In 2021, during their virtual Investor Day commemorations, Philip Morris International (PMI) announced an ambitious target to accelerate their vision toward a smoke-free future by ensuring that smoke-free products account for more than 50 percent of the company’s total net revenues by the year 2025.
This mark was an upward revision of their 2019 integrated report target, where PMI had initially earmarked between 38 and 50 percent of their revenue to come from smoke-free products by 2025. This will see a majority of smokers taking up alternative nicotine products that are less harmful.
All over the world, tobacco kills half of its users and according to World Health Organisation (WHO), smoking kills more than 8 million people each year. More than 7 million of those deaths are the result of direct tobacco use while around 1.2 million are the result of non-smokers being exposed to second-hand smoke.
With growing evidence showing that smoke-free nicotine products could be the panacea to reducing the high morbidity and mortality associated with tobacco smoking, PMI has made significant strides to attaining their 2025 target of ensuring that the majority of smokers will be using smoke-free products.
In 2016, PMI made the bold announcement to replace all cigarettes with better Smoke-Free alternatives. With only 24 months to go to 2025, PMI has attained one-third of their 50 percent target, amidst indications that 35 percent of their net revenue is now coming from smoke-free products. To date, more than 2500 patents have been granted for PMI smoke-free technologies, with over 25 million adult smokers already using PMI smoke-free alternatives. To date, 18 million smokers have made the switch from combustible tobacco products and stopped smoking.
PMI Chief Executive Officer (CEO), Jacek Olczak told a Technovation Smoke-Free conference in Switzerland that they now have a vision beyond 2025, as the 50 percent set target is now within reach.
“When we made the 50 percent target, it was a pretty very ambitious statement and now we are left with about 24 months to reach the target to be very frank. We are much more focused now on what is beyond 50 percent and what is the next threshold, where we want to reach as a company, how many years and how much time we will need to get there,” said Olczak.
While smoke-free innovations have gained ground in terms of acceptance, Olczak said the level of skepticism was extremely high at the beginning. He did however say that the pace at which smoke-free products were getting acceptance would soon render cigarettes to be museum relics.
“Based on the knowledge and evidence we have today, the faster we put the cigarettes in the museum, the better it is. The faster we do it, the better it is for us. We started in 2014 and next year is our 10 th anniversary of the commercialisation of this product. If we look back on this nine-year period, we can see that we have achieved this 35 percent without any visible support.”
“Presumably, I admit that we could have been smoke-free already today if the environment was different. The maximum which any country needs today to put cigarettes in the national museum of any country is 10 years. This can happen with an orchestrated effort of any party to completely eliminate smoking.”
Now that the vision has been set, and already a third of PMI’s net revenue is being realised from smoke-free products, how does that company plan on reaching the 50 percent target? Stefano Volpetti, PMI President for Smoke-Free Products and Chief Consumer Officer says it all starts from their clearly spelt-out Mission.
“Our vision is clear. Don’t Smoke, Don’t Start, If You Smoke, Quit, If You Don’t Quit, Change. This is why our mission statement says replace every cigarette with smoke free products. Now, to do that, there isn’t one single product that will convert all other smokers to smoke-free alternatives. This is why we cater, we develop, and we commercialise a portfolio for smoke-free alternatives so that we can satisfy the different preferences when it comes to taste, for us to be able to serve all the other smokers around the world,” said Volpetti.
Smoke-fre products include heated tobacco products, E-vapour products and oral smokeless products. These products provide nicotine without burning, making them a much better alternative to cigarettes.
“We start with heated tobacco, this a technology that heats the tobacco and doesn’t burn, the cigarette is burning the tobacco while this category is heating tobacco without the combustion. We eliminate 95 percent of all harmful carcinogens that cause disease by eliminating combustion. Heated tobacco is by far the biggest business we have today regarding smoke-free alternatives.”
PMI has to date invested US$10 Million into the development, scientific substantiation, manufacturing, commercialization, and continuous innovation of smoke-free products. The company launched its first smoke-free alternative in Japan and already, the products are available in more than 70 markets across the globe with the IQOS ILUMA being the best-performing and most popular brand of them all.
Since November 2022, following PMI’s acquisition of Swedish Match, they have become a very important player in the Oral Smokeless category. Oral Smokeless is another smoke-free category that delivers nicotine combustion free. Another smoke-free group is the E-vapour category. E-vapor products are handheld battery-powered devices that heat an e-liquid to produce an aerosol, commonly referred to as vapour.
