Philip Morris International (PMI) is setting ambitious goals for its heated tobacco venture in the United States, aiming for a 10% share of the total cigarette and heated tobacco market within five years of launching its flagship device, IQOS.
Despite skepticism from competitors like British American Tobacco, analysts and investors believe PMI’s objectives are within reach.
IQOS, already a top seller globally, represents PMI’s shift towards healthier alternatives to traditional cigarettes.
In a market dominated by vaping, heated tobacco is virtually non-existent, presenting both a challenge and an opportunity for PMI.
To achieve its goals, PMI aims to convert approximately 2.8 million U.S. smokers to IQOS, a move backed by its substantial investment in smoking alternatives, totaling over $12.5 billion.
The success of IQOS in the U.S. will serve as a litmus test for its appeal to smokers in diverse markets.
PMI spokesperson Corey Henry expressed confidence in replicating IQOS’ success in the U.S., citing the company’s track record in other regions.
Despite initial challenges, including pricing and marketing within stringent regulations, PMI remains optimistic.
The U.S. Food and Drug Administration’s authorization of IQOS as reducing exposure to harmful chemicals compared to cigarettes provides a regulatory advantage over vaping products.
Additionally, PMI’s independence from its former parent company, Altria, allows for a more aggressive approach without concerns about cannibalizing cigarette revenues.
PMI’s strategy includes utilizing sales personnel and promotional outlets similar to its global approach.
However, raising awareness in a market with minimal exposure to heated tobacco will require significant investment.
Despite these challenges, analysts like Sean King believe PMI’s targets are feasible, given the substantial profit potential and the absence of competing cigarette revenues.
With the U.S. representing a pivotal market, PMI’s success with IQOS could reshape the tobacco industry’s landscape in the country.