Me & My Brand: Harry Wake on IQOS ILUMA

Harry Wake, Marketing and Digital Director, Philip Morris UK & Ireland, tell Asian Trader how the evolution of the IQOS heated tobacco concept is delivering a step-change in technology and quality with the launch of the new ILUMA

Can you please give an overview of your brand...

IQOS is the world’s – and UK’s – leading heated tobacco brand¹ and is all about delivering next-level satisfaction to users who are making a change in their lives for the better. It uses real tobacco, but unlike cigarettes it heats the tobacco rather than burning it. This means IQOS ILUMA emits on average 95 per cent lower levels of harmful chemicals compared to cigarettes² while delivering a real tobacco taste experience and satisfaction.

For smokers who don’t quit cigarettes and are looking to switch to smoke-free alternatives, this could be an alternative for them, alongside vapes and oral nicotine pouches.

It’s also more affordable than cigarettes, as smokers can save up to £3,000 a year when they switch to IQOS³. A welcome saving for users across the country.

As a brand, IQOS is focused on delivering tobacco satisfaction to help adult smokers switch away from cigarettes to better alternatives. To do that, it has developed a pioneering range of heated tobacco products. Its portfolio is the result of more than a decade of research and $10.5 billion⁴ worth of investment into developing, scientifically substantiating, and commercialising our most sophisticated heated tobacco technology.

We’re now set to take the category to the next level in the UK with the introduction of a trailblazing new product!

Do you have any new product development?

Yes, we’re delighted to share that IQOS ILUMA hit the UK market in September 2023. It’s the latest breakthrough technology for the brand, that is already providing next-level heated tobacco experiences for consumers. It will also help thousands of convenience retailers switch their adult smoking customers away from cigarettes for good and unlock new growth for their businesses.

Featuring the innovative bladeless SMARTCORE INDUCTION SYSTEM™ – and paired with the all-new TEREA tobacco sticks – IQOS ILUMA is the ground-breaking new way of heating tobacco instead of burning it. It results in a satisfying experience, with no tobacco residue, broken blades, or cleaning required, and over 70 per cent of consumers agree that IQOS ILUMA produces less smell compared to previous generations of IQOS⁵.

There are three devices in the range: ILUMA ONE, IQOS ILUMA, and ILUMA PRIME, all in a variety of colours and with accessories. Meaning that for a cleaner, more satisfying, smoke-free tobacco experience, consumers need look no further than IQOS ILUMA and TEREA tobacco sticks.

How is the heated tobacco market currently performing?

IQOS is the leader in heated tobacco category and has grown +400% in the UK in the last three years⁶.

We are seeing increased consumer demand for smoke-free alternatives, and it’s important that smokers seeking alternatives are given not only choice but also information about their options within the retail environment. Heated tobacco and hence IQOS ILUMA meets the needs of legal-age smokers seeking alternatives who want to maintain a real tobacco experience and is a better choice than continued smoking, while also bringing a significant cost benefit: by switching away from cigarettes in favour of IQOS ILUMA, a smoker could save up to £3,000 a year⁷.

As stores adjust to these shifts in trends, we can support them with not only products, but also talking points and range recommendations to ensure they maximise the opportunity. With a conversion rate of 72 per cent⁸, IQOS products are a credible alternative for adult smokers looking to leave cigarettes behind.

How is your brand currently performing?

IQOS is going from strength to strength.

To put the success of the brand into context, as of 30 June, 2023⁹ we estimate there were 27.2 million users of IQOS globally. The continued strong performance of IQOS is a key factor to the growth of our business, with an additional 1.4 million users gained across Q2 of 2023, with notable progress in Europe and Japan¹⁰.

In the UK, prior to the IQOS ILUMA launch the brand has been in high growth and within the heated tobacco space has the highest market share of any brand by a long way¹¹, driven by its superior product performance. In every market where ILUMA has launched it has turbo-charged the brand’s growth¹², and just a few days into the launch in September, initial results surpassed our high expectations – including long queues of loyal users waiting for several hours to get their hands on the new products!

However, it is also our retail partners that have been central to the success of IQOS around the world – and it is no different here in the UK. Retailers currently stocking IQOS Originals and HEETS can expect to see the same boost to their bottom line with the new device, as IQOS ILUMA and TEREA offers an equivalent profit margin.

