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ZYN growth crashes to 1.8% as Velo Plus and On! Plus eat market share — PMI fires back with ULTRA and first-ever FDA modified-risk claim

Philip Morris International's ZYN US shipments grew just 1.8% in Q2 2026 — down from 37% annual growth in 2025 — as BAT's Velo Plus and Altria's On! Plus gain share in the $7 billion nicotine pouch market. PMI's response: ZYN ULTRA and a historic FDA modified-risk authorization.

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Philip Morris International just reported the sharpest deceleration in ZYN's history: US shipments grew 1.8% year-over-year to 2.9 billion pouches in Q2 2026, per the company's July 22 earnings release filed with the SEC. That's a collapse from 37% growth for full-year 2025, and PMI had projected 15–20% growth for 2026.

The slowdown comes despite nicotine pouches continuing to devour the oral tobacco category — pouches now account for 59.9% of the entire oral tobacco market, up 8.1 percentage points year-over-year, according to August 2026 data from Tobacco Insider.

PMI's explanation: an "uneven competitive landscape." Translation: Velo Plus and On! Plus are winning.

What happened: Velo and On! are eating ZYN's lunch

PMI held roughly 70% of the US nicotine pouch market as of late 2025, per Bloomberg. But that grip is slipping.

BAT's Velo Plus — launched with a moist formulation — has capitalized on consumer complaints about ZYN's dry mouth problem, Bloomberg reported in May. ZYN's flagship dry pouches have faced persistent user feedback about dryness, and Velo Plus positioned itself as the solution.

Altria's On! Plus drove explosive growth in Q2 2026:

  • On! off-take hit 47.2 million cans in Q2, up from 40.8 million in Q1 and 40.2 million in Q4 2025 — growth "driven entirely by the newly launched On! Plus product lineup," per Tobacco Insider.
  • On! retail share climbed to 14.4% of the nicotine pouch category in Q2, up 1.0 share point sequentially (though down 1.7pp year-over-year).
  • Brand awareness reached 57% among adult nicotine consumers aged 21–54 in H1 2026, up from 53% in H1 2025.
  • On! is now in 120,000 retail locations.

PMI's Q2 US segment revenues fell 0.7% year-over-year to $0.9 billion, with ZYN offtake volumes "flat to slightly growing versus prior year in a growing category."

PMI's counterattack: ZYN ULTRA and historic FDA win

Philip Morris isn't sitting still. In June 2026, PMI shipped ZYN ULTRA — 9mg and 11mg moist variants priced lower per pouch than the flagship dry line. The move directly targets Velo Plus's value positioning and addresses the dry mouth complaints.

Additional moves:

  • New flavors added to the ZYN dry flagship lineup in June.
  • 1.5mg and 8mg dry variants launching in Q3 2026.
  • PMI plans to "accelerate US investments in H2" to maximize ZYN's long-term value and prepare for the IQOS ILUMA launch.

Then came the regulatory bombshell: on June 30, 2026, the FDA granted Modified Risk Tobacco Product (MRTP) authorization to 20 variants in the flagship ZYN range — the first and only MRTP authorization for any nicotine pouch product, per PMI's SEC filing.

This is a historic milestone. No other nicotine pouch can make a modified-risk claim. PMI can now market those 20 ZYN variants as presenting a modified risk compared to cigarettes — a powerful differentiation tool in a crowded market.

International ZYN: still strong

Outside the US, ZYN volume grew 14.7% in Q2 2026 (26.3% excluding the Nordics, where legacy snus is declining). ZYN is now available in 60 markets, with strong growth in Pakistan, Poland, and the UK.

Total international oral smoke-free product volume decreased 7.0% due to legacy snus declines in the Nordics, but modern oral (pouches) continues to expand.

The big question: has ZYN peaked in the US?

PMI's overall Q2 performance was strong — $11.2 billion in net revenues (the first time above $11B), up 10.4% (7.6% organically), with adjusted diluted EPS up 15.2% to $2.20. Smoke-free products now account for ~42% of total net revenues.

But the US ZYN slowdown is the story. PMI had invested in doubling ZYN factory capacity, per Bloomberg, only to see rivals erode share with moist formulations and aggressive pricing.

The H2 2026 test:

  • Can ZYN ULTRA recapture value-conscious consumers?
  • Will the FDA's modified-risk authorization translate to market share gains?
  • Can accelerated H2 spending reverse the momentum shift to Velo Plus and On! Plus?

CEO Jacek Olczak called the quarter "outstanding," but ZYN's US trajectory tells a different story. The nicotine pouch category is still growing fast — it's just no longer a ZYN monopoly.

SOURCES:

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