The future is vaporous for Philip Morris

CEO Andre Calantzopoulos looks to a future beyond conventional cigarettes.

SEOUL: The growing popularity of e-cigarettes in Japan and South Korea has Philip Morris International, the world's most valuable cigarette company, considering a future in which cigarettes are stubbed out completely in the two countries within five years.

The time frame is based on projections of when users of smoke-free devices may overtake traditional smokers in those two countries.

"If you extrapolate the figures, then logically, we could reach the tipping point in five years," Andre Calantzopoulos, Philip Morris' chief executive, told the Nikkei Asian Review in a recent interview in Seoul. "That’s when we could start talking to governments about phasing out combustible cigarettes entirely."

Calantzopoulos, who took the top job in 2013, has staked his company's future on new devices that it claims can reduce toxicity by as much as 90%. These include the IQOS device, which heats, rather than burns, tobacco packed into what resemble mini cigarettes.

Asia is extremely important to the U.S.-based company as it implements its strategy of phasing out conventional cigarettes, Calantzopoulos said. The region is home to 60% of the world's 1 billion-odd smokers, and Japan was the first and is still the most successful market for IQOS.

Consumer takeup in South Korea, where sales began on a limited basis in late May, has also been encouraging.

"Korea has benefited from the product awareness generated by Japan, so it has been a faster start than Japan and I hope it will continue that way," Calantzopoulos commented.

"They are [both] countries which are open to innovation and trying new products, and have a culture of considering people around them," he added, touching on the problem of secondhand smoke.

The key outlet for IQOS in South Korea has been the CU convenience store chain. Calantzopoulos said the company is struggling to keep the stores stocked with enough of the special mini cigarettes used in IQOS, which are sold under the Heets brand name in South Korea and as HeatSticks in Japan.

"Demand keeps running ahead of supply, but it is a good problem to have," he said.