Switzerland-based tobacco company Philip Morris International Inc. (NYSE: PM) has announced a global collaboration agreement with the leading tobacco and nicotine company with South Korea’s KT&G Corporation’s (OTC: KTCIF) to commercialize KT&G’s smoke-free products outside of the country.
They hope to win over international smokers wary of hazards from vaping options.
“To achieve PMI’s vision of a smoke-free future we must grow the smoke-free category worldwide which requires multiple players providing a wide array of better choices for adult smokers. While IQOS continues to be the leading product in the smoke-free category, and we plan to broaden our portfolio by launching IQOS MESH in the coming months, we believe that increased collaboration will benefit adult smokers by providing greater choice and drive accelerated adoption of smoke-free products worldwide.”
“Our objective is that all adult smokers who would otherwise continue to smoke switch as soon as possible to better alternatives and abandon cigarettes to the benefit of their health, public health, and society at large. Further to our ongoing efforts to develop, assess, and commercialize our pipeline of science-based smoke-free alternatives to cigarettes, we are always open to collaboration with third parties on products that complement our already strong portfolio and that we can further enhance. We are delighted that KT&G has chosen PMI to expand the sales of its smoke-free products outside of South Korea. We look forward to working together to provide adult smokers around the world more options to leave cigarettes behind, by offering a portfolio that provides them an ever-broader range of taste, price, and technology choices.”André Calantzopoulos, PMI’s Chief Executive Officer , said in a statement.
The tobacco giant Philip Morris International (PMI), best known for its “Marlboro” line of cigarettes, is seeking “transformation” for a “smoke-free future.”
KT&G sells its electronic cigarettes under the brand “Lil” that include heat-not-burn tobacco systems, e-vapor products, and their hybrids.
KT&G announced Wednesday it has signed a three-year supply contract for its e-cigarette label Lil to PMI for entry into overseas countries at Four Seasons Hotel Seoul in Seoul. The two companies agreed to build own cooperative system for launch in more countries starting this year, it said.
Under the contract, KT&G supplies three HNB kinds of ‘Lil Hybrid’, ‘Lil Plus’ and ‘Lil Mini’ and one e-liquid type of ‘Lil Vapor,’ to PMI responsible for the commercialization and distribution of the products supplied outside Korea. New products could also be added to the contract.
The agreement will run for an initial period of three years. The two companies plan for global collaboration with the intention to actively expand to cover many markets, based on commercial success. The agreement allows PMI to distribute current KT&G smoke-free products, and their evolutions, on an exclusive basis, and does not restrict PMI from distributing its own or third-party products. KT&G’s smoke-free products include heat-not-burn tobacco systems (e.g., Lil Mini and Lil Plus), hybrid technologies that combine heat-not-burn tobacco and e-vapor technologies (e.g., Lil Hybrid), and e-vapor products (e.g., Lil Vapor).
Products sold under the agreement will be subject to careful assessment to ensure they meet the regulatory requirements in the markets where they are launched, as well as PMI’s high standards of quality and scientific substantiation of their harm reduction potential. PMI and KT&G will seek any necessary regulatory approvals that may be required on a market-by-market basis.
“The latest collaboration with global leading tobacco maker PMI proves KT&G’s strong brand power and product development capability. We’ll keep efforts to bring new market standards for the future tobacco industry.”Baek Bok-in, chief executive of KT&G.
KT&G and PMI are planning to create new brand name for overseas markets.
PMI CEO André Calantzopoulos also welcomed the collaboration, saying” We are excited to enter into this agreement with KT&G.”
Mr. Calantzopoulos added “We are able to bring PMI’s resources, knowledge, and infrastructure as we launch KT&G’s smoke-free products outside South Korea. Products sold under this agreement will give consumers across multiple international markets access to KT&G’s smoke-free products for the first time; accelerating the achievement of PMI’s vision of a smoke-free future while enabling KT&G to benefit from PMI’s technical, scientific and international expertise in helping adult smokers switch to better alternatives.”
PMI will be responsible for the commercialization of smoke-free products supplied under the agreement. The agreement does not pertain to the South Korean market or combustible products.
The tobacco maker(PMI)said that it has no plans to commercialize KT&G products in the United States, where the Food and Drug Administration has banned a majority of flavored nicotine vaporizers.
Read more about Heat-Not-Burn:
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- Philippine: PMFTC Will Launch IQOS in the First Half of Next Year
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Source: Business Wire