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Philip Morris Extends Deal With KT&G, RRPs Expansion on Track
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Philip Morris International Inc. (PM - Free Report) announced plans to begin commercialization of KT&G’s smoke-free alternatives outside South Korea. The move forms part of the company’s agreement with KT&G, signed in January 2020.
According to the disclosure, Philip Morris will launch KT&G’s lil SOLID device and associated Fiit consumables in Russia. Philip Morris is also considering commercializing lil SOLID in other markets, in subsequent periods.
lil SOLID is a pin-based tobacco heating system that can be used four consecutive times without recharging. The device will be introduced by IQOS, and will be a part of Philip Morris’ existing smoke-free alternatives portfolio in Russia, including the IQOS Tobacco Heating System.The deal, which extends for an initial period of three years, enables Philip Morris to distribute KT&G smoke-free products and its evolutions on an exclusive basis.
KT&G’s smoke-free alternatives include products like tobacco heating systems, hybrid technologies (which combine heated tobacco and e-vapor technologies), and e-vapor products. The products distributed by Philip Morris outside South Korea will be subject to careful assessment prior to commercialization so that they meet all regulatory requirements of the market.
Building a Smoke-Free Future: A Key Focus Area
Philip Morris is one of the industry forerunners when it comes to developing and marketing low-risk tobacco alternatives. This helps the company to stay afloat amid receding cigarette sales.
Markedly, RRPs have been gaining traction across the globe. As of Jun 30, 2020, worldwide adult users of PMI’s IQOS Tobacco Heating System were approximately 15.4 million. RRPs formed around one-fourth of the company’s total revenues, when the company reported second-quarter 2020 results. The figure also included about 8% contribution from IQOS devices. Heated tobacco unit shipment volumes of 18.7 billion units rose 24.3% year over year in the said quarter.
On Jul 7, the FDA approved a version of IQOS’s marketing as a modified risk tobacco product (MRTP). This is expected to radically boost the business of the company. IQOS brand is currently available across more than 57 markets globally.
By extending the agreement with KT&G, which is one of South Korea’s leading tobacco and nicotine companies, Philip Morris is likely to be able to further widen its presence in the Asian markets, especially in context of RRPs.
Wrapping up
We note that Philip Morris is grappling with lower cigarette sales volumes stemming from anti-tobacco campaigns, stringent marketing regulatory measures and rising health consciousness. Moreover, COVID-19 led restrictions and reduced global travel adversely impacted duty-free sales have further deterred sales recently.
Despite such crisis, the switch from smoking to RRPs has been trending positively as reflected by the company’s second-quarter results. That said, we expect that the ambitious moves pertaining to low-risk tobacco products as well as gains from pricing power will continue to favor the company. This Zacks Rank #3 (Hold) stock has gained 14.7% in the past three months compared with the industry’s rise of 5.1%.
Nu Skin (NUS - Free Report) , which also sports a Zacks Rank #1, has a long-term earnings growth rate of 5.6%.
Helen of Troy (HELE - Free Report) has a Zacks Rank #2 (Buy) and a long-term earnings growth rate of 6.5%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Philip Morris Extends Deal With KT&G, RRPs Expansion on Track
Philip Morris International Inc. (PM - Free Report) announced plans to begin commercialization of KT&G’s smoke-free alternatives outside South Korea. The move forms part of the company’s agreement with KT&G, signed in January 2020.
According to the disclosure, Philip Morris will launch KT&G’s lil SOLID device and associated Fiit consumables in Russia. Philip Morris is also considering commercializing lil SOLID in other markets, in subsequent periods.
lil SOLID is a pin-based tobacco heating system that can be used four consecutive times without recharging. The device will be introduced by IQOS, and will be a part of Philip Morris’ existing smoke-free alternatives portfolio in Russia, including the IQOS Tobacco Heating System.The deal, which extends for an initial period of three years, enables Philip Morris to distribute KT&G smoke-free products and its evolutions on an exclusive basis.
KT&G’s smoke-free alternatives include products like tobacco heating systems, hybrid technologies (which combine heated tobacco and e-vapor technologies), and e-vapor products. The products distributed by Philip Morris outside South Korea will be subject to careful assessment prior to commercialization so that they meet all regulatory requirements of the market.
Building a Smoke-Free Future: A Key Focus Area
Philip Morris is one of the industry forerunners when it comes to developing and marketing low-risk tobacco alternatives. This helps the company to stay afloat amid receding cigarette sales.
Markedly, RRPs have been gaining traction across the globe. As of Jun 30, 2020, worldwide adult users of PMI’s IQOS Tobacco Heating System were approximately 15.4 million. RRPs formed around one-fourth of the company’s total revenues, when the company reported second-quarter 2020 results. The figure also included about 8% contribution from IQOS devices. Heated tobacco unit shipment volumes of 18.7 billion units rose 24.3% year over year in the said quarter.
On Jul 7, the FDA approved a version of IQOS’s marketing as a modified risk tobacco product (MRTP). This is expected to radically boost the business of the company. IQOS brand is currently available across more than 57 markets globally.
By extending the agreement with KT&G, which is one of South Korea’s leading tobacco and nicotine companies, Philip Morris is likely to be able to further widen its presence in the Asian markets, especially in context of RRPs.
Wrapping up
We note that Philip Morris is grappling with lower cigarette sales volumes stemming from anti-tobacco campaigns, stringent marketing regulatory measures and rising health consciousness. Moreover, COVID-19 led restrictions and reduced global travel adversely impacted duty-free sales have further deterred sales recently.
Despite such crisis, the switch from smoking to RRPs has been trending positively as reflected by the company’s second-quarter results. That said, we expect that the ambitious moves pertaining to low-risk tobacco products as well as gains from pricing power will continue to favor the company. This Zacks Rank #3 (Hold) stock has gained 14.7% in the past three months compared with the industry’s rise of 5.1%.
Consumer Staple Stocks to Bet On
Turning Point Brands (TPB - Free Report) has a Zacks Rank #1 (Strong Buy) and an impressive earnings surprise record. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nu Skin (NUS - Free Report) , which also sports a Zacks Rank #1, has a long-term earnings growth rate of 5.6%.
Helen of Troy (HELE - Free Report) has a Zacks Rank #2 (Buy) and a long-term earnings growth rate of 6.5%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>