Global Tobacco Giants’ H1 2023 Reports Show Continued Push in New Tobacco Categories

Recently, several major international tobacco companies have released financial reports for the first half of 2023 or the second quarter. Overall, total revenue has declined, but represented by Philip Morris International and British American Tobacconew tobaccoThe sector continues to maintain growth, and various companies are taking frequent actions in the new tobacco sector, leading the development direction of the global tobacco industry.

Philip Morris International's total revenue increased by 12%, and new tobacco contributed more than 35%

Philip Morris International released its second quarter 2023 financial report, with new tobacco contributing 35% of revenue. The company's IQOS in the first half of 2023the cartridgeA total of 58.8 billion units were shipped, a year-on-year increase of 18.5%, of which 31.4 billion units were shipped in the second quarter, a year-on-year increase of 26.6%, and a month-on-month increase of 14.7%. From a revenue perspective, the new tobacco sector contributed US$6 billion to the company in the first half of 2023. It can be calculated from the revenue and proportion of new cigarettes that Philip Morris International's total revenue in the first half of 2023 will be US$17.14 billion, an increase of 12% from US$15.138 billion in the first half of 2022.

Among new tobacco users, as of the second quarter of 2023, the number of IQOS users has reached 27.2 million, a month-on-month increase of 5.4% and a year-on-year increase of 14.8%. Among them, the number of users fully converted into IQOS consumption (i.e., stopped using traditional cigarettes) reached 19.4 million people (71% Retention rate). But in the traditional tobacco sector, the company sold 157 billion packs of cigarettes in the quarter, down 0.4% from the same period last year. Philip Morris International said sales of new tobacco were the fastest-growing products in the second quarter while sales of traditional cigarettes fell.

portant; font-weight: bold;"> British American Tobacco's new tobacco growth rate halved,heating non-burningWaiting to be exerted

British American Tobacco (BAT) released its semi-annual results report. As of the first half of 2023, its revenue reached 13.436 billion pounds, a year-on-year increase of 4.4%. The new tobacco business continues to maintain growth. In the first half of 2023, new tobacco achieved revenue of 1.625 billion pounds, a year-on-year increase of 26.6%. wherein the atomizinge-cigarettes(Vuse Series) revenue was 837 million pounds, a year-on-year increase of 35.5%; heating non-burning (glo series) revenue was 547 million pounds, a year-on-year increase of 10.2%; new oral cigarettes (Velo series) revenue was 241 million pounds, a year-on-year increase of 42.4%.

Although the revenue of new tobacco continued to grow in the first half of the year, the growth rate was only 26.6%, which was growing rapidly compared with other companies. However, compared with 45.4% in the same period last year, this year it has dropped by nearly half. Among them, Glo, which is heated but not burned, only increased by 10.2%, which is the lowest. However, it is reasonable. In addition to the economic downturn, after all, in the world's major heated and non-combustible markets, Philip Morris's IQOS market share and consumer mental share are absolute first, so it is still difficult to compete with it. The number of users of the company's new tobacco products increased by 1.5 million compared with last year to 21.5 million, but last year increased by 2.1 million compared with the previous year, and the growth in the number of users also dropped significantly.

The company said that new tobacco contributed £ 201 million to the group's profits and plans to achieve the profit target of its new tobacco business in 2024. Moreover, its investment in new tobacco products has gradually taken effect, and the sector is now very close to breaking even. However, the progress of heated tobacco products requires more efforts. It was previously mentioned in news that some shareholders of the company were disappointed that the company's transformation to new tobacco was too slow.# p#pagination title #e#

Altria enters the heated cigarette market and completes newe-cigarette companiesacquisition

Altria announced its results for the first half of 2023. In the first half of 2023, Altria Group's revenue was US$12.23 billion, down 1.7% from the same period last year. In the first half of 2023, revenue after deducting consumption tax increased 0.1% to US$10.2 billion.

In the new tobacco sector, Altria began to enter the heated cigarette market this year. Altria began to establish a cooperative relationship with Japan Tobacco this year to jointly develop and sell heated cigarettes. Two types of cigarette heating equipment will be launched on the market. One device owned by Japan Tobacco can heat cigarette shells similar to cigarettes; the other device owned by Altria Group can heat solid tobacco leaves in capsules or cigarette packs.

