Is Philip Morris (PM, $82.31) Reducing Cigarette Output For Less-Hazardous Alternatives?

In an environment of increasingly health-conscious consumers and heightened health regulatory measures, Phillip Morris International seems to be tapering its cigarette business to focus more on healthier alternatives.

In 2018, the company plans to invest almost $600 million in reduced risk products (RRP’s) or low-risk smoking alternatives – which includes its smokeless cigarettes, iQOS. Additionally, the company is transforming more and more of its plants from cigarette to RRP manufacturing facilities.

Apparently to boost its move towards healthier alternatives, Philip Morris recently made a deal with Canada-based Parallax that provides low-risk alternatives of tobacco.

Not only are more consumers becoming health-conscious, but the FDA is also tightening its leash on cigarette producers. The regulatory body has made it mandatory for tobacco companies to use precautionary labels on cigarette packets, and is reportedly trying to have manufacturers to reduce nicotine to low levels in their cigarettes. The effects might already be seeping in. During Q2 2018, Philip Morris total cigarette shipment volume declined 1.5% in Q2, following a 5.3% fall in its shipment volumes Q1.