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All Big Tobacco companies reported growth in their smoke-free segments in the first half and second quarter of 2024, reflecting a broader industry trend towards diversification from traditional cigarettes.
For example, Philip Morris International (PMI) recorded strong performance from Iqos and Zyn, despite challenges such as supply constraints and the EU flavour ban. The company plans to expand its Iqos portfolio with new products like Delia, Levia, and the Iluma i device range, currently exclusive to Japan. PMI is also preparing to launch Iqos Iluma in the US, starting with a pilot in Austin, Texas, later this year.
Altria reported significant contributions from its On! nicotine pouch brand, with notable growth in markets like Sweden and the UK. The company secured the top retail fixture position for nearly 80% of On!’s volume and introduced new packaging and branding to further differentiate the product.
British American Tobacco (BAT) saw a revenue decline in the first half of the year, but new categories, particularly modern oral products, showed robust growth. The company increased its new-category contribution and maintained a leading position in the modern oral segment, especially in the Americas and Europe.
Japan Tobacco International (JTI) reported strong performance, continuing its investment in expanding the heated tobacco segment, with Ploom available in 21 markets.
What about how regulations could affect future earnings?
While these companies share a common goal of transitioning towards reduced-risk products, they differ in market focus and performance. PMI and BAT have substantial international operations, excelling in the EU and Japan, while Altria remains primarily focused on the US market. Altria faced declining cigarette volumes, whereas PMI reported growth in both heated tobacco sticks and traditional cigarettes. BAT experienced challenges in conventional tobacco sales but progressed in vaping.
Interestingly, none of the companies have addressed the regulatory environment and its potential impact on future earnings, suggesting uncertainty or strategic ambiguity in managing future challenges.
Their commitment to reduced-risk products underscores the importance of adaptability as they navigate shifting consumer preferences and regulatory landscapes. This adaptability will be crucial for sustained growth amid potential changes in legislation.
– Antonia Di Lorenzo TobaccoIntelligence staff
