PMI CEO talks about phasing out cigarettes in Japan & S. Korea

The CEO of Philip Morris International (PMI), said that due to the popularity of their electronic device, iQOS, in Japan and South Korea, the tobacco company should be able to phase out combustible cigarettes in these countries within five years.

Diane Caruana

July 18, 2017

PMI’s iQOS device, is a smokeless alternative to combustible cigarettes and works by heating tobacco leaves known as Heets in Korea and HeatSticks in Japan. These refills which look like short cigarettes, must be inserted into the device and are heated it up once iQOS is turned on. Last year, Bloomberg reported that these heat sticks will be sold under the Marlboro brand for approximately the same price as their combustible counterparts.

Based on calculations of when iQOS users will outnumber regular smokers, PMI’s CEO thinks that talks about phasing out cigarettes should commence within 5 years.

The device was launched in South Korea last May, and in Japan in April 2016. In Japan the product was immediately sold out. In fact up to last March, PMI had already sold over 3 million devices, and President of Philip Morris Japan, Paul Riley, had said that the company could not keep up with the demand. “But the question is what is the demand? We continue to increase the production but they get sold out as soon as they hit the stores,” he said in March.

Based on calculations of when iQOS users would outnumber regular smokers, Chief Executive Andre Calantzopoulos said that within 5 years, talks about phasing out cigarettes should commence. “If you extrapolate the figures, then logically we could reach the tipping point in five years,” said Calantzopoulos in an interview with Nikkei Asian Review, adding, “That is when we could start talking to governments about phasing out combustible cigarettes entirely.”

Why iQOS found more success in Japan and Korea

Big Tobacco Companies consider Japan as the ideal test ground for HNB tobacco products, since regular e-cigarettes are not allowed due to the country’s strict nicotine regulations. Additionally this nation is one renowned for having a high regard for cleanliness and health, hence non-combustible cigarettes are also sought after as they are in line with these values.

“Korea has benefited from the product awareness generated by Japan, so it has been a faster start than Japan and I hope it will continue that way.” Andre Calantzopoulos, CEO, Philip Morris International

PMI’s iQOS however has also had a tremendous success in S. Korea. “Korea has benefited from the product awareness generated by Japan, so it has been a faster start than Japan and I hope it will continue that way,” said Calantzopoulos. “They are [both] countries which are open to innovation and trying new products, and have a culture of considering people around them.”

Are these claims just free advertising?

Many are of course sceptical about PMI’s intentions and consider such statements about wanting to “stop selling conventional cigarettes” as nothing but a clever marketing strategy. Their direct competitors in these countries Japan Tobacco and KT&G, are also selling their own ‘Heat not Burn’ products, however Calantzopoulos is confident that PMI will remain at the top.