Philip Morris International is currently going through a rough patch. The IQOS device has not seen the success the company thought it would, as tobacco sales continue to fall. The tobacco giant experienced one of its worst days in company history last week, when stocks fell by more than 17 points. The company has thus decided to focus its strategy on smokers over 50 years old.
The drop in PMI stocks is primarily due to the slowing down of cigarette sales (-5.3%). It is also due to an earlier than expected stabilization of IQOS sales in Japan. In fact, more than 40% of Japanese smokers are over the age of 50, and they think of heated tobacco devices as gadgets. It does not look like they are ready to replace traditional cigarettes with the new device.
PMI’s biggest fear: that IQOS is seen as a gadget
The fact that IQOS appears to be a gadget was one of Philip Morris’ greatest fears. Indeed, in the USA, 18% of smokers are between the ages of 45 and 64, and almost 9% are over the age of 65. Consequently, PMI is now forced to do everything they can to make sure that smokers over 50 change their opinion about this new way of smoking. If the company does not succeed, they will lose a major part of the market. This could continue to negatively affect Altria Group Inc, a subsidiary of PMI in the USA. This company has already been affected, seeing a major drop in stock prices in the past few days.
PMI’s response is as follows: do everything necessary to change older, more conservative smokers’ opinions about IQOS. Stay tuned for more updates.