00:00Today on Forbes, How Zin Conquered America.
00:05Along the Ohio River, inside a clean, well-lit factory in Owensboro, Kentucky,
00:11dozens of gleaming stainless steel machines, manned by employees in hairnets and safety glasses,
00:17churn out millions of tiny, pillow-shaped white fabric pouches
00:21filled with flavored, pharmaceutical-grade nicotine powder.
00:25Every 15 seconds, 24 hours a day, 5 days a week,
00:28these automated machines fill a white plastic can the size of a hockey puck with 15 pouches.
00:35In a few days' time, containers of the wildly in-demand Zin
00:39will appear in convenience stores, gas stations, and bodegas across the United States.
00:45And a few days after that, the shelves will be reliably empty,
00:48and retailers will be begging Philip Morris International, also known as PMI,
00:53which owns Zin's manufacturer, Swedish Match, for more.
00:58Elizabeth Leary, who has managed River's Edge tobacco outlet in Owensboro for a decade,
01:03says she has never sold a nicotine product with such fervent acolytes.
01:08She explains that she's constantly out of stock, despite being just a few miles from the factory.
01:13She says, quote,
01:1550% of my customers come here for Zin. I've never seen a product this popular.
01:21By the end of 2024, Stanford, Connecticut-based PMI expects to sell as much as 580 million cans of Zin,
01:29a 50% increase over the 385 million sold last year.
01:34Forbes estimates that Zin sales, which PMI does not break out in public filings,
01:39generated $1.3 billion last year, about 3.7% of PMI's $35 billion in total revenue,
01:47and could hit $1.9 billion this year.
01:51Overall, PMI's smoke-free products, Zin, vaporizers, its heat-not-burn device IKOZ,
01:58and chewing tobacco, hit $12.5 billion in sales last year, up from $9.9 billion in 2022.
02:07And they account for nearly 40% of the company's gross revenue as of the fourth quarter.
02:12Zin, in particular, is insanely lucrative.
02:16A can, which comes in 10 flavors including cinnamon, citrus, and wintergreen, retails for about $6.50.
02:24Bonnie Herzog, an analyst for Goldman Sachs who covers the tobacco industry,
02:28says that Zin is six times more profitable than PMI's cigarette division.
02:33And unlike cigarettes, which have been steadily declining in volume for the last decade,
02:37Zin is in hyper-growth mode.
02:40Shipment volume in the U.S. has jumped a staggering 238% since 2020.
02:46It's a new business for PMI, which bought Swedish Match and its Zin brand for $16 billion in 2022.
02:53But the cult nicotine pouch is critical to its future.
02:57PMI makes the world's number one cigarette brand, Marlboro,
03:01but its stated goal is eventually to stop selling cigarettes.
03:04That may sound crazy, if not improbable,
03:07given that global cigarette sales rang up $22.3 billion for the company in 2023.
03:14Since 2008, PMI has invested $12 billion to create less harmful smoke-free nicotine delivery systems.
03:22Stacey Kennedy, the 51-year-old head of PMI's U.S. operations,
03:26and who smoked Marlboros for 10 years before switching to the Icos and the occasional Zin, says,
03:39PMI is investing $232 million to expand the Owensboro factory by 40%,
03:45adding 450 new full-time jobs.
03:48Soon, it will operate 24 hours a day, 7 days a week.
03:52By the end of 2025, Kennedy estimates, Swedish Match can manufacture 900 million Zin containers.
03:59That could bring Zin sales to $2.9 billion, Forbes estimates.
04:04Kennedy says,
04:11While pouches have successfully divorced nicotine from the cigarette, they still have health risks.
04:16For one, nicotine is ferociously addictive.
04:19It is also a vasoconstrictor, meaning it narrows blood vessels.
04:23And it raises blood pressure.
04:25Cancer seems to be less of a concern.
04:28A Swedish Match-funded study found that the pouches contain,
04:38The study also found that Zin contains low levels of other harmful chemicals,
04:42including ammonia, chromium, formaldehyde, and trace amounts of nickel.
04:48For full coverage, check out Will Yakowitz's piece on Forbes.com.
04:53This is Kieran Meadows from Forbes. Thanks for tuning in.
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