According to foreign reports, Philip Morris International (PMI) CEO Jacek olczak delivered a speech at the Goldman Sachs Global Forum on May 18, stressing the company's goal of moving towards 2025 and becoming the next step of the strategy of most smoke-free companies.
Olczak highlighted iqos's strong and accelerating revenue momentum, as well as potential profitable opportunities to expand from nicotine to broader lifestyle / health markets such as high margin botanicals and respiratory medications.
According to olczak, iqos added 1.5 million users in the first quarter of 2021, well above its historical average of 1 million new users per quarter. A solid conversion of 70% to 80% continues to dwarf the average conversion of many steam products.
Now, iqos devices can be used in 66 markets, with 19.1 million users, of which 14 million have quit smoking and completely converted to iqos.
Olczak is particularly excited about the iluma iqos product that PMI plans to launch in the second half of 2021. He believes that as PMI continues to use the fixed cost base of iqos, while simplifying its customer acquisition and sales activities, PMI can drive higher conversion and profit margins.
Olczak also reviewed management's ongoing efforts to digitize and simplify business processes, including PMI's commercial strategy around iqos.
According to him, these efforts have saved $60 million in sales, general and administrative expenses, moving towards the management's goal of $1 billion in 2021-2023.
Olczak believes that PMI's digital efforts will not only further reduce the cost of acquiring and retaining new users, and ultimately drive more profitable growth, but also accelerate conversion and customer acquisition, especially as PMI finally introduces digital customer experience worldwide.
Olczak also talked about long-term opportunities for PMI, including non burning tobacco, including nicotine bags and next-generation equipment.
Management is also looking for adjacency points, such as broader lifestyle / health markets, such as highly profitable botanical drugs (including pure CBD) and respiratory drugs. The company hopes to achieve net revenue growth of at least $1 billion by 2025 through efforts other than nicotine.
Olczak is optimistic about PMI's competitive advantage because of its ability to focus on product safety and effectiveness, as well as verify / validate scientific claims.