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Philip Morris opens first Africa store to stoke demand for alternative cigarettes

Nov 16 2018 11:07
Roxanne Henderson, Bloomberg

Philip Morris International will open a flagship store in Johannesburg as it tries to stoke demand in Africa for its alternative cigarette known as iQOS, which heats rather than burns tobacco to give users their nicotine kick.

The Marlboro maker plans to use the shop as a springboard to expand in the rest of the continent, according to spokesperson Alessandro Poggiali.

South Africa is the only African country in which Philip Morris distributes iQOS, but more are slated to follow, he said.

"In many countries we’ve developed a dedicated point of sale, a touch point, where we can interact with the consumer,” Poggiali said in an interview in Johannesburg.

Philip Morris has 70 iQOS shops in 23 countries, echoing a wider trend of tobacco companies including British American Tobacco [JSE:BTI] and Japan Tobacco investing in smoking alternatives to drive new revenue streams. Traditional cigarettes are under pressure from regulators the world over and have declined in popularity as more people become aware of their inherent health risks.

South Africa has 7 million smokers, or about an eighth of the population, according to a report by the Foundation for a Smoke-Free World.

The World Health Organisation estimates about 80% of the world’s 1.1 billion smokers live in low and middle-income countries, according to the World Health Organisation.

A South African footprint will help the Philip Morris build the case for iQOS with regulators and consumers in other markets in the region, Poggiali said. About 10 000 smokers are converting to the device daily, the company estimates. The company is still awaiting approval from the Food and Drug Administration to sell them in the US.

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