Philip Morris Opens Facility To Make Lower-Risk Products

Tobacco giant Philip Morris International Inc. (NYSE:PM) inaugurated the first-of-its-kind manufacturing facility for the large scale production of two of its non combustible reduced risk tobacco products. The facility with an investment of €500 million has an initial production capacity of 30 billion units annually. This venture also marks Philip Morris' initiative to shift focus toward the growing alternative tobacco product category to counter dwindling cigarette shipments volumes.

The manufacturing hub, located at Bologna, Italy will currently employs over 300 people and will have the capacity to employ up to 600 employees when fully operational.

Philip Morris is focusing on less harmful tobacco products in order to cater to growing demand for low-risk, smokeless tobacco products. The company has considerable presence in the unconventional tobacco products category. In this regard, Philip Morris launched a set of Next Generation Products in early 2015 to attract adult consumers while reducing the risks related to tobacco products.

A reduced risk tobacco product, iQOS, which heats tobacco instead of burning it was first launched in Nov 2014, is now sold in cities in 10 countries, and is scheduled to be expanded to 10 additional markets by 2016 end.

The company is also engaged in extensive research for developing reduced risk tobacco products, which is in line with the guidelines set by the U.S. Food and Drug Association regarding the tobacco products that can be sold in the country. Philip Morris has engaged 300 scientists for this project.

As more and more people are shifting away from consumption of traditional tobacco products, there is rising competition among tobacco companies to capture market share by providing best quality tobacco products which are potentially less harmful. Other tobacco companies like Altria Group Inc. (NYSE:MO) , Reynolds American Inc. (NYSE:RAI) and British American Tobacco (NYSE:BTI) have also come up with reduced risk tobacco products in order to tap into the growing preference for these products. Reynolds’ Vuse and Altria’s Mark Ten e-cigs are considerably popular in the market.

Philip Morris currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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