Tobacco giant Philip Morris International (NYSE:PM) said on Monday that it would suspend online sales on Swedish Match North America’s ZYN.com nationwide as the Zyn nicotine pouch maker responds to a subpoena from the District of Columbia (D.C.).
Philip Morris bought Swedish Match in a $16 billion deal in 2022 as the company looked to reduce its reliance on cigarettes amid stricter regulations, and a consumer shift towards alternatives to tobacco and traditional cigarettes.
The company said that Swedish Match North America had received a subpoena from D.C.’s Attorney General requesting information about its compliance with D.C.’s 2022 ban on the sale of all flavored tobacco.
In October 2022, D.C. banned the sale of all flavored tobacco, including flavored synthetic nicotine products.
Philip Morris said that it intends to comply with D.C.’s request and that in the event of an unfavorable outcome related to this matter, a material liability is reasonably possible.
The company said its preliminary investigation indicates that there have been sales of flavored nicotine pouch products in D.C., predominantly related to certain online sales platforms and some independent retailers.
“Swedish Match is conducting a full review of its sales and supply chain arrangements in D.C. and other U.S. localities where flavor bans may apply and is temporarily suspending all sales on ZYN.com until that assessment is complete,” a Philip Morris spokesperson told Reuters.
Philip Morris has benefited from strong demand for its Zyn nicotine pouches in the U.S., which the company says do not contain tobacco.
In its first quarter results, reported in April, shipments of Zyn nicotine pouches grew nearly 80% compared with a year ago. However, sales on ZYN.com represent a “very small percentage of nationwide Zyn volumes,” the company added on Monday.
