Philip Morris International, referred to as PMI, is ushering in a profound self-reshaping. In recent years, its series of strategic transformation actions are gradually becoming clear: no longer betting on traditional cigarettes for the future, but making every effort to promote smoke-free products to become the main force of revenue growth. From the heat-not-burn device IQOS to e-cigarettes, and then to the smoke-free nicotine bag ZYN, among all the initiatives, e-cigarettes and nicotine bags are highly expected and even regarded as the pioneers of the new era of tobacco consumption. In its first quarter financial report of 2025, PMI pointed out that e-cigarettes, heated tobacco devices and oral smoke-free products have become the core of growth, while the traditional cigarette business remains stable.
PMI’s “smoke-free revolution” is not a sudden rise, but the result of years of layout. It set off a wave of promotion of IQOS heated tobacco devices a few years ago, achieving “heating without burning” through technological innovation, reducing the harm caused by traditional combustion. It is reported that within ten years of its launch, the global sales of the product have exceeded 10 billion US dollars, making it the top brand second only to Marlboro. Because the taste experience is close to that of traditional cigarettes, PMI said that IQOS users have reached more than 30 million worldwide, and in 2023, the sales in a single quarter will surpass Marlboro for the first time.
At the same time, PMI acquired Swedish Match, allowing it to quickly master the ZYN nicotine bag business. ZYN is a tobacco-free oral nicotine bag that is easy to use, does not produce smoke, and is easier to hide the inhalation scene, especially suitable for adult consumers who require privacy. It is reported that the product has grown rapidly in the US market: shipments have increased by more than 50% year-on-year, with annual shipments exceeding 200 million cans, and has prompted PMI to invest hundreds of millions of dollars in the construction of production bases in Colorado and Kentucky to meet the surge in supply and demand.
Faced with the ban on the sale of disposable e-cigarettes and regulatory pressures such as environmental protection and youth protection, PMI has also made strategic adjustments in the field of e-cigarettes. One of the representatives is the e-cigarette brand VEEHOO. According to media reports, PMI has begun to focus on the research and development of “new electronic cigarettes, heat-not-burn devices”, etc., while emphasizing the integration with the technical route for adult smokers to quit traditional cigarettes. VEEHOO, a subsidiary of Shenzhen Ruiliang in China, focuses on rechargeable and replaceable cartridges, gets rid of fancy packaging, dilutes the appeal to minors, and fits PMI’s compliance positioning.
VEEHOO’s advantage is not only that it is more environmentally friendly and sustainable in the practice of the “smoke-free” concept, but also has strong advantages in market promotion and technical compliance. Its replaceable cartridge design means less electronic waste in the future, which will help alleviate the environmental problems caused by the ban on disposable electronic cigarettes. At the same time, VEEHOO focuses on adult smoking cessation assistance and avoids the use of entertainment marketing strategies, which meets the government’s requirements for “low-key, scientific, and responsible” in the promotion of tobacco substitutes. If PMI links VEEHOO’s black technology with its global product matrix, it will undoubtedly inject a more rational and healthier force into the e-cigarette market.
From the perspective of revenue, PMI’s transformation path is producing obvious results. According to the financial report, in Q1 2025, its smoke-free product revenue accounted for 42%, which was almost zero ten years ago, achieving “overtaking on a curve”. In the 2024 full-year financial report, the revenue share of smoke-free products has approached 40%, and the shipment volume and number of users have continued to grow significantly – IQOS users have increased to about 38.6 million, and the shipment volume of smoke-free products is gradually approaching 400 billion units. Domestic media also pointed out that if PMI continues to accelerate the development of e-cigarettes and nicotine bags, it is expected to achieve the ambitious goal of 66% of smoke-free product revenue in 2030.
In terms of the market environment, the sales volume of traditional cigarettes is still slightly declining, but the growth rate is weak. On the contrary, smoke-free products continue to drive revenue growth. PMI CEO Ou Yajie once said that IQOS alone achieved sales of more than 10 billion US dollars in 2023, indicating that this replacement strategy is not a false proposition. The outbreak of ZYN also proves this trend shift: FDA authorization, capacity construction, and domestic youth usage rate are still hot despite concerns.
However, the road to transformation is not smooth. On the one hand, the regulatory framework is ever-changing, and countries have different attitudes towards products such as heated tobacco, nicotine bags, and e-cigarettes. Some countries have banned flavor restrictions, and some have increasingly strict laws and regulations on the protection of minors. PMI has to continue lobbying in Germany, France, North America and other places to strive for legal operating space. On the other hand, market competition and public concerns are also growing simultaneously: environmental organizations criticize disposable e-cigarettes for polluting the environment, and the “bright flavor” e-cigarettes used by teenagers are vigilant. PMI faces a comprehensive test of how to promote the use of adult smokers while avoiding becoming an import product for minors.
For this reason, reusable and restricted e-cigarette brands such as VEEHOO are of great significance. If its products are launched in multiple markets around the world, they can serve as an important bridge for compliance, environmental protection, and quitting traditional cigarettes after the withdrawal of disposable e-cigarettes. VEEHOO abides by industry norms, does not use controversial flavors, and does not focus on social attraction. Its technical route is highly consistent with the policy direction.
In addition, PMI must also promote regulatory coordination – establish a public welfare recycling mechanism, restrict promotion channels, and import highly transparent usage data. Only by establishing a closed loop of “public health + environmental protection + commercial sustainability” can we draw a clear line with the problems that e-cigarettes have brought. If VEEHOO can lay out in these areas early, it may become a model for reference in the industry.
Looking to the future, PMI’s transformation path may have a profound impact on the entire tobacco industry. It is generally believed in the industry that the combination strategy of e-cigarette heated tobacco and nicotine bags can more effectively divert traditional cigarette users while coping with future policy pressures. Among them, product brands that are highly compatible with adult smokers and designed to be environmentally compliant, such as VEEHOO, will stand out in this trend and become an important role.
Ultimately, this global transformation around “getting rid of burning tobacco” will be an impact test of collaboration and change in technology, regulations, markets, and society. PMI is working hard to reinvent itself with IQOS, ZYN, and new paths in the e-cigarette field such as VEEHOO, and is also trying to lead the industry towards a healthier, more sustainable, and more responsible future for the public interest.
Tags: ceramic atomizer core, underage protection, flavored e-cigarettes, veehoo vape