The tobacco giants are starting to wonder about the future of traditional cigarettes. All signs point to the electronic cigarette overtaking traditional cigarettes in the coming years, and Big Tobacco is ready for this shift.
Currently, the tobacco industry is valued at 470 billion Euros worldwide, but the forecast for the evolution of traditional cigarettes is not looking good. Once a surefire bet on the stock market, tobacco companies are now seeing major financial setbacks across global markets. Consequently, investors are starting to lose interest in an industry that continues to be steeped in controversy.
Moreover, the president of Philip Morris France, Jeanne Pollès, is convinced that vaping is the future. The company is preparing to make significant changes to be part of a “zero tobacco” initiative. For the time being, however, the vaping industry still pales in comparison to Big Tobacco. Globally, one billion people regularly smoke cigarettes, compared to just 36 million vapers.
An expanding vaping market
Even if tobacco remains king across the globe, vaping devices are starting to gain ground as major tobacco manufacturers begin investing in the promising new market. Altria (formerly Philip Morris) bought 35% of Juul’s shares for an astronomical $12.8 billion. 300 researchers were hired to help create new products, and $4.5 billion were invested in the company’s R&D department.
Philip Morris’ flagship product is the Iqos. This tobacco-heating device was designed to provide the same effects as smoking a traditional cigarette. However, Jeanne Pollès remains skeptical. While she does not deny that there may be secondary side effects with electronic cigarettes, she also recognizes that these effects are far less dangerous than those associated with traditional cigarettes.
British American Tobacco estimates that by the year 2030, vaping will account for 30% of the company’s profits. The tobacco giant has already invested $2.5 billion in its Vype device, which has seen varying levels of success depending on the country.