Philip Morris International: 2026 may become a pivotal point for the explosion of the smoke-free product market

From International Expansion to Breakthrough in the US

Philip Morris International (NYSE: PM) has focused on international tobacco sales since spinning off from Altria Group in 2008. Now, the world’s largest publicly traded tobacco company is rewriting its growth story—by attacking the US market, which has the largest sales of tobacco products, with smoke-free alternatives.

According to existing data, the annual sales of traditional tobacco products in the US (mainly Marlboro cigarettes) reach $21.1 billion. Philip Morris has acquired the Swedish brand Swedish Match, gaining ownership of Zyn (oral nicotine pouch products), and is preparing to launch an upgraded version of the IQOS Iluma device to penetrate this market.

Breakthrough in Market Share of Smoke-Free Products

Smoke-free alternatives are reshaping the entire tobacco industry landscape. Philip Morris’s current smoke-free products (including IQOS heat-not-burn devices and Zyn oral products) already contribute 41% of the company’s revenue, indicating that the business model transformation has begun to take effect.

More notably, Zyn’s performance in the US market has been exceptionally strong. In just the third quarter, the product sold 204.9 million cans, a 37% increase compared to the same period last year. This growth rate clearly demonstrates that market acceptance of smoke-free products is rapidly rising.

IQOS Iluma: Growth Trigger Point in 2026

Philip Morris submitted an application for the IQOS Iluma to the US FDA as early as October 2023. This device heats tobacco to its boiling point without burning it, producing nicotine vapor for users. According to company conversion data, approximately 72% of smokers would quit traditional cigarettes after using it.

Considering the FDA’s typical approval cycle, a decision on this product’s approval should be announced soon. Once approved, Philip Morris will launch large-scale nationwide promotional campaigns, further strengthening Zyn’s market momentum and opening a new growth engine for the company’s US tobacco market.

Investment Outlook and Valuation Logic

From a valuation perspective, Philip Morris currently offers a 4% dividend yield, and analysts forecast the company’s long-term profit growth rate to reach an annualized 11%. Given the vast potential of the US smoke-free product market, this growth expectation still has room for upward revision.

The stock has risen over 24% so far this year, although it has fallen 20% from its high. From a long-term holding perspective, the current price adjustment provides a window for buying. If IQOS Iluma is approved as scheduled and successfully launched, 2026 is likely to be remembered by investors as a key turning point for Philip Morris.