Philip Morris International (PMI) has reported impressive growth figures driven by its commitment to smoke-free products. The company’s latest financial results for 2024 reveal substantial gains, especially within its duty-free segment, which soared by 11.3% year-on-year, hitting notable milestones with 14.4% growth recorded just in the fourth quarter.
Total revenues for PMI reached $37.88 billion, reflecting a 7.7% increase compared to the previous year. These numbers highlight the surging demand for PMI’s smoke-free offerings, particularly the IQOS heated tobacco units (HTUs) and ZYN nicotine pouches. The rise of such products demonstrates increasingly positive consumer attitudes toward alternatives to combustible tobacco.
PMI's report indicated the estimated total market for cigarettes and HTUs outside of China remained "broadly stable," accounting for approximately 318.9 billion units. Though PMI observed declines of 28.5% in Australia and 2.2% in Korea, international duty-free sales and improvements within the Japanese market helped counterbalance these losses.
The company’s strategic pivot toward smoke-free products has paid off handsomely, accounting for 40% of PMI’s total net revenues. Notably, smoke-free products also represented around 42% of gross profit, demonstrating their importance to the company's bottom line. PMI’s CEO, Jacek Olczak, highlighted these developments, stating, "2024 was a remarkable year for PMI. We delivered very strong full-year results driven by the continued growth of IQOS and ZYN as well as solid performance from combustibles."
Olczak also noted the recent authorization from the U.S. Food and Drug Administration (FDA) for ZYN nicotine pouches, which he views as pivotal for solidifying the scientific backing of smoke-free products. He stated, "The long-awaited US FDA authorization of all ZYN nicotine pouches currently marketed... is evidence of the compelling science supporting smoke-free products, and we hope our other pending FDA applications will be accelerated."
According to PMI’s estimates, about 38.6 million adults are using its smoke-free products, which have expanded their reach considerably, now available across 95 countries. Such growth signifies not just the popularity of these alternatives, but also PMI’s continued commitment to transitioning smokers away from combustible cigarettes.
The company’s smoothed transition is underlined by its ambitious investment strategy; since 2008, PMI has invested more than $14 billion to develop its line of smoke-free products effectively. Olczak emphasized, "We hope other countries follow the example of the USA and embrace effective tobacco harm reduction measures, especially where smoke-free products are banned, resulting in the perpetuation of combustible cigarette consumption."
Moving forward, PMI is poised to capitalize on its growing market presence, and its recent acquisition of Swedish Match—an influential player within oral nicotine delivery—has strengthened its position substantially. The integration of IQOS and ZYN brands reflects PMI’s focus on innovation to meet consumer demands for reduced-risk products.
This strategy was indicated as highly beneficial, particularly as PMI manages to expand its product reach. The recent FDA authorizations for marketing Swedish Match’s General snus and ZYN nicotine pouches, along with versions of IQOS devices and consumables, exemplify the enhanced regulatory environment as it shifts toward acceptance of smoke-free alternatives.
CEO Olczak has made it clear how pivotal these advancements will be for PMI’s future, expressing hope for more swift FDA approvals to build on this momentum. Observers within the industry are enthusiastic about PMI's proactive stance, especially as it aligns with growing global trends against smoking, pointing toward healthier options and increasing regulations.
With the upcoming Consumer Analyst Group of New York (CAGNY) Conference scheduled for February 19, 2025, PMI is set to present its remarkable growth story to investors and analysts. The webcast, available at www.pmi.com/2025CAGNY, will feature insights from Olczak and CFO Emmanuel Babeau detailing the current and future strategies of PMI.
The overall narrative presented by PMI indicates a strong drive to redefine its image within the tobacco industry positively. Its commitment to delivering smoke-free alternatives not only responds to changing consumer preferences but also reflects broader health initiatives aimed at reducing smoking-related harm globally.
By focusing on developing innovative products and adapting to regulatory landscapes, PMI is positioning itself as a leader within the reduced-risk segment. Acknowledging the challenges posed by declining cigarette use rates, the company's transition to smoke-free solutions serves as both a business strategy and public health endeavor.