Yes we Can: 600 million dollar investment for nicotine pouch production in the USA

Tobacco-free Snus are currently experiencing a real upswing, and not just in Europe - demand is also increasing in the USA. Find out here which tobacco company is now investing several million dollars in nicotine pouch production and what else is being seen as a reason for such an investment in addition to the boom in demand.

Nicotine pouch demand in the USA

In the USA they are known and seen in many places - tobacco-free nicotine pouches are becoming increasingly popular here. In such a way that they were even discussed in politics at the beginning of the year by Chuck Schumer, the Democratic majority leader in the US Senate. Even though for him they are more of a bad trend than a good one, it seems clear that demand has been rising rapidly in recent years, and with it a trend towards quitting to smoke tobacco cigarettes.

Fully aware of an imminent trend reversal and also of the opportunities Nicotine pouches could offer for quitting smoking the leading international tobacco company Philip Morris recently announced its investment in a new production facility in the USA. However, the fact that this is in response to an unmistakable increase in demand only partially reflects the Group's intentions.

New production facility for tobacco-free nicotine pouches in Colorado

In addition to responding to the increasing global demand for smokeless nicotine products, Phillip Morris International Inc. (PMI) is also looking to expand its nicotine pouch production in the direction of a smoke-free future. Over the next two years, a new modern production facility for tobacco-free nicotine pouches is to be built in Aurora, Colorado.

The tobacco company has announced an investment of 600 million US dollars. This should make it possible to achieve an appropriately scaled production facility as well as an efficient and modern production process. Tobacco-free nicotine pouches under the Zyn brand will ultimately be produced there by the subsidiary Swedish Match.

Nicotine pouch factory in Kentucky has reached its limits

Due to the massive growth in demand, the existing Zyn factory in Owensboro, Kentucky, would probably no longer have been able to meet the current growth in demand on its own in the long term. According to a PMI press release, Swedish Match North America is currently working on increasing production in Kentucky. Ongoing investments in Owensboro and now also in Aurora should create sufficient capacity in the short and medium term for the current growth rate of cyn consumption in the USA and for exports.

For the Colorade site selection, Stace Kennedy, CEO of PMI's U.S. business, says, PMI would believe Colorado is similarly minded in its commitment to innovation, economic opportunity and public health, and would be excited to work with the state and its talented workforce as it expands its product presence in the U.S.

Nicotine pouch production creates new jobs in the USA

According to the tobacco company, the groundbreaking ceremony is planned for this year, with regular operations starting in 2026. In connection with the construction of the plant, PMI states that almost 5,000 jobs would be expected to be created in the construction phase of the project alone, which should have an "economic impact of 1 billion US dollars".

For the plant operation, PMI sees the creation of 500 direct jobs as having an "annual economic impact of 550 million US dollars" and a further 1,000 indirect jobs in the entire region.

It remains to be seen how the exact figures will turn out in the end - but the tobacco company is already holding out the prospect of a wide range of career opportunities in the new plant.

Smoking is "out", nicotine pouches are "in" - how the USA is reducing its smoking figures

When it comes to moving towards a smoke-free future, the USA can already claim promising successes. More and more smokers there are switching to reduced-risk alternatives, and the number of smokers has fallen significantly in recent years.

Figures from the U.S. Centers for Disease Control and Prevention (CDC) confirm this trend reversal. In 2022, only eleven percent of adult Americans were still cigarette smokers. In comparison: in 2005, the smoking rate was still over 20 percent. And in the 1940s, one in two people were still affected by such a vice.

This American success did not go unnoticed in Germany for long, as the German medical journal Ärtzeblatt reported in 2023, that never fewer people have been smoking in the USA than today."

A significant contribution to this success story, especially in recent years, has certainly been made by the e-cigarette - as it has now become a new trend that has given conventional cigarettes the character of being "out". However, the rapid growth in American demand for white Snus seems to show that completely smokeless (or vaporless) can also pave a way for success.

>> You might also be interested in: Addiction researcher advocates EU-wide legalization of Swedish oral tobacco

Germany lacks legal certainty

Germany seems a long way away from such falling smoking figures. Rather, a high smoking rate of over 30 percent has persisted here for several years. However, a Swedish model could have been followed - even if tobacco-containing Snus would not have been desirable, the white Snus would still exist.

But not only are there no signs of (modern) production facilities in Germany, nicotine pouches are also temporarily banned at least for local sale in many districts. The reason for this is a lack of legal certainty and a lack of a regulatory framework for such products.

Torsten Albig, Managing Director External Affairs at Philip Morris Germany, knows about this:

"Die deutsche Politik verhindert seit Jahren, dass Nikotinbeutel erwachsenen Rauchern als schadstoffreduzierte Alternative zur Verfügung stehen - infolgedessen hat sich ein Graumarkt etabliert. Deutschland wartet weiter auf die dafür erforderlichen Regulierungen. Der Verkauf von Nikotinbeuteln, aber nicht zuletzt auch ihre Inhaltsstoffe und der Jugendschutz müssen endlich gesetzlich geregelt und die Produkte damit als Alternative zum Rauchen etabliert werden. 2021 gab es bereits einen Beschluss der Verbraucherschutzministerkonferenz, dass Nikotinbeutel im Tabakrecht zu regeln seien. Dies wurde von der Bundesregierung bis heute nicht umgesetzt. Das Beispiel USA zeigt sehr gut, wie durch den richtigen Regulierungsrahmen neben sinkenden Raucherquoten auch positive wirtschaftliche Effekte entstehen."

>> You can read how the EU could create a solution here in: Tobacco Directive in the new EU Commission: The future for Snus and nicotine pouches

Investing in a "smoke-free future"

As mentioned above, Philip Morris' investment in nicotine pouch production in the USA is not just a response to rising demand - the tobacco company also seems to be aware of this: Smoking is not only "out", it is also a burden on the health of consumers and therefore our society.

This is why PMI is focusing on realizing its vision of a smoke-free future and expanding its product portfolio to include innovative smoke-free solutions. Since 2008, the Group has invested USD 12.5 billion in the development, scientific evaluation and marketing of such solutions for adults, with the aim of completely phasing out the sale of cigarettes.

At a press conference in July, Stace Kennedy also emphasized that the project in Colorado represents a significant investment in PMI's vision of a smoke-free future.