Innovation, in the minds of people, cannot be something extremely cheap. If you are an average person and you hear that something that is much better than cigarettes comes to the market at the cheapest possible price, you'll not trust it. This is the reason we didn't initially manufacture in China, because you need to create that credibility. Over time you need to make the products available and affordable to different categories of people.
It's pretty clear that we will need measures to accelerate the conversion to new products. Governments can either make measures even worse for cigarettes or do something different on these new zero-risk products to show consumers they are different. I think they should do both.
I think over time the fiscal environment on cigarettes will become different, and the regulatory environment has to differentiate the products. If that is at the expense of cigarettes, so be it - it's not a problem for me. But we need some logical forum where we don't talk ideology but rather we talk about what can really accelerate the conversion. If you do display bans everywhere in the world on cigarettes but you can display IQOS, that's a differentiating measure for me. Then I'm more than willing to accept these measures because they are really conducive to make people switch.
The problem Philip Morris had with electronic cigarettes since the beginning of development was the satisfaction of the smoker. Because the taste is dramatically different and, at the initial stages, the nicotine pharmacokinetics were very slow. You could not get the satisfaction. It's not so easy to crack this code. The taste satisfaction is very important. The closest you are to this, the more chances you have to switch people. It's very nice to have a zero-risk product, but if nobody uses it, you don't have any reduction in public health risk.
When you look at the potential of such a zero-risk products as electronic cigarettes you need to understand what is the readiness of smokers to switch. That relates to public-health concerns, social pressure, concern for people around you and many other more subtle things. You cannot say that Indonesia is at the same level of readiness as the U.K, Western Europe or the U.S.
The potential of a zero-risk is in every market, because eventually I think people will switch to these products as they become available. There are two unmet needs in smokers: something that is much better for my health and something that bothers others much less or doesn't bother them. These are things cigarettes can't resolve. These new products are developed to address these needs.
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