Investors are underestimating Philip Morris International’s (PMI) smoke-free future, according to Jacek Olczak, the company’s chief operating officer and CEO in waiting.
Philip Morris stock has risen just under 1 percent year to date, lagging far behind the S&P 500, a measure of the broader market.
In an interview with Barron’s, Olczak said that IQOS is the most advanced reduced-risk product on the market, with the most rigorous science behind it. He highlighted the company’s valuable first-mover advantage in many markets, which should also help it rebuff competition from smaller rivals.
PMI hopes to sell between 90 billion and 100 billion heated-tobacco units in 2021, a 20 percent to 30 percent increase from this year and a target that the company is closing in on.
Olczak also has high hopes for Veev, a vaping product that has already rolled out in New Zealand. To prevent underage use, the Veev device can be activated only by users who can verify their age. According to Olczak, this extra, built-in layer of protection should give “a level of confidence to regulators in various geographies, that they can offer a solution to adults while [excluding] audiences that shouldn’t have access.”
Olczak said PMI has successfully overcome many of the challenges presented by Covid-19, including supply chain shutdowns. Increased focus on digital sales of IQOS has helped the company build valuable relationships directly with consumers. The resulting shift from a business-to-business to a business-to-consumer model is differentiating PMI from the competition.
As part of a long-planned leadership transition, Olczak will take over for Andre Calantzopoulos in May 2021.