High times at Happō-en as IQOS changes everything

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Martin Moodie
Martin Moodie is the Founder & Chairman of The Moodie Report.

I’ve adopted the 4-4-3 system.

No, I’m not talking football formations but consecutive jet lag-driven nights of sleep. Four hours Sunday, four hours Monday and three (just about) last night. Hopefully (though unlikely given the work backlog and Lufthansa having onboard Wi-Fi), about ten to follow on the plane this afternoon to Frankfurt and then to Heathrow.

But every now and then along comes an event that makes you say, “You know what? I don’t care about the lack of sleep, the body clock being not so much disorientated as disassembled, and the fretful prospect of yet another intercontinental flight. This was important. This was worth it.”

It was as ritzy, glitzy and downright classy as any launch I have attended in over three decades of covering this business.

This week offered one of those occasions. You had to be here in Tokyo to understand it. Something big is happening. Something global. Something fundamental. Attending the launch of Philip Morris International’s ‘next-generation’ IQOS (smoke-free, reduced-risk) products has been like experiencing a rock festival fused with a religious revivalist meeting, then merged with a blockbuster new season’s fashion launch and with a Steve Jobs-type Apple iPhone reveal thrown in. It involves a plot that if you had predicted it 20, perhaps even ten, years ago you would have been dismissed as the equivalent of a flat earth believer.

The global press conference yesterday was compelling enough but last night’s event in Tokyo was the real deal. It was as ritzy, glitzy and downright classy as any launch I have attended in over three decades of covering this business – including numerous big beauty, fashion and retail introductions. Trendy, impossibly stylish influencers from across Asia; hard-bitten journalists from the world’s top media titles; fans, no make that devotees of not a fashion or beauty or car brand but a tobacco product. All in an atmosphere that at times resembled the second coming.

The venue – Tokyo’s exquisite Happō-en, a sanctuary-like combination of traditional gardens, architecture, culinary techniques, art and music  – was stunning. But it was the fervour surrounding the launch that stood out for me. Here was PMI Chief Executive Officer André Calantzopoulos cast in an almost messianic role, treating an audience of hundreds of influencers, journalists, business partners and company executives to a catwalk-style reveal of the new IQOS product lines. Versace, Dior, Chanel, Apple, eat your hearts out.

“Our driving ambition is to kill the product that made us. We will say we’ve achieved success when we’ve killed Marlboro.”

Enjoying last night’s grand affair with Philip Morris World Trade Corporate Affairs Manager Manuel Lira.
With Manuel Lira and PMI Area Manager Duty Free Japan Kentaro Mitsui.
(Above and below) What all the fuss was about. Guests discover the new lines during the launch evening.

This was big. “This,” as PMI and Calantzopoulos like to put it, “changes everything”.

Everything? You better believe it. Over the past two days I, along with scores of leading international media, have heard the following phrases uttered. Note the first one in particular. No, I am not misquoting. And yes, it was on the record.

  • “Our driving ambition is to kill the product that made us. We will say we’ve achieved success when we’ve killed Marlboro.” – PMI Senior Vice President Senior Vice President, Global Communications Marion Salzman
  • “I’m not designing a product, I’m designing an experience.” PMI Senior Vice President IQOS Design and User Experience Bertrand Bonvin
  • “I realised that by doing this (joining PMI and working on reduced-risk products) – and if we were successful – my impact on public health and on human quality of life would be a lot greater than what I could ever do as a single person in a pharmaceutical environment.” – Philip Morris Products Chief Scientific Officer, Reduced-Risk Products Professor Manuel Peitsch

And, from André Calantzopoulos himself, this: “One day we will stop selling cigarettes – that’s our ambition.”

A remarkable statement in its own right. But entirely consistent with that of a company which in January took out UK national newspaper advertising proclaiming, “Our New Year’s Resolution: We’re trying to give up cigarettes.” The same company that marked World No Tobacco Day with similarly high-profile communications that declared “We’re moving away from cigarettes: How about you?”

And they are. IQOS is as big a departure from the traditional world of the Marlboro cowboy and scenes of chain-smoking executives in TV series Mad Men as you could possibly imagine. IQOS is cool, chic, fashionable, trendy, even personalised. “We have 576 customisation options that will allow any one of us to better match our IQOS with our mood of the moment, what we wear, where we are, you name it,” said Calantzopoulos last night.

“IQOS will always be the most desirable, sophisticated, intuitive and fashionable heated tobacco product. After all, we carry IQOS with us all day, every day and we see it and it’s part of how people see us. So, it has to be beautiful.”

I’ll close with a couple of predictions. I believe IQOS will become one of the world’s most famous brands within a relatively short time frame. It has that much over-used term (one I generally ban from our pages) ‘iconic’ written all over it.  Check out Interbrands’ Top 100 a couple of years from now and don’t be surprised to see IQOS featuring high up the ranking.

Dufry’s ‘Guide and Trial’ IQOS boutique corner at Zürich Airport.

 I can easily imagine an IQOS boutique/showroom in a T Galleria by DFS.

I also think IQOS is bound for a unique positioning in the duty free channel. It needs to be differentiated, perhaps physically separated, from traditional combustible cigarettes. The business is incremental, not (that awful word) cannibalising. It taps into so many key travel retail trends. Gifting. Personalisation. Differentiation. And, yes, even well-being.

I would not be surprised to see stand-alone boutiques, a la Hermès, Cartier, Montblanc, Apple or (a good analogy) Nespresso (think what a brilliant adjacency that would be) in top hubs such as Heathrow or Dubai International within the relative near-term.

You don’t think a tobacco brand can do that? Zürich Airport and Dufry (above) have already taken a step down the road with an elegant 20sq m ‘Guide and Trial’ boutique corner. Take a look at the IQOS downtown boutiques pictured below in South Korea (top) and Germany. Do you see any resemblance whatsoever with the traditional world of tobacco? I can easily imagine an IQOS boutique/showroom in a T Galleria by DFS.

And listen to this. “We are vastly expanding the range of iQOS 3 with very beautiful accessories that can serve our needs whether we are on the go in the car or at the office, or at home.” Yes, André Calantzopoulos again.

The PMI CEO closed last night by repeating perhaps the most startling words of this 21st century tobacco giant’s  vision. “A smoke-free world.” Yes, he said it. He really said it. This changes everything.