Papastratos HeatSticks

    Philip Morris International (PMI) will invest approximately €300 million ($323.72 million) to convert its Papastratos cigarette factory, in Greece, into a manufacturing facility for the tobacco sticks to be used with its IQOS tobacco-heating product. These tobacco sticks are currently commercialized as Heets or HeatSticks.

    Because the equipment necessary to manufacture tobacco sticks is larger than that required for cigarette manufacturing, the current facility area will be expanded. Once fully operational, the plant will have an annual capacity of around 20 billion tobacco sticks. The investment will create 400 new jobs at Papastratos, which already employs approximately 800 people. Construction on the site will commence immediately, with production scheduled to begin in January 2018.

    “This investment is further evidence of our progress towards a smoke-free future,” said Frederic de Wilde, PMI’s regional president for the European Union. “We are encouraged by the 1.4 million smokers who have already switched to IQOS around the world, and we expect this momentum to continue.”

    Located in Aspropyrgos, the Papastratos plant in will be PMI’s third facility fully dedicated to the manufacture of smoke-free products. In October 2016, PMI announced completion of its first facility for tobacco sticks manufacturing near Bologna, Italy, in addition to a pre-existing small scale industrial development center in Neuchatel, Switzerland.

    IQOS is one of four smoke-free product types from PMI to address adult smoker demand for potentially less-harmful alternatives to cigarettes. Launched in late 2014 in two city test markets, the product is expected to be available in key cities in more than 30 markets in 2017.

    Since 2008, PMI has hired more than 400 scientists and experts and invested over $3 billion in research, product development, and scientific substantiation. Results of scientific research to assess the reduced-risk potential of IQOS are very promising, according to PMI, and the company has been sharing its scientific methodologies and findings for independent third-party review and verification.

    According to Stifel, PMI sold every HeatStick it produced in 2016 (7.4 billion units). For 2017, the investment bank expects the company to sell 27 billion HeatSticks and achieve a break-even profit performance.