In the first half of this year, Altria also completed the acquisition of NJOY and achieved strong business results. Previously, Altria investede-cigarette enterprisesJUULDue to the FDA's ban on sales across the United States, business development was frustrated and the performance of the e-cigarette sector continued to decline. After abandoning JUUL, a new alternative was finally found-NJOY. The group will implement its commercial promotion plan for NJOY in the second half of the year. Altria plans to achieve a 35% growth in new tobacco products throughout this year and looks forward to revitalizing the performance of the new tobacco sector.

Japanese tobacco growth is stable, accelerating the regional expansion of new tobacco

Japan Tobacco Group (JT) released its first-half results for 2023. Japan Tobacco Group's first-half revenue reached 1.39 trillion yen (approximately US$9.17 billion), an increase of 9.9 in yen terms from the same period in 2022, and core income at constant exchange rates increased by 6.8% to 1.3 trillion yen. The growth rate of 9.9% seems very high because the yen has depreciated severely in the past two years. If calculated in US dollars (US$9.17 billion), it is 20.9% lower than the same period in 2022 (US$11.604 billion).

In terms of new tobacco, considering the accelerated investment in heating and non-burning in the second half of 2023, it is expected to maintain the adjusted operating profit for the whole year unchanged. In April this year, Japan Tobacco said it would invest 300 billion yen (about US$2.25 billion) in the next three years to promote its heated non-burning Ploom X series, of which 200 billion yen (about US$1.5 billion) will be used outside Japan. In the market, it plans to launch Ploom X in more than 10 countries this year and cover at least 20 countries by the end of 2024. The company did not announce revenue from the new tobacco segment this year. Revenue in the first half of last year was approximately $357 million and should decline this year.

Japan Tobacco's overall revenue growth is relatively stable, and the company said it will accelerate investment in heated non-burning products to lay the foundation for future growth. Currently, Ploom X was launched in the Czech Republic in June this year and will be launched in Switzerland in September. It is expected that it will be released in 14 markets by the end of 2023 and in 28 markets by the end of 2024. Geographical expansion is proceeding as planned.

Imperial Tobacco's traditional cigarettes are growing steadily, and new cigarettes in Europe are developing well

Imperial Tobacco released its fiscal year 2023 mid-year report. For the half year ended March 31, 2023, the company achieved net income of 3.663 billion pounds, a year-on-year decrease of 1.0%, and achieved operating profit of 1.716 billion pounds, a year-on-year increase of 0.8%. Among them, the total revenue of the New Europe region was 1.37 billion pounds. New tobacco revenue mainly comes from the European region. New tobacco revenue in New Europe is 74 million pounds, and the original European region's new tobacco revenue is 77 million pounds. New tobacco revenue in the entire European region reaches 5.4%.

This year, Imperial Tobacco has made progress in new tobacco product and market launches, with the segment's business achieving net income of £ 125 million, a year-on-year increase of 19.8%. In terms of atomizing e-cigarettes, blu 2.0 products have been launched in the UK, Spain, France, the Czech Republic and Portugal. Driven by strong growth in Europe, revenue is expected to exceed that of the same period last year in the second half of this year, enough to offset the decline in results caused by uncertainty caused by the U.S. Food and Drug Administration's marketing refusal order. However, compared with other major tobacco companies, new tobacco is developing slowly and the overall volume is very small.

The company expects that in the traditional cigarette market, the market share of the five major markets (the United States, Australia, Spain, Germany and the United Kingdom) in the first half of the year will be flat compared to the same period last year. Market shares in the United States, Spain and Australia are expected to grow steadily, offsetting declines in Germany and the United Kingdom. Amid the decline in the global traditional cigarette market, Imperial Tobacco has taken advantage of price increases to expand the business's market share over the past six months, gaining an additional 20 basis points increase in cigarette revenue in five major markets.

Summary

Overall, due to the global economic downturn in the first half of 2023, except for Philip Morris International, the total revenue of all giant companies declined. New tobacco as a whole maintained growth, but the growth rate slowed down, especially British American Tobacco. Under the Global Framework Convention on Tobacco Control, the global traditional cigarette market has declined at an average annual rate of 3%, and new tobacco products have become the key development direction of international tobacco companies. Philip Morris International continues to be committed to realizing the vision of a "smoke-free future". Altria, British American Tobacco and Japan Tobacco are all active in the field of new tobacco, either increasing investment in R & D, expanding geographical coverage, or establishing cooperation with other giant companies. The giants have a clear strategy for transforming into new tobacco and lead the development direction of the global tobacco market. Imperial Tobacco has also taken action on new cigarettes, but is generally committed to innovating traditional cigarettes, rather than shifting its overall strategy and focus to new tobacco products like its competitors.# p#pagination title #e#