Maximize the benefits of smoke-free products

At PMI, we want to accelerate the end of smoking. To that end, we are transforming our operations and value chain to develop and commercialize science-based better alternatives to smoking.

 

 

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Our 2025 Roadmap goals

See our full 2025 roadmap

MAXIMIZE THE BENEFITS OF SMOKE-FREE PRODUCTS

Develop and commercialize science-based, smoke-free alternatives, making them available in 100 markets (of which at least half in low- and middle-income markets) and continuing to increase the total number of users.

Deploy robust youth access prevention programs in indirect retail channels and ensure the sales of our products abide by our Marketing Codes.

Key performance indicators to track our progress

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See full performance metrics

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Learn more about PMI’s Sustainability Index in our Integrated Report 2021. See the full performance metrics and related footnotes here.

The right thing to do

Cigarette smoking is the most dangerous form of nicotine consumption. People who do not smoke should not start. Those who do smoke should quit. And those adult smokers who would otherwise continue to smoke should switch to the better alternatives to cigarettes now available.

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The right thing to do

Cigarette smoking is the most dangerous form of nicotine consumption. People who do not smoke should not start. Those who do smoke should quit. And those adult smokers who would otherwise continue to smoke should switch to the better alternatives to cigarettes now available. 

Our priority is to address the health impacts associated with smoking by offering scientifically substantiated options that have been demonstrated to be a far better choice than continued smoking. We then chose to go beyond that by giving these products the purpose of replacing cigarettes, helping achieve the end of smoking. 

Our purpose is to make our legacy product, cigarettes, obsolete. The public health benefit of smoke-free products depends not only on their potential to reduce the risk of smoking-related disease compared with continued smoking, but also on adult smokers using these products instead of cigarettes. 

This is critical to achieve the expected public health benefit. For that, broadening access is key, and we are committed to improving consumer awareness, while also making smoke-free products more acceptable, available, and affordable to adults who smoke. 

The business case

The future of nicotine is indisputably in smoke-free products, which are experiencing rapid growth. Through our early and sustained investment in R&D and consequent leadership in technology and innovation, we have built a powerful position and competitive advantage.

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The business case

The future of nicotine is indisputably in smoke-free products, which are experiencing rapid growth. Through our early and sustained investment in R&D, and consequent leadership in technology and innovation, we have built a powerful position and competitive advantage. 

By focusing our commercial expenditure on encouraging adult smokers who otherwise would not quit to switch fully to better alternatives, we aim to reach as many adult smokers as possible in as many markets as possible; this includes the around 130 million PMI cigarette smokers, as well as the hundreds of millions of adult smokers who buy competitor brands. The business case is clear: Our smoke-free product consumables drive higher net revenues per unit than cigarettes, with accretive product contribution per unit already helping to generate attractive returns on our significant upfront and ongoing investments in developing the category.

We are also gaining share of the total tobacco market, thereby increasing our current and future revenue base. We are committed to marketing and selling our products responsibly. Concerns that our products, marketing, or sales could discourage smoking cessation, encourage initiation of nicotine use, or hold particular appeal to minors would undermine our credibility, harm our reputation, and potentially trigger adverse regulation, hampering our ability to achieve a smoke-free future as fast as possible.

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Our progress in 2021

Read more in our Integrated Report

2021 highlights

  • PMI’s smoke-free products were available in 71 markets.
  • 21.7 million adults were using PMI smoke-free products by year-end 2021, of whom we estimate 15.3 million had switched to these products and stopped smoking.
  • 99 percent of our adjusted R&D expenditure was dedicated to smoke-free products.
  • 29.1 percent of PMI’s adjusted net revenues came from smoke-free products.
  • >70,000 PMI employees and third-party workers participated in at least one Marketing Codes-related training session.
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18.05.2021

Integrated Report 2021: Top 10 takeaways

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Looking ahead

More than a decade ago, PMI set itself the goal to refocus its business and develop products that can reduce the risk of smoking-related diseases compared with cigarette smoking, while in parallel phasing out cigarettes. Science and technology are at the core, and key enablers for this ambition. So far, we could demonstrate that our heated tobacco and e-cigarette products significantly reduce the formation of, and exposure to, harmful chemicals, as well as the risk of smoking-related diseases in animal models.

 

But this is only the starting point. Moving forward, and building on the past decade of experience, capability buildup and scientific work, we have started to execute a significant program of biomarker, clinical outcome and real-world evidence studies to demonstrate the individual clinical and public health benefits of our smoke-free products. 

 

Jorge Insuasty, Vectura Fertin President and Chief Life Sciences Officer

We have a robust infrastructure for monitoring compliance with our Marketing Codes, and we are committed to implementing our youth access prevention efforts globally and ensuring adequate monitoring of their enforcement. We will also continue to deploy YAP tools in our indirect retail channels. Currently, these programs cover more than 90 percent of our shipment volume, and we will continue to engage with various stakeholders on this topic, including retailers and governments, to find more effective solutions.

 

Werner Barth, President, Combustibles Category & Global Combustibles Marketing

We achieved remarkable progress in 2021 and have ambitious plans for 2022, including expanding and improving our product portfolio with a broader range of taste, price, and technology choices. We will continue to make our heat-not-burn and e-vapor products available in additional markets.

 

Building on its success in Japan and Switzerland in 2021, we look forward to launching the latest generation of our heat-not-burn product, IQOS ILUMA, across additional markets over the coming years. Moreover, with the acquisition of AG Snus and its Shiro nicotine pouch, and Kapten snus brands in May 2021, we have grown PMI’s capabilities and expect additional product and market launches in 2022. A clear consideration to improving access of adult smokers to smoke-free products is affordability, particularly in low- and middle-income markets.

 

We plan to introduce a new heat-not-burn device to expand the access for consumers in the medium and below segments in emerging markets towards the end of 2022. This will be a simple, convenient, and affordable proposition that can cater to local taste preferences without compromising on harm reduction. We believe this product can also help address the lower price segment in developed countries. We will continue to design and deploy a suite of effective tools to ensure that our smoke-free products reach only the intended audience: Adults who smoke or use other nicotine products. 

 

Stefano Volpetti, President, Smoke-Free Products Category & Chief Consumer Officer

This online content about our Integrated Report should be read in conjunction with PMI’s 2021 Integrated Report. The information and data presented here cover the 2021 calendar year or reflect status at December 31, 2021, worldwide, unless otherwise indicated. Where not specified, data come from PMI estimates. Please also refer to 'This report at a glance' on page 5 of the 2021 Integrated Reportfor more information. Aspirational targets and goals do not constitute financial projections, and achievement of future results is subject to risks, uncertainties and inaccurate assumptions, as outlined in our forward-looking and cautionary statements on page 252. In the 2021 Integrated Report and in related communications, the terms “materiality,” “material,” and similar terms, when used in the context of economic, environmental, and social topics, are defined in the referenced sustainability standards and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by the U.S. Securities and Exchange Commission.

 

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