PMI accelerates growth as smoke-free products reach 40% of revenues
MILAN, Italy — Philip Morris International (PMI) is rapidly advancing its transition toward a smoke-free future, with its smoke-free product portfolio now accounting for 40% of the company’s total net revenues, a senior executive revealed.
Tommaso di Giovanni, PMI’s vice president for communications and engagement, said the company is seeing significant momentum in the adoption of its heated tobacco and smoke-free offerings, led by its flagship product IQOS.
“In a matter of six to seven years, we’ve reached a point where IQOS is available in 95 countries around the world where 40% of our revenues, net revenues come from smoke-free products. And where 37 million consumers have adopted our smoke-free products,” di Giovanni said on the sidelines of the launch of its smoke-free campaign “IQOS Curious X” in Milan, Italy on April 7.
“Seventy-two percent of them have abandoned cigarettes, So I would say for a few years that's actually [a] great progress” he added.
PMI began its shift in 2014 with pilot launches in Nagoya, Japan and Milan, Italy, but the business transformation gained scale in 2016 when the company went national in several key markets.
Since then, PMI has invested heavily in research and development, supply chain transformation and strategic partnerships to support its long-term goal of becoming a majority smoke-free business by 2030.
“We started this journey just a few years ago, but we’ve already seen remarkable commercial results,” di Giovanni said.
Tapping emotions, targeting a smoke-free 2030
PMI is also leveraging brand partnerships, such as its collaboration with lifestyle brand Stefano Seletti for the “Curious X: Sensorium Piazza” exhibit during Milan Design Week, to influence consumer behavior beyond the product level.
"We also need to leverage on a more emotional side of the story. And this is where working with designers who know how to drive emotional choices makes full sense," di Giovanni said.
"The more we can appeal to that, the more we can make sure that people who otherwise continue using cigarettes can switch to better choices," he added.
The PMI official said the company sees more room for growth and is pushing for faster consumer conversion to its reduced-risk alternatives.
"I always see the glasses half empty. And I think of all the smokers out there who are still using cigarettes. And I think that we need to convince them. We need to convince them because every day they use a cigarette instead of a smoke-free product, it's a day lost for their health. And that's why we want to accelerate the pace of change," di Giovanni said.
The company’s multi-category approach, which includes heated tobacco, e-vapor and oral smokeless products, has contributed to four consecutive years of positive volume growth and robust operating cash flow.
According to di Giovanni, PMI is aiming for smoke-free products to generate more than two-thirds of its total net revenues by the end of the decade.
"By 2030, we want two-thirds of our net revenues to come from those [smoke-free] products. And that's really our ambition. It's an ambitious ambition," di Giovanni said.
"But I think we're going to get there because today we're already at 40%. And in many markets, actually, this percentage is more than 75%. So things are really going in the right direction. And I want to hope that the Philippines will be among the pioneers like it's always been," he added.
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Editor's note: The trip to Milan, Italy was hosted by PMFTC. At no stage does the host organization have a say on the stories generated from the coverage, interviews conducted, publication date and story treatment. Content is produced solely by Philstar.com following editorial guidelines.
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