Philip Morris halts nationwide sales on following D.C. subpoena

The recent decision by tobacco giant Philip Morris International to suspend online sales on Swedish Match North America’s nationwide has raised eyebrows in the industry. This move comes as the Zyn nicotine pouch maker responds to a subpoena from the District of Columbia (D.C.), signaling potential trouble on the horizon.

The acquisition of Swedish Match by Philip Morris in a $16 billion deal in 2022 was seen as a strategic move for the company to diversify its portfolio and reduce its reliance on traditional cigarettes. With stricter regulations and a shifting consumer preference towards alternatives to tobacco, this acquisition was pivotal for Philip Morris.

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The subpoena received by Swedish Match North America from D.C.’s Attorney General pertains to the 2022 ban on the sale of all flavored tobacco in the District. This ban, which includes flavored synthetic nicotine products, has forced companies to reconsider their sales and supply chain strategies in the region.

Philip Morris has indicated its intent to comply with D.C.’s request, although it also warned of a possible material liability in case of an unfavorable outcome. The company’s preliminary investigation suggests that there have been sales of flavored nicotine pouch products in D.C., particularly through online sales platforms and independent retailers.

As a result, Swedish Match has decided to conduct a comprehensive review of its sales and supply chain arrangements in D.C. and other U.S. localities where flavor bans are in effect. In the interim, all sales on have been temporarily suspended until this assessment is completed.

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While Zyn nicotine pouches have seen strong demand in the U.S., with shipments growing nearly 80% in the first quarter of the year according to the company’s reports, sales on represent only a small percentage of nationwide volumes. This development will likely have minimal impact on the overall sales performance of the product.

As the situation unfolds, investors and industry watchers will be keeping a close eye on how Philip Morris and Swedish Match navigate this challenge. Stay tuned to Extreme Investor Network for the latest updates and insights on this developing story.