British American Tobacco, the world's biggest international tobacco company, sees revenue from its "next generation products" doubling to more than £1 billion next year.
These products, which include e-cigarettes and devices that heat tobacco without burning it, should exceed revenue of £5 billion by 2022, BAT said today.
Although still tiny compared with its traditional cigarette brands like Lucky Strike and Dunhill, the business should break even by the end of 2018 and deliver "substantial profit" by 2022, BAT said.
The company said it is confident about another year of "good" earnings growth at constant currency for the overall company.
At current exchange rates it said it sees a lift of 6.5% on operating profit and 5.5% on earnings per share, helped by the weak British pound.
It said the pricing environment in a number of markets has been difficult, particularly in Russia, but that recent developments were encouraging.
BAT and rivals Philip Morris International Japan Tobacco International and Imperial Brands are racing to deliver the best alternative to cigarettes as more people try to quit smoking.
Philip Morris is ahead in the segment for tobacco-based products with its iQOS device, but BAT is trying to catch up with a device called glo.
In Japan, a key testing ground, BAT said glo has cornered 1.8% market share in a leading convenience store chain two weeks after its national roll-out.
Glo will soon expand into Russia, its fifth country.
Philip Morris has said iQOS would be in more than 30 markets by the end of this year.
Whereas e-cigarettes use nicotine-laced liquid, glo and iQOS heat tobacco to a high enough temperature to create a vapour but not smoke.
Philip Morris has applied to US health regulators to have iQOS recognised as having "modified risk" compared with cigarettes.