Since launching IQOS, PMI’s reliance on Europe has grown. The continent’s relatively wealthy population and strong currencies make it PMI’s most important geographic market. It generates over half of the company’s revenue and operating profit while accounting for 41% of volumes.
PMI’s Asia market is also significant, generating 31% of revenue and 27% of operating income off of 31% of PMI’s volumes.
PMI’s Americas market has not played a big role for PMI yet, but that is all but guaranteed to change in the coming years thanks to the Swedish Match acquisition and management’s decision to buy back the rights to IQOS in the U.S.
And while smaller than PMI’s Europe and Asia businesses, ME&A has something Europe and Asia don’t: resilient volumes. ME&A volumes are down only 2% since 2016 compared to Europe and Asia where volumes are down over 8% and 15%, respectively, over the same timeframe.
Europe is also PMI’s most valuable market when it comes to the company’s smoke-free business. While Asia led the way during IQOS’s first few years, Europe caught up by 2020. In fact, Europe’s 2022 smoke-free revenue was greater than the company’s total smoke-free revenue in 2019. Europe now generates 64% of PMI’s smoke-free revenue and 57% of heated tobacco volumes. Asia accounts for almost all of the rest. If IQOS gains traction in ME&A and as management turns its attention to executing in the U.S., PMI’s reliance on Europe and Asia could moderate over the next several years.
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Other pieces in this series on PMI:
The New and Improved Philip Morris International
Philip Morris International: Europe
Philip Morris International: Middle East & Africa
Philip Morris International: Americas
Philip Morris International: Asia (+ Australia)
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