Jack Bowles : Yes. As you see, I mean, we have now close to £3 billion in terms of new category revenues to a point that represents 50% of the total company. And you saw that in the different categories, vapour grew very fast, and the percentage of growth of THP has slowed down a little bit, and there is more price competition within the different segments. So you have different competitors that have come in at different price points, different product offerings. So I think that there’s a bit more of internal competition in the segment. I must say that we are very happy with our performance, and we continue to plow forward. We’re only in 50% of the markets that are carrying THP, as we speak today. So we still have a lot of geo expansion to do, and we’re improving our pricing as we go along our price index as we go along.
So I think that we have a very good start with glo X2 in Japan. It has reached a record share in December, and we grew during the year. So there is more intense competition, but we have a lot of space to grow in. And when you look at, for instance, Europe, that is the nearly 50% of the total market, I mean, we are doing extremely well and growing fast. Overall New Categories, as we said in the presentation, in 11 markets where we have already 30% of our revenue that is there, yes, for the total company. So we are strong, and we’ll have an innovation pipeline that is strong, not only in 2023, but also in 2024. So we have more launches that are coming, and we are doing the rollout of X2 that is very well accepted by the consumers. It’s smaller, it’s lighter, delivers more flavor.
And we’ve done a lot of improvement also in terms of the consumer models. So I’m confident.
Tadeu Marroco: Just to complement that in Japan, and it’s not different in Europe, every single product we sell in THP has higher margins than our combustible products. So even the newly launched the Lucky Strike that we did to complement our range in the market has higher margins than the combustible on. So, for us, is a financial opportunity to strength our business in all those locations. We are very pleased with the — to be honest, with the progress that we have made in all categories throughout 2022, margin-wise. We have read in THP on the consumables side margin that is higher than combustible. The same is happening in Modern Oral. And in vapor, we have reached worldwide, a 50% gross margin compared with the cigarettes, which is around 68%.
And in the U.S. alone is even higher than that. So it’s a big improvement. That’s what is really driving the reduction in loss as well. And we are really heading towards a very sustainable business where we’re being different between you selling cigarettes or selling one of these products.
Jack Bowles : I mean we took the view three years ago to do multi-category. And that’s starting to pay off because you have more interaction between the different categories. Tadeu was speaking about the fact that there is now a relations between THP users and Modern Oral, for instance, or in other markets, THP with Vapour. Just remember that the number of consumers in Vapour is close to the double of the ones in THP. And this is interesting to see that increased interaction between the categories. So being truly multi-category as we’re now and having done that for three years gives us a head start in terms of being able to serve better the consumers, and we have now a profitability that is coming through in vapour. So all they put together gives us a very strong position, where, again, I insist, we said we will invest in ’23 and in ’24, and we prioritize that because as we saw, we can grow volume and revenue faster and reduce our losses by £600 million.
