By Timothy S. Donahue
Top Takeaways:
Smoke-free surge: PMI says nearly $17 billion of 2025 revenue came from alternative products
Growth streak: Company posts fifth consecutive year of volume growth
Long-term focus: PMI reaffirmed 2026–2028 growth targets despite regulatory pressures
At its 2026 Annual Meeting, Philip Morris International reinforced a message the company has spent years building toward: its future is increasingly smoke-free. The tobacco giant said 2025 net revenues surpassed $40 billion, including nearly $17 billion from smoke-free products, as alternatives such as IQOS and ZYN continued to drive growth across international markets.
“Our leading global position in smoke-free products enabled us to deliver our fifth consecutive year of volume growth in 2025, with excellent revenue performance and significant margin expansion,” said Jacek Olczak during the company’s annual meeting.
PMI said that smoke-free products accounted for 43% of total net revenues in the first quarter of 2026, up from 41.5% for the full year of 2025, underscoring the company’s accelerating transition away from combustibles.
The company estimates that its smoke-free portfolio is now used by more than 43 million adult consumers worldwide in 108 markets. PMI also reaffirmed its 2026–2028 growth targets, with the company projecting continued growth in revenue, operating income and earnings, largely tied to smoke-free categories.
“We achieved another remarkable year of results in 2025,” Olczak said. “With excellent results in 2024 and 2025, we have delivered our three-year CAGR targets on operating income and EPS in just two years.”
The company said it remains “on track to outperform” its prior growth algorithm for 2024–2026. Since 2008, PMI has invested more than $16 billion in the development, scientific substantiation and commercialization of smoke-free products, including heated tobacco, nicotine pouches and vapor products.
Much of the company’s current momentum still comes from IQOS and ZYN, which PMI increasingly positions as the center of its long-term growth strategy. “Our business is increasingly smoke free,” Olczak said earlier this year during an earnings call.
PMI said that smoke-free products now generate more than half of net revenues across multiple international markets, including several major European and Asian regions. At the same time, executives acknowledged the increasingly difficult operating environment for the global nicotine industry.
“A complex regulatory environment continues to slow innovation and the shift of adult smokers to smoke-free products,” CFO Emmanuel Babeau said during the company’s recent quarterly earnings discussions.
Regulatory delays tied to nicotine pouch authorizations in the United States, including the ongoing FDA review of newer ZYN products, have become an increasing focus for investors and analysts. Despite those challenges, PMI reported a strong start to 2026, with first-quarter revenue up 9.1% to $10.1 billion and adjusted diluted EPS up 16%.
“Our performance exceeded our expectations in the first quarter, with an outstanding delivery from IQOS driving very good growth for the group against a strong prior-year comparison,” Olczak said in April.
