Philip Morris International has unveiled a new smokeless tobacco lineup by releasing two new versions of its IQOS products in the 40 or more markets worldwide the products are already being sold.
It also announced a new device called HEETS, which is a cheaper tobacco insert for the devices. Sales have already increased and in Japan.
iQOS is an accessory that instead of burning the tobacco, it heats it. iQOS was first introduced in Japan during the spring of 2016, and is being distributed in 43 markets around the world. In some places, sales have improved and in others they remain stagnant.
New versions of the device have now been launched by PMI. The IQOS 3 and IQOS E Multi should become available in the next few weeks in Europe, South Korea, and Japan. The company is also introducing a new lineup of cheaper heatsticks in Japan to entice new consumers to the industry.
As a way of increasing income, many big tobacco companies are changing to heated products as another revenue stream since smoking rates have dropped. The tobacco industry says that these devices are less dangerous than conventional cigarettes. This is due to the fact that the process is different; tobacco is warmed only until it is hot enough to free nicotine.
According to consumer feedback, the new version of the iQOS has some changes. It is a more compact version that opens up on the side, is bulkier, and the heat sticks are inserted on the side.
The new products represented $823 million of the revenue for PMI during its third quarter or equal to 11% of its total revenue of more than $7.5 billion. Conventional cigarettes represented $6.68 billion. In the entire category heat tobacco sales globally were $5.82 billion in 2017 and should reach as high as $18.66 billion in 2022.
According to CEO Andre Calantzopoulos, the product needed to be updated in order to integrate consumer insights and feedback. But, most important is to convince more people across Japan and the rest of the world to switch to the IQOS from cigarettes.
The marketplace in Japan has been very good to PMI and results from sales there have helped to increase stock by over 5%. Sales are expected to pick up as older smokers begin to change over as the new products become more enticing for them to make a change.