Global Nicotine and Tobacco Investment Advisor: Watch Short-Term Outlook When Acquiring Harm Reducti

Global nicotine and tobacco investment advisor Erik Bloomquist (CFA) believes that the investment prospects for harm reduction products are promising.

[Two Supremes from Seoul] On September 21, Two Supremes interviewed global nicotine and tobacco investment advisor Erik Bloomquist (CFA), who is attending the 2023 GTNF forum in Seoul. He believes that the future investment prospects for harm reduction products are broad, but he pointed out that caution should be exercised regarding the short-term outlook when acquiring harm reduction companies. 

Two Supremes with global nicotine and tobacco investment advisor Erik Bloomquist (far right) - Photo source | Two Supremes 

Erik Bloomquist told Two Supremes that globally, the retail sales of reduced-risk nicotine products (RRP) were approximately $56 billion in 2022, with about 100 million consumers. However, he emphasized: "Excluding China, the total retail sales of nicotine and tobacco categories are close to $700 billion, with about 1.1 billion consumers." 

Regarding which tobacco companies in the traditional tobacco industry have investment prospects and what the evaluation criteria are, Erik Bloomquist stated that it depends on what the investment company is looking for. Many investors want growth, not just dividend yields. Therefore, if an investment company is looking for potential future growth, Philip Morris International (PM.US) carries the highest forward multiples, indicating that the overall market believes it has the most future growth potential. This is attributed to its significant transformation over the past decade, particularly in heated tobacco products, which account for about 37% of its revenue and are expected to reach 50% by 2025. 

Erik Bloomquist believes that if an investment company is looking for high dividend yields and stability, a dividend yield of 8%-9% from Imperial Brands (IMBBY) may be very attractive to investors. If an investment company wants to acquire a company focused on reducing risk, it might choose a company like Smoore (06969.HK) or RELX (parent company Fog Core Technology, RLX.US). However, the issue with these companies is their short-term outlook, such as the current situation with RELX Technology, where restrictions in the Chinese market seem unlikely to be overcome in the short term, so growth for such companies is not expected at this time. 

Regarding the future outlook for the e-cigarette industry and whether there are companies to watch, Erik Bloomquist believes that the future development of harm reduction products is very promising, and the technological changes that have occurred over the past decade since 2013 are very exciting. These technological changes have made products easier to use, more effective, and more appealing to consumers. As a result, more and more people are using these products, transitioning from combustible tobacco to lower-risk products. Therefore, he believes this is a very promising industry with much to look forward to in the future.

Guest Profile:

Erik Bloomquist (CFA) has analyzed the global tobacco and nicotine industry for nearly 20 years and has worked in the global consumer sector for nearly 25 years, working for several investment banks, including J.P. Morgan, and serving as an independent advisor to alternative nicotine companies. He has served as the chair of the Tobacco Transformation Index Technical Committee and is a Chartered Financial Analyst.