Our smoke-free products represent 5.1 percent of our shipment volume and around 13.8 percent of our net revenues. They also represent 60 percent of our global commercial expenditure and 92 percent of our global Research and Development expenditure. Seven
of our manufacturing facilities are producing IQOS heated tobacco units, as well as other nicotine-containing products.
The table below shows the number of people who are using IQOS and how many of them have stopped smoking completely.
Business transformation metrics1 | 2015 | 2016 | 2017 | 2018 | Aspiration2 |
R&D expenditure (smoke-free/total)* | 70% | 72% | 74% | 92% | |
Patents granted relating to smoke-free products (cumulative) | 600 | 1,800 | 2,900 | 4,600 | |
Number of factories producing smoke-free products out of total number of factories | 2 out of 48 | 2 out of 48 | 3 out of 46 | 7 out of 44 | |
Number of markets where IQOS is available | 6 | 20 | 38 | 44 | |
Commercial expenditure (smoke-free/total)* | 8% | 15% | 39% | 60% | |
Net revenues3 (smoke-free/total)* | 0.2% | 2.7% | 12.7% | 13.8% | 38–42% by 2025 |
Number of markets where net revenues from smoke-free products exceed 10% of total net revenues | 0 | 1 | 5 | 19 | |
Number of markets where net revenues from smoke-free products exceed 50% of total net revenues | 0 | 0 | 1 | 3 | |
Smoke-free product4 shipment volume (billion units)* | 0.8 | 7.7 | 36 | 42 | 90–100 by 20215 |
Combustible product6 shipment volume (billion units)* | 881 | 845 | 791 | 767 | <550 by 2025 |
Smoke-free product shipment ratio7 (smoke-free/total)* | 0.1% | 0.9% | 4.4% | 5.1% | >30% by 2025 |
Total IQOS users (in millions)8 | 0.2 | 2.1 | 6.9 | 9.6 | |
Estimated users that have stopped smoking and switched to IQOS (in millions)9 | n/a | 1.5 | 4.7 | 6.6 | >40 by 2025 |
1. The 2018 metrics marked with a star (*) are subject to PwC’s Assurance Report. See page 129 of the Sustainability Report.
2. Assuming constant PMI market share. We do not set aspirational targets for R&D and commercial expenditure but we expect both ratios to continue increasing to enable the stated outcome in terms of shipment volume.
3. Excluding excise taxes. For future periods, at today’s pricing and excise tax assumptions.
4. Includes heated tobacco units and e-cigarettes.
5. The 90–100 billion units’ shipment volume is a target and pertains exclusively to heated tobacco units.
6. Includes cigarettes and other combustible products.
7. The smoke-free product shipment ratio is compiled based on million of units.
8. See glossary on page 130 of the Sustainability Report.
9. See glossary on page 130 Sustainability Report. Metric introduced in 2018.
