For years, the multinational company Philip Morris International (PMI) has been at the helm of changes in tobacco industry which can lead to a complete reversal in the perception of what it means to enjoy tobacco, as well as to all the benefits for those people who don’t want to give up smoking. General Manager for Southeast Europe at PMI, Aleksandar Jakovljević speaks about the plans of this segment of the tobacco industry and the company’s focus on export.
What are your expectations from the domestic cigarette market? What share does it have in your overall production in relation to your exports?
— Philip Morris is the leader in the domestic cigarette market. Although the leading position has been maintained since the time of Duvanska Industrija Niš (DIN), the thing that changed the most since Philip Morris acquired DIN fifteen years ago is the factory itself, its capacities and sales. We transformed a local factory that mainly produced cigarettes for the domestic market into a modern, efficient plant which is mainly export-oriented. Thanks to this transformation, investments and expertise that PMI brought with it, today’s export has increased 40 times compared to the period of 10 years ago, and 80% of the cigarettes manufactured in the Niš factory are exported.
What position does the Serbian branch and the Niš factory occupy in the Philip Morris system in terms of technology and market share?
— Considering that the Philip Morris International decided to transform its Serbian branch office into a hub for its operations in Southeast Europe and for its factory in Serbia to produce cigarettes that are exported to 50 countries, it is quite clear that Serbia occupies a very high position in the global network of this multinational corporation. We are working hard on maintaining this position. On the one hand, we successfully manage six markets and different business models. On the other side, by rounding off our investment cycle worth $44 million in 2018, we proved that we are still actively investing in improving the factory’s production performances, in order to continue to meet all the demands and deadlines that this big business and demanding consumers impose on us.
What does the structure of consumption of conventional and alternative tobacco products in the world look like today? Do smokers’ habits change?
— The fact that the habits and expectations of consumers are changing is the reason why the company has developed IQOS, a device that heats up tobacco instead of burning it. Many smokers welcomed the device, while fully understanding that this is not a well-designed fashion supplement that meets their needs since it contains real tobacco, but a product that is less harmful than cigarettes, does not generate tobacco smoke and does not cause passive smoking. However, as with any innovation, some consumers have embraced it immediately, while some are sceptical and require more time. Consequently, the consumption structure has not changed drastically, but it will certainly change, given that 6.6 million smokers worldwide have already switched to IQOS. This growth trend is continuing, primarily in the developed and influential markets, such as Japan, South Korea, Russia or Italy, from where it spills over to the rest of the world.
How fast is Philip Morris progressing technology- wise on a global scale and what does this mean for the number and structure of the workers you employ?
— From the initial traditional cigarette manufacturer, Philip Morris is slowly transitioning into a company based on technology, innovations and scientific achievements. In order to achieve a full transformation as soon as possible, we are working hard on bridging the gap between the traditionally slow corporate model, on one hand, and a quick, brave, and entrepreneurial way of thinking on the other. Accordingly, there are no significant changes in the total number of employees, but we change their structure towards our employees possessing creative, specialized knowhow, while they are changing their mindset towards a “startup way”.