[OC] Big Tobacco is becoming Big Nicotine

Hello! I analyzed % of net revenues coming from smokeless products from the largest tobacco producers in the world ("Big Tobacco"). JTI was excluded as I couldn't find full time series for them but it's around 4% currently.

Sources: Publicly available annual and quarterly reports of Big Tobacco companies

Tools: Excel, PowerPoint

For years, I saw tobacco as an industry slowly burning out. Fewer people were smoking, taxes and restrictions kept growing, and young people were turning away from cigarettes.

Then three things happened.

First came IQOS: heated tobacco in sleek devices, sold in polished, Apple-like stores.
Then vaping exploded, first with JUUL in the US and then with cheap, colourful disposables.
Finally, nicotine pouches quietly took over offices and campuses, one lip at a time.

Turns out, reports of tobacco industry’s death were greatly exaggerated.

But not every tobacco giant is making the switch to smoke-free at the same speed. To see who’s leading and why, I analyzed the annual reports of four of the largest listed players* (“Big Tobacco”).

Here are key takeaways:

1️⃣ PMI is leading the smokeless transition

First, it launched IQOS heated tobacco and marketed it as a cleaner, more elegant alternative to cigarettes.

Then, it bought the owner of ZYN, the leading US pouch brand. Pouches took off because they’re invisible: no smoke, no smell, no device.

PMI moved early, picked the right products, and built one advantage while buying the other.

2️⃣ BAT is catching up, but still far behind

BAT bet on cigarettes for longer. Today about 20% of its revenue is smokeless, half of PMI’s share.

It paid $49bn for Reynolds American (mostly US cigarettes) in 2017 then wrote down ~$35bn.

glo never caught up with IQOS, and Vuse was hurt by illegal disposables, though it’s now recovering.

Velo is the bright spot: its US pouch revenue more than tripled in H1 2026.

3️⃣ Altria and Imperial are lagging behind

Both have grown their smoke-free share since 2017, but slowly: Altria from 10% to 13%, Imperial from 1% to 5%.

Altria bet big and lost almost every time: JUUL ($12.8bn in 2018, worth $250m four years later), IQOS (US rights handed back to PMI after a patent ruling) and NJOY (main vape banned for infringing JUUL’s patents). Limited to the US, it can’t grow abroad while waiting on slow FDA approvals.

Imperial launched vapes and heated tobacco in many markets at once, then retreated when sales disappointed: out of Japanese heated tobacco in 2021, now out of US vaping. It chose cigarette cash and shareholder returns over big smoke-free bets, and has no leading brand in any category.

𝐖𝐡𝐚𝐭’𝐬 𝐧𝐞𝐱𝐭?

The biggest threat to the industry is regulation catching up. The EU wants to set union-wide minimum taxes on vapes, heated tobacco and pouches, Poland plans to ban disposable vapes and flavoured pouches, US authorizations can take years, and cheap illegal vapes keep eating into sales.

How far regulators go will depend on the health evidence. “Smoke-free” doesn’t mean harmless: nicotine is addictive and carries risks for the heart. 

The WHO says heated tobacco hasn’t been shown to lower health risk.

UK health authorities say vapes are much less harmful than smoking for those who switch completely, but not risk-free.

And pouches, the fastest-growing category, are too new for long-term studies.

The cigarette may be fading. Nicotine isn’t.

At least not yet.

#tobacco #nicotine #PMI #BAT #strategy #business #dataviz

*JTI excluded due to incomplete data; latest smoke-free share ~4% (H1 2026)