Philip Morris sees 1.2 billion dollars boost from cigarette alternative | Progresiv
Philip Morris International Inc. said it’s boosting investment in cigarette alternatives to expand sales to as many as 35 countries next year, aiming to lead the tobacco industry in the development of reduced-risk products that it says will eventually replace traditional smokes. 
The Marlboro maker has “increasing confidence” that it will reach the upper end of its forecast for that business to add 700 million dollars to 1.2 billion dollars to earnings by 2020, Chief Executive Officer Andre Calantzopoulos said at an investor presentation in Lausanne, Switzerland. It plans to spend an additional 100 million dollars this year on so-called next-generation products, taking the total to 1.2 billion dollars.
Philip Morris is throwing more money behind its iQOS heat-not-burn tobacco device to outdistance its rivals, British American Tobacco Plc and Japan Tobacco Inc. Philip Morris expects to end this year with the product on store shelves in 20 markets. With 1.5 billion dollars earmarked for development of reduced-risk products next year, the tobacco maker is betting that smokers will prefer heat-not-burn to e-cigarettes because it feels more like smoking.
“We are more confident than ever that these products have the potential to fundamentally transform our business,” Calantzopoulos said.
The iQOS is a rechargeable electronic device that heats tubes of tobacco called HeatSticks, which resemble a cigarette cut in half. Philip Morris said it will produce more than 32 billion HeatSticks next year, up from 7 billion this year, and could manufacture 50 billion by 2018. HeatSticks have advantages over cigarettes as they’re new and some countries tax them at a lower rate, the CEO said. The cost to produce them is in line with that of conventional cigarettes, and the next-generation business should approach break-even in 2017. (www.esmmagazine.com)
