Smoke-Free Products to Make Up Half of PMI’s Revenues by 2025

24^th February, 2021, CSP Magazine

NEW YORK — Smoke-free products will make up half of Philip Morris International’s (PMI) total net revenues by 2025, up from the previous goal of 38% to 42%.

The maker of Marlboro cigarettes held an investor day in early February, which was detailed on its website. In part of the presentation, PMI management, including CEO Andre Calantzopoulos and COO Jacek Olczak, highlighted the progress of the company’s heat-not-burn device IQOS and plans for the next-generation version, IQOS ILUMA.

“The product change and switching smokers out of cigarettes into less harmful alternatives is the biggest contribution we can make to society and public health,” Calantzopoulos said.

The U.S. Food and Drug Administration (FDA) announced in July that Philip Morris Products SA could market IQOS as a modified risk tobacco product (MRTP). The heated tobacco system allows adult smokers to use tobacco by heating instead of burning it.

Altria Group, Richmond, Va., is under an exclusive licensing agreement with PMI to commercialize IQOS and its accompanying compressed-tobacco HeatSticks in the United States. Altria subsidiary Philip Morris USA is adding IQOS to the Altria companies’ portfolio of products for adult smokers looking for an alternative to cigarettes.

Switching completely from conventional cigarettes to the IQOS system significantly reduces exposure to harmful or potentially harmful chemicals, the FDA said, citing scientific studies; however, this does not mean the products are safe or FDA approved.

IQOS is in 64 markets total, but COVID-19 hampered its rollout in the U.S., Calantzopoulos said. It is in more than 500 retail stores across Atlanta and Richmond and its launch was delayed in Charlotte, N.C., due to the pandemic. PMI expects IQOS to reach 100 markets by the end of 2025.

It has been five years since it was launched at full-scale.

“I think we are succeeding with IQOS having also a first-mover advantage,” Calantzopoulos said. “Clearly, IQOS still needs work to build its brand equity, but I think we’re on the right path. And our ambition is, in a few years, we’ll be as high up there in the minds of consumers as Marlboro and other iconic brands have been.”

The next generation product, IQOS ILUMA, is set to launch in the second half of 2021. The product features internal heating based on Smartcore induction technology, PMI said, which replaces the heating blade from IQOS.

It also plans to launch IQOS VEEV, a MESH technology e-vapor product in more than 20 markets this year.

PMI, New York, sells tobacco products in more than 180 markets, according to its website. Its top brands include Marlboro, Parliament, Virginia Slims, IQOS and more.