Driven by IQOS, $PM's flagship heated tobacco product.

IQOS HTUs (heated tobacco units) generate more than x2 the revenue of cigarettes on a per unit basis, as they are taxed at significantly lower rates.

PMI cigarette volumes remain relatively stable relative to trend and pricing has more than offset declines. Overall dynamics indicate IQOS growth is poaching consumers from other parts of the tobacco market, and not that PMI is strictly cannibalizing its own base.

Faster volume growth x higher margins x longer living customers