Korea Philip Morris surpasses 8% of HNB stick market share last year

Last year, Philip Morris's e-cigarettes (stick-based) accounted for over 8% of the entire Korean cigarette market. It was the first time in six years since 2018 that the annual market share exceeded 8%.

Although the overall market share did not exceed 20% due to a decrease in shipments of regular cigarettes (tobacco), the sales ratio is gradually shifting to electronic cigarettes, showing significant progress toward the goal of a 'smoke-free future.'

According to the relevant industry sources on the 7th, at 9:00 AM on February 6th, local time in the United States, Philip Morris International announced its fourth quarter and annual performance for last year.

According to the announcement, Korea Philip Morris's total share of the domestic cigarette market (including cigarettes and sticks) last year was 19.9%, up 0.4%P from the previous year. The expected annual share of 20% was just around the corner.

However, the share of sticks in the entire cigarette market in Korea has increased by 1%P from the previous year (7.1%) to 8.1% on an annual basis, exceeding 8%. Philip Morris International only discloses the share of IQOS in the entire cigarette market, including cigarettes.

Of course, there is a difference between the shipment volume and the actual sales volume. In particular, sticks shipped from mass production plants are exported not only domestically but also to neighboring countries. It is difficult to predict the domestic market based on shipment volume alone, but it can be used to gauge the situation.

It is the first time since 2018, the year after IQOS first landed in Korea, that Philip Morris Korea's stick market share has exceeded 8% on an annual basis. Although shipments and sales have grown, the market share has remained in the 6% range as competing devices continue to be released.

Philip Morris Korea recorded a total market share of 20.4% in the first quarter of last year, surpassing 20% for the first time in 11 quarters. It then recorded 19.6% in the second quarter and 19.9% in the third quarter, raising expectations of 'surpassing 20% market share annually.'

If it succeeds in recapturing the 20% mark, Korea Philip Morris will be able to achieve '20% total market share and 8% stick market share' simultaneously for the first time since 2018 (25.3%, 8.5%).

The reason it failed to surpass the 20% mark is because of the decrease in cigarette (regular cigarette) shipments. In fact, stick shipments increased by 600 million from the previous year to 5.7 billion last year, but cigarette shipments decreased by 600 million to 8.3 billion, slowing growth.

This is interpreted as being due to a lack of stamina in the fourth quarter. In fact, the total shipments of cigarettes and sticks in the fourth quarter decreased by 100 million compared to the previous year, reaching 4.5 billion. Although the number of sticks increased by 100 million during the same period, sales of cigarettes decreased by that amount, resulting in a plus or minus zero.

Although shipment growth has stalled, the increasing share of electronic cigarettes in the form of heat-not-burn cigarettes is said to be in line with Philip Morris' vision of a "smoke-free future."

By the end of 2023, about 10 years after its initial launch in the global market in 2014, IQOS surpassed Philip Morris' flagship product, Marlboro, in sales. Philip Morris aims to generate ⅔ of its sales from non-combustible products like IQOS by 2030.

The '20% achievement' is also positive as the new device 'IQOS Illuma i' was released this year. It is a device introduced two years after the release of IQOS Illuma Prime in February 2023, and is characterized by enhanced consumer convenience.

Yoon Hee-kyung, CEO of Philip Morris Korea, said at the 'IQOS Illuma i' launch event held at the Lotte Hotel in Seoul on February 5, "So far, one in five smokers in Korea has switched to non-combustible products like IQOS." She added, "Our vision for the future is to quickly help the remaining 80% of adult smokers switch to non-combustible alternatives."

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