How are you supporting your brand and New Product Development (NPD)?

We have invested significantly in the UK launch of IQOS ILUMA, providing a wide range of support through our specialist field teams for both vape and convenience retailers through education to help retailers make existing IQOS users and adult smokers looking for alternatives aware of the product.

We’re also ensuring every retailer is aware of the significant sales opportunity offered through stocking IQOS ILUMA and TEREA and helping them to increase awareness with their smoking customers looking for alternatives - through our field force across the country and relaunching our trade partner website HEATWAVE OPEN to help them accelerate their understanding of the heated tobacco category, the new technology used by ILUMA, and our new range of TEREA packs.

We’re further supporting retailers by investing in developing the awareness and demand that’ll bring them into stores, curious to learn more and to try IQOS.

How important are independent retailers to your brand?

Independent retailers are incredibly important to our brand. The convenience sector is thriving, and local stores are so crucial to their communities. It’s therefore our priority channel for driving the growth of IQOS and plays a crucial role in assisting and informing adult smokers who want to move away from cigarettes to risk-reduced products.

This was demonstrated by the significant expansion of our field force operation in 2021, to offer support to even more cities and regions across England. Now, with the launch of IQOS ILUMA, we’ll have a laser focus on helping retailers benefit from stocking the device and TEREA to maximise its traction with their customers.

Since the expansion of our field force operation, we now engage and support over 10,000 general trade and vape stores offering our heated tobacco sticks and over 2,500 of these stores stock the IQOS devices and engage their consumers with the opportunity to change to a better alternative than continuing to smoke. London continues to be the biggest growth city for IQOS with around seven per cent¹³ share of the total tobacco category.

What trends are occurring in the sector?

With the current cost-of-living increases, value is more important than ever to consumers.

We also know many retailers are helping their adult smokers switch away from combustible tobacco by offering a range of smoke-free options. That's why we've created a portfolio that helps retailers in adopting this multi-category approach. It empowers them to cater and provide their customers with cutting-edge products that prioritise quality, safety, and innovation and at the same time, are profitable for their business.

Describe your brand in three words…

Transformative, Remarkable, Innovative

Published in Asian Trader Vol. 35, No. 934, 17 November to 14 December 2023

^[1]PMI Q2 Results published July 20, 2023

² Important information: This does not necessarily equal a 95% reduction in risk. IQOS ILUMA is not risk-free. Reductions in levels of the 9 harmful chemicals the World Health Organization recommends to reduce in cigarette smoke, which do not include nicotine. See Important Information on IQOS.com

³ Claim compares (i) the cost of smoking an average priced pack of cigarettes (with king size filter) per day, and (ii) the cost of buying an IQOS ILUMA ONE Starter Kit (RRP £39), and then consuming one pack of TEREA daily (RRP £6). In April 2023, the average price for a pack of cigarettes with king size filter was £14.40 (ONS data). Savings will vary depending on IQOS ILUMA model and Starter Kit selected. For further information, visit www.iqos.com/legal.

⁴ PMI Q2 Results published July 20, 2023

⁵ 72% agreement amongst 714 adult consumers in Japan and Italy, 2020 – 2021.​

⁶ The heated tobacco category has grown by 406% between January 2020 to June 2023 (Nielsen offtake independent and symbol general data)

⁷ Claim compares (i) the cost of smoking an average priced pack of cigarettes (with king size filter) per day, and (ii) the cost of buying an IQOS ILUMA ONE Starter Kit (RRP £39), and then consuming one pack of TEREA daily (RRP £6). In April 2023, the average price for a pack of cigarettes with king size filter was £14.40 (ONS data). Savings will vary depending on IQOS ILUMA model and Starter Kit selected. For further information, visit www.iqos.com/legal.

⁸ Based on PMI’s Q2 earnings we estimate there were 27.2 million global IQOS users as of June 30th, 2023, with approximately 72% (19.4 million adults) having already switched to IQOS and stopped smoking

⁹ PMI 2023 Q2 Earnings Results

¹⁰ PMI 2023 Q2 Earnings Results

¹¹ Source: PMI Investor Day September 2023

¹² PMI 2023 Q2 Earnings Results

13 Nielsen Total Coverage Data Jan-June 2023