Philip Morris International

PMI benefits from several reinforcing advantages. Intangible assets are powerful: Marlboro remains the leading global cigarette brand ex‑U.S., while IQOS and ZYN have become category brands in heated tobacco and nicotine pouches.

PMI’s smoke‑free products exceeded 41% of net revenue in Q2 2025, and IQOS holds the majority share of the global heat‑not‑burn market in key regions. These brands sit behind strict marketing regimes and high regulatory hurdles, which in practice entrench incumbents.

Switching costs are meaningful: nicotine dependence plus device/consumable ecosystems (e.g., IQOS ILUMA sticks) create product lock‑in and reduce churn. Scale advantages appear in global procurement, manufacturing and distribution, where PMI’s capex program is largely dedicated to smoke‑free capacity and cost per unit reductions.

Regulatory barriers and product authorizations increase moat depth: FDA granted PMTA orders for 20 ZYN SKUs, and existing MRTP orders for IQOS reduced‑exposure claims are in renewal; ITC import restrictions were rescinded in March 2024 following BAT settlement, facilitating U.S. reentry.

We also see efficient scale in many geographies where a few players dominate under heavy excise oversight. Offsetting risks are real: flavor restrictions, nicotine caps, excise harmonization (e.g., Germany’s surcharge; Japan’s 2026–2027 plan), and litigation. Net, the multi‑moat structure remains strong and is widening as smoke‑free scales.