Tobacco & RRP Report
View from the brands
In this section, we round up brand owner opinion on the trajectory of market recovery, address the innovation agenda in the category and ask suppliers what makes a great partnership in travel retail. We begin with the views of Philip Morris International.
For Philip Morris International (PMI), travel retail represents an important platform in its strategic vision to create a smoke-free future, a world without cigarettes.
The company says: “There are an estimated one billion-plus adult smokers in the world. The company is clear that the best choice for any smoker is to quit tobacco and nicotine altogether. But for those adults that don’t, they deserve access to better alternatives and accurate information about these products.
PMI Duty Free Vice President Edvinas Katilius
“The Philip Morris International Duty Free omnichannel approach bridges the interaction between digital and physical touchpoints”
“For those adult smokers who would otherwise continue smoking, we want to provide them with scientifically substantiated smoke-free products that are a better alternative. Our ambition is for our smoke-free products to account for more than 50% of total net revenues by 2025. To make our vision a reality, we have been transforming our company and working on all channels, including, of course, the travel retail channel.”
Addressing the channel in particular, PMI Duty Free Vice President Edvinas Katilius says: “Philip Morris International Duty Free is a major contributor to achieve our bold ambition. Travel retail is an important and vital channel to accelerate our progress to a smoke-free future. We have the unique opportunity to reach millions of travelling adult smokers and inform them of better alternatives to cigarettes.”
IQOS ILUMA: A recent addition to the PMI portfolio of smoke-free products for adults who would otherwise continue to smoke or use nicotine products
The company’s transformation is driven by science and technology. Investments in these areas, PMI says, align with its plan to “put consumers front and centre”. Katilius says: “Responsible sales and marketing is a key priority for PMI. Our smoke-free products are intended as cigarette substitutes for existing adult smokers and nicotine users only. Our Good Conversion Practices serve as our bedrock for encouraging adult smokers who would otherwise continue smoking to switch, while working to prevent unintended use in markets where we sell innovative products that do not burn tobacco.”
PMI has accelerated its investment in digital innovation through the pandemic, building its omnichannel strategy and multi-channel communication to deliver new shopper technology and experiences. That drive is led by the roll-out of the IQOS brand.
Katilius notes: “Over the last two years Philip Morris International Duty Free has deployed an integrated network of digital-to-consumer tools providing our legal age consumers with interactive digital experiences to discover and purchase IQOS products. These new digital innovations were deployed to provide solutions to better connect with legal age consumers, providing them with faster and smoother access to relevant information, supporting them on their travel retail journey.
“The Philip Morris International Duty Free omnichannel approach bridges the interaction between digital and physical touchpoints and reinforces the importance of both in delivering a fully integrated and tailored consumer experience. It is important that through the omnichannel approach, the travel consumer journey is not an isolated episode, but a seamless and integrated experience for the consumer pre- and post-travel. We are focused on delivering the right communication at the right touchpoint for the consumer. It is not a one-size-fits-all approach therefore we are continuously gathering learnings to adapt to consumer feedback.
IQOS at Kansai International Airport
“We at Philip Morris International Duty Free had a clear vision with where we wanted to go with our digital transformation. The pandemic and the resulting changing consumer needs accelerated the deployment of our digital initiatives across our global points of sale. We are focused on creating an omnichannel consumer experience where consumers can choose their preferred platform, physical or digital, to engage with IQOS.”
PMI says that to meet consumer needs, diversity is required – and here, travel retail represents a showcase for innovation.
Katilius says: “People smoke for different reasons—not just nicotine, but also taste, sensory experience, and ritual. Therefore, no one product will meet all adult smokers’ preferences; a portfolio of alternatives is required. PMI’s smoke-free product portfolio currently includes heat-not-burn products, nicotine-containing vapor products, and oral nicotine products. As these products do not involve combustion, they generate significantly lower levels of harmful compounds compared with cigarettes and are better alternatives for those who would otherwise continue smoking.”
He adds that Philip Morris International Duty Free is a “global brand vitrine where we can showcase our latest innovations. We will continue to launch our most innovative products in duty free”. See also panel below.
Cooperation and joint investment in the channel’s future will guide the industry’s progress post-crisis, says Katilius.
Sleek look: The IQOS VEEV e-vapour product range
“A good partnership entails close collaboration of the whole travel retail ecosystem, which includes airlines, airports, retail operators, and brand owners. They are all essential to ensure a consumer-centric approach to provide the customer with the best service and experience within this universe. For us to achieve our vision of a smoke-free future, it’s critical we put the needs of our consumers first.
“Specifically for consumers in travel retail, a good partnership is one where the consumer journey is not interrupted by the different players involved to ensure consumers feel a connected brand experience from pre travel, during and post travel.
“We work with many operators and retailers worldwide such as in Zürich, Dubai, and many other airports and have fantastic relations with companies such as Lagardère Travel Retail, Dufry and Gebr. Heinemann.
“Recently, an example of a strong collaboration and good partnership is with ANA Duty Free (ANADF) with the launch of the new IQOS ILUMA in Japan. We collaborated with ANADF to launch the IQOS ILUMA ecommerce brand page and product listing. Additionally, to introduce ILUMA and drive brand experience we launched a CRM activation and paid media campaign with ANADF to encourage legal age consumers to pre-order ILUMA before travelling.
“Also, we have a great collaboration with Dubai Duty Free with an IQOS Brand Boutique on the ecommerce platform, product listing and activation through QR codes instore driving legal age consumers to the ecommerce platform to discover our products further.”
Leading the innovation agenda with IQOS
The PMI IQOS portfolio currently includes heated tobacco and e-vapour products.
The company says: “Firstly, heated tobacco products (HTP) heat tobacco releasing flavours and nicotine and allows adult smokers to enjoy tobacco without combustion. Through intensive research and development, we have created breakthrough heated tobacco products, which do not burn the tobacco. Instead, they heat tobacco, using an electronically controlled heater.”
PMI has developed two types of HTP, which use different technologies to heat the tobacco.
Initial generations of PMI’s HTP series use blade heating technology, and these are designed to be used with specific heated tobacco units, called HEETS (or Heatsticks). The blade devices include IQOS 2.4+, IQOS 3 Duo, and IQOS 3 Multi (availability varies from market to market).
PMI’s latest generation of HTP devices, IQOS ILUMA, uses induction to heat the tobacco, and was launched in 2021. These devices use specific heated tobacco units called TEREA SmartCore Sticks.
Both generations of HTP are available in duty free today. The company says that it continues “to develop our HTP bringing exciting innovations to legal age consumers”.
E-vapour products are without tobacco and produce a nicotine-containing vapour.
PMI’s next generation e-vapour product platform, IQOS VEEV is now present in ten markets, including Italy, Finland, Croatia, Canada, New Zealand, Czech Republic and France. PMI is looking at opportunities to expand into travel retail markets in the future.
Alongside these, oral smokeless products will further accelerate the drive toward a smoke-free future, says PMI.
“While e-vapour and HTP may work for many, it is unlikely that one solution will meet the preferences of all adults who smoke. Nicotine pouches provide another choice for smokers, encouraging them to switch completely from cigarettes. The first major activity is the full relaunch of the revitalised Shiro portfolio (below) in the Nordics earlier this year and [we are] looking at opportunities to expand into travel retail markets in the future.”
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The Moodie Davitt eZine Issue 316 | 31 October 2022
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