTUs 155,133 / (607,367 + 155,133) = 20.3% of cigarette plus HTU shipments. U.S. ZYN cans 793.7 / 384.8 = 2.06 times (2023-2025), 793.7 / 580.5 - 1 = 36.7% (2025); international nicotine pouches 879.6 - 793.7 = 85.9 million cans (2025), 644.0 - 580.5 = 63.5 (2024); snus 227.9 / 240.4 - 1 = -5.2% (2023-2025); e-vapor 3,330 / 1,651 = 2.0 times. U.S. segment: cigars 358 / 410 - 1 = -12.7%, 358 / 431 - 1 = -16.9% (2023-2025); wellness 238 / 333 - 1 = -28.5%. Cash and dividends: free cash flow 12,233 - 1,569 = 10,664 (2025), 12,217 - 1,444 = 10,773 (2024), 9,204 - 1,321 = 7,883 (2023); dividends paid / free cash flow 8,624 / 10,664 = 80.9% (2025), 8,197 / 10,773 = 76.1% (2024), 7,964 / 7,883 = 101.0% (2023). Payout of declared dividends per share over diluted EPS: 5.64 / 7.26 = 77.7% (2025), 5.30 / 4.52 = 117.3% (2024), 5.14 / 5.02 = 102.4% (2023); over adjusted EPS 5.64 / 7.54 = 74.8%. Annualised dividend 1.60 x 4 = 6.40; 6.40 / 5.64 = 1.13; dividend 5.64 / 1.54 = 3.7 times since 2008; yield 6.40 / 190.48 = 3.4%. R&D 756 / 40,648 = 1.9% of revenue; capex 1,569 / 40,648 = 3.9%. Customers: two customers 12% + 10% = 22% of 2025 net revenues; related-party revenue 4,582 / 40,648 = 11.3%; Megapolis 2,805 / 40,648 = 6.9%; Megapolis growth 2,805 / 2,393 - 1 = 17.2%. Japan 4.2 / 40.6 = 10.3% of net revenues. Canada: RBH carrying value 3,280 fair value at deconsolidation to 51 at 30 June 2026; impairments 2,316 + 511 = 2,827. Valuation: trailing twelve months to June 2026 revenue 40,648 + 21,338 - 19,441 = 42,545; net earnings 11,348 + 5,255 - 5,729 = 10,874; P/E 296.88 / 10.874 = 27.3; P/S 296.88 / 42.545 = 6.98; 2018 P/E 103.78 / 7.911 = 13.1; 2025 P/E 249.68 / 11.348 = 22.0; free cash flow yield 10,664 / 296,880 = 3.6%. Other PMI cigarette brands: 25.4 - 9.8 = 15.6% (2023), 25.3 - 10.7 = 14.6% (2025), a loss of 1.0 point against Marlboro's gain of 0.9. Excise Q2 2026 14,973 / 13,272 - 1 = 12.8% against net revenues 11,192 / 10,140 - 1 = 10.4%. U.S. smoke-free H1 1,584 - 1,311 = 273 decline. ISF H1 2026 gross margin 5,400 / 7,713 = 70.0%. Gross margin 2025 27,282 / 40,648 = 67.1%. ROIC average 2015-2025 (45.6 + 50.2 + 43.4 + 50.7 + 48.7 + 52.1 + 57.2 + 40.6 + 26.8 + 28.6 + 32.5) / 11 = 43.3%. Employees 84,900 - 82,700 = 2,200 (2023-2025); net revenues 40,648 - 35,174 = 5,474, about 5.5 billion. Snus 240.4 - 227.9 = 12.5 million cans. Europe smoke-free 8,127 / 16,854 = 48.2%, about half. Cigarette decline 2% to 3% of 607,367 = 12,147 to 18,221 million units. Operating cash flow over R&D 12,233 / 756 = 16.2 times. Blocked markets 440 / 2,587 = 17%, about a sixth. Market cap against peers 296.88 / 119.41 = 2.5 times British American Tobacco; 296.88 / 114.91 = 2.6 times Altria. Net debt to adjusted EBITDA 43,963 / 17,375 = 2.53. Interest 966 / 14,892 = 6.5% of operating income. Guidance midpoints: (8.35 + 8.50) / 2 = 8.43, reported (7.28 + 7.43) / 2 = 7.36, gap 8.43 - 7.36 = 1.07; earlier adjusted midpoints (8.38 + 8.53) / 2 = 8.46, (8.31 + 8.46) / 2 = 8.39, (8.26 + 8.41) / 2 = 8.34; 8.43 / 7.54 - 1 = 11.8% - revenue mix, segment shares and customer concentration. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in PMI's Forms 10-K and 10-Q, the recast segment schedules, results releases and market data; operands shown in the source line.
  3. ReportedThe U.S. segment earned $3,216 million of net revenues in 2025, 7.9% of the company, from ZYN and snus, cigars, IQOS in Austin and the wellness unit Aspeya.
    Philip Morris International Form 8-K exhibit 99.1 - 2025 and 2024 results recast into the new segments International Smoke-Free, International Combustibles and U.S. — FY2025 · publ. 13 March 2026 · source ↗
  4. ReportedPMI has spent more than $20 billion on American investments since 2022, about $19 billion of it in 2022 including Swedish Match.
