In my last article on Philip Morris (PM), I argued that due to the company's success in introducing healthier, non-tobacco-based products into the market, the company would ultimately be in a position to capitalize on increasing revenues both for this product range and that of traditional tobacco products.
However, no company is without inherent risk, and Philip Morris is a company that is in the midst of changing its business model significantly.
I continue to take a bullish view on this company overall. However, there is one inherent risk to Philip Morris’s new reduced-risk product strategy: temporary demand.
What do I mean by this? Well, one of the main reasons smokers continue to smoke in the first place is due to the addictive properties of nicotine. If the dynamic behind the appeal of tobacco products starts to change, then overall demand stands to also change.
