Double-take on the headline... Philip Morris International is the smoke giant behind 130+ cigarette brands, including Marlboro, Parliament, and your great aunt's Chesterfield's. This week, PMI said it plans to stop selling cigarettes in the UK within the next 10 years. In fact, CEO Jacek Olczak said he wants to allow the company to leave smoking behind altogether. Huh?
Blowing smoke?... If you think the headline is surprising, just look up PMI's website: it says "Delivering a Smoke-Free Future" all over. What it's really selling when it says smoke-free: heated tobacco products and vapes. Smoking kills more than 8M people per year, but PMI is pushing these products as "less harmful" alternatives for smokers. While cigarettes still make up the bulk of PMI's biz, "smoke-free" products accounted for 28% of its sales last quarter:
To roll it up... While cigarette use has been declining, PMI's sales actually grew 6% last quarter. That was thanks to IQOS, which now has an estimated 19M+ users. Regardless of the "smoke-free" narrative, heated tobacco units still require PMI’s pseudo-cigarettes, called “Heets” sticks, which boosts PMI's sales.
"Smoke-free" saved Big Tobacco... for now. Global tobacco use has been falling for decades, with 60M fewer users since 2000. Smokers are trading tobacco-filled paper for liquid-filled metal and other puffable tech. That's why smoke giant Altria (PMI's former parent company), bought a big stake in Juul — and why PMI has been doubling down on its IQOS biz. But while "smoke-free" products may not be as harmful as OG cigs, non-smokers and teens are getting hooked, too. That's already posed major regulatory troubles for Big Tobacco.