    Philip Morris International release 'PMI is invested in America', 15 January 2026 - US investments and plants. — January 2026 · publ. 15 January 2026 · source ↗
  5. ReportedNet revenues went from $2,169 million in 2023 to $2,944 million in 2024 and $3,216 million in 2025, and adjusted operating companies income from $676 million to $1,124 million.
    Philip Morris International Form 8-K exhibit 99.2 - 2024 and 2023 results recast into the new segments. — FY2024 · publ. 13 March 2026 · source ↗
  6. ReportedNet revenues went from $2,169 million in 2023 to $2,944 million in 2024 and $3,216 million in 2025, and adjusted operating companies income from $676 million to $1,124 million.
    Philip Morris International Form 8-K exhibit 99.1 - 2025 and 2024 results recast into the new segments International Smoke-Free, International Combustibles and U.S. — FY2025 · publ. 13 March 2026 · source ↗
  7. ReportedNet revenues went from $2,169 million in 2023 to $2,944 million in 2024 and $3,216 million in 2025, and adjusted operating companies income from $676 million to $1,124 million.
    Philip Morris International Form 8-K exhibit 99.2 - 2024 and 2023 results recast into the new segments. — FY2024 · publ. 13 March 2026 · source ↗
  8. ReportedNet revenues went from $2,169 million in 2023 to $2,944 million in 2024 and $3,216 million in 2025, and adjusted operating companies income from $676 million to $1,124 million.
    Philip Morris International Form 8-K exhibit 99.1 - 2025 and 2024 results recast into the new segments International Smoke-Free, International Combustibles and U.S. — FY2025 · publ. 13 March 2026 · source ↗
  9. ReportedAmerican smoke-free revenue rose from $1,738 million to $2,858 million.
    Philip Morris International Form 8-K exhibit 99.2 - 2024 and 2023 results recast into the new segments. — FY2024 · publ. 13 March 2026 · source ↗
  10. ReportedAmerican smoke-free revenue rose from $1,738 million to $2,858 million.
    Philip Morris International Form 8-K exhibit 99.1 - 2025 and 2024 results recast into the new segments International Smoke-Free, International Combustibles and U.S. — FY2025 · publ. 13 March 2026 · source ↗
  11. ReportedFirst-half net revenues fell 16.1% to $1,478 million and adjusted operating income fell 50.2% organically.
    Philip Morris International Form 10-Q for the quarter ended 30 June 2026 - segment results, the balance sheet, FDA authorisations and shares outstanding. — Q2 2026 · publ. 24 July 2026 · source ↗
  12. ReportedFirst-half net revenues fell 16.1% to $1,478 million and adjusted operating income fell 50.2% organically.
    Philip Morris International second-quarter 2026 results release, Form 8-K exhibit 99.1 - volumes, shares, ZYN and 2026 guidance - results, margins, operating companies income, cash and 2026 guidance. — Q2 2026 · publ. 22 July 2026 · source ↗
  13. ReportedZYN shipments dropped 23.5% in the first quarter on channel destocking, and the second quarter showed only a small recovery.
    Philip Morris International first-quarter 2026 results release, Form 8-K exhibit 99.1 - ZYN destocking, IQOS brand share and Poland's flavour ban. — Q1 2026 · publ. 22 April 2026 · source ↗
  14. ReportedZYN shipments dropped 23.5% in the first quarter on channel destocking, and the second quarter showed only a small recovery.
    Philip Morris International second-quarter 2026 results release, Form 8-K exhibit 99.1 - volumes, shares, ZYN and 2026 guidance - shipment volumes, market shares, IQOS, ZYN and Japan. — Q2 2026 · publ. 22 July 2026 · source ↗
  15. ReportedZYN leads its category, with around two-thirds value share, and holds the only modified risk order for a nicotine pouch.
    Philip Morris International fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - smoke-free share of revenue and gross profit, 2026 guidance and 2026-2028 targets. — FY2025 · publ. 6 February 2026 · source ↗
  16. ReportedZYN leads its category, with around two-thirds value share, and holds the only modified risk order for a nicotine pouch.
    Philip Morris International second-quarter 2026 results release, Form 8-K exhibit 99.1 - volumes, shares, ZYN and 2026 guidance - shipment volumes, market shares, IQOS, ZYN and Japan. — Q2 2026 · publ. 22 July 2026 · source ↗
  17. ReportedPMI says it has invested more than $1 billion in American manufacturing since the Swedish Match purchase, with plants in Colorado, Kentucky and North Carolina employing more than 1,000 people directly.
    Philip Morris International release 'PMI is invested in America', 15 January 2026 - US investments and plants. — January 2026 · publ. 15 January 2026 · source ↗
  18. ReportedIts quarterly revenue deserves the closest eye, $856 million in the second quarter of 2026, down 0.7%; a return to double-digit growth would restore the story, and another year of decline would mean the Swedish Match price was paid for a peak.
    Philip Morris International Form 10-Q for the quarter ended 30 June 2026 - segment results, the balance sheet, FDA authorisations and shares outstanding. — Q2 2026 · publ. 24 July 2026 · source ↗
Sources
Generated September 26, 2026