At the opening of Tuesday’s session on Wall Street, the tobacco sector is among the worst-performing segments of the entire stock market. The industry leader, Philip Morris International (PM), is down nearly 5.6%, making it one of the biggest losers of the day across the broader market. The immediate catalyst for the sell-off is new reports from Reuters regarding mounting regulatory issues surrounding popular nicotine pouches such as ZYN and Velo.
The FDA, which was supposed to expedite approvals for new products under a pilot program by the end of 2025, is still holding off on decisions regarding applications submitted by PMI and British American Tobacco. According to three anonymous sources close to the agency, FDA scientists have serious concerns about the risk of addiction among young users and children, which calls into question the current growth strategy of both companies. BTI (British American Tobacco) is reacting with a decline of 1.5%, while Altria (MO) is losing 1.7%.
It is worth noting that Philip Morris alone sold nearly 794 million ZYN pouches in the United States—more than double the amount sold in 2023. The U.S. nicotine alternative market is valued at approx. $22 billion, so any regulatory delay directly impacts projected revenue growth. Today’s declines reflect investors’ fears that, instead of the expected green lights, companies may face months of uncertainty ahead.
Source: xStation
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