Hauke Goos and Ann-Kathrin Nezik
Oct 12 2018
Along the Avenue de Rhodanie in Lausanne, Switzerland, the world’s largest cigarette manufacturer, Philip Morris, is taking an unconventional step that might be described, by some, as an attempt by a reformed tobacco company to save the world’s smokers. The cigarette maker, the story goes, doesn’t want to make cigarettes anymore. Its hero is Andre Calantzopoulos, the Greek who, since 2013, has been the chief executive of Philip Morris International. Calantzopoulos says he quit smoking because he discovered something better and healthier, namely “heating”.
Heating products don’t burn tobacco but release nicotine by raising the temperature to about 300 degrees. According to the cigarette companies, this prevents the combustion of carcinogens found in normal cigarette smoke. Calantzopoulos conveniently made the jump from conventional cigarettes to the product, which he is helping bring to market and that Philip Morris has marketed under the brand Iqos. It is a minimalistic-looking, battery-powered device, similar in form to an e-cigarette, but containing a lithium-ionic battery, a temperature regulator and a hot plate made of gold, platinum and ceramic.
Iqos devices are available in Germany, Britain, Japan, Italy and 38 other countries. According to Philip Morris, they fulfil an age-old dream of smokers and non-smokers alike: a way to consume tobacco without the smoke, smell and cancer. A guilt-free ticket to enjoyment.
The tobacco industry is in crisis, and has to redefine itself if it intends to survive. On the one hand, 1.1 billion people around the world still smoke about 5.7 trillion cigarettes a year. In 2017, the five largest tobacco companies earned close to $US27 billion ($38 billion) in profits.
On the other hand, they’re losing customers in industrialised countries, where fewer people are picking up the habit. Unlike their parents’ generation, young people today care about living (and looking) healthy. According to one survey, only one in 13 people between the ages of 12 and 17 in Germany smoke cigarettes. And among 18-to-25-year-olds, 40 per cent have never smoked, a historic low.
Meanwhile, nearly every major tobacco company is throwing money at so-called “next generation products”, which rely on heating (Philip Morris), steaming (Imperial Brands) or both (British American Tobacco).
Tobacco companies are not only trying to get out in front of the shift away from cigarettes, they’re leading the charge. A technological and strategic battle for market share is taking place, but does it make sense to bet everything on a radical disruption and industry realignment?
A promise for a new beginning
Calantzopoulos sure hopes so. Two years ago, he told the BBC he hoped cigarettes would soon be history. “The goal is to convince as many smokers as possible to give up cigarettes,” Calantzopoulos says today. He hopes they’ll turn to Iqos and other smoke-free alternatives instead. In early January, Philip Morris took out full-page ads in British newspapers. “Our new year’s resolution,” the ad read in large, capital letters. “We’re trying to give up cigarettes.”
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