LONDON – Philip Morris International’s goals for heated tobacco in the United States are reachable, analysts and investors say, even though rivals see limited potential in a market where vaping dominates.
The world’s biggest tobacco company by market value will launch its flagship heated tobacco device IQOS in the US in the second quarter, developing the brand pretty much from scratch.
Being the top-selling heated tobacco device globally, IQOS is central to PMI’s transformation efforts. It’s pivotal in shifting to healthier options.
Heated tobacco remains nearly absent in the US, despite its prominence in other major markets for nicotine alternatives.
PMI aims for a 10% share of US cigarette and heated tobacco volumes within five years of launching its latest device. This launch is anticipated around 2025.
Switching 2.8 million US smokers to IQOS is necessary for achieving PMI’s goal. This analysis is based on PMI numbers and Barclays forecasts.
Rival British American Tobacco has said it does not see huge potential for heated tobacco in the US where vaping is dominant.
Two analysts and one investor in PMI told Reuters they see an opportunity for PMI in the US.
“We are all going to be watching this test,” said Bonnie Herzog, analyst at Goldman Sachs.
PMI has poured most of the more than $12.5 billion it has spent so far on smoking alternatives into IQOS’ development.
In conclusion, Philip Morris faces a pivotal moment as it navigates its heated tobacco push in the US market. Despite challenges, Philip Morris is optimistic about growth and innovation in the heated tobacco product category. Through meticulous planning and strategic execution, Philip Morris aims to become a significant player in the shifting tobacco market. As the landscape evolves, the company adapts accordingly.
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