Philip Morris International Reinvents Itself and the Tobacco Industry
In an era where evolution is the key to survival, industries are no exception. One of the most dramatic and compelling transformations is being done by Philip Morris International (PMI), a company long associated with traditional tobacco products. In our exclusive interview with Massimo Andolina, President Europe Region of PMI, we explore the drastic internal shift within the company, its penetration into new territories of technological capabilities, and the reasons behind these bold steps.
You joined the company in 2008. Can you explain in short transformation that PMI undertook in these 15 years?
You will probably rarely find another company that has transformed so deeply from within and that is making such huge steps to transform completely the industry that it belongs to. And rarely, you will find a company that decides to “kill” its own business in favour of a better one. Because really, this is what we’re doing. The journey of transformation has been huge. It has addressed changing completely the products that we focus on, that we develop, and that we commercialize. It has had to deal with building our muscle in engaging with a variety of stakeholders that have a role to play in making this transformation possible. It has also been an internal transformation that has been huge – just look at the scientific capabilities that we’ve had to acquire, then dealing with electronic devices, the latest generation of technology, batteries, clinical trials, so a variety of things that we’ve had to learn, start doing and mastering.
As we can see, businesses are more open to transformation than institutions, whether local or international. What is the reason behind this, and do you see hints of change in their approach?
I see more and more openness. I have to hold space myself and acknowledge the fact that there is a history behind it, and therefore I can understand the reason why a variety of stakeholders can still be skeptical today towards the industry or, in this particular case, the company that they believe has created the problems associated with tobacco. But the reality is, in many other areas of human evolution, the solution to a problem has come from a strong partnership and collaboration among all the stakeholders that can bring elements of that solution. Look at what is happening today in energy, look at what is happening in mobility, look at what is happening in a variety of other fields, in which science and technological innovation are welcome in order to drive evolution, wherever they may come from.
What would be the best case, achievable scenario, in your opinion, considering the pushbacks that the tobacco harm reduction approach faces today?
The best scenario would be if all the parties that can contribute to this come to the table, and together to orchestrate a plan by which we accelerate to the maximum the opportunity for smokers to actually quit smoking. And if they cannot quit smoking altogether, at least they have access to a variety of products that are significantly better than smoking and are scientifically validated. That would be the best scenario. In order to put this scenario in place, this goes through dialogue, openness, and orchestration of the steps that will be taken to make this happen as fast as possible.
As a small market, still outside of the EU, does Serbia have impact on the transformation of the company, but also on the change in public opinion when it comes to tobacco harm reduction?
I think a lot of good things about Serbia. PMI is present here for a long time. I have personally worked in operations, and I’ve worked closely with the affiliate that we have in Serbia and the factory in Niš. I’ve seen the factory developing very, very nicely for the past 20 years. I also see that the country is taking steps in the right direction. From a regulatory perspective, various measures have been put in place. But let’s face it, to a large extent, for Serbian smokers smoking is relatively normalized. Everybody should work on the awareness of the fact that burning of cigarette is a problem, that a lot of the diseases coming from tobacco smoking come from combustion, and that there are available better alternatives. Having said that, the government is going in the right direction, there is openness to the dialogue toward tobacco harm reduction, and we hope to see the acceleration of the implementation of some of these measures in the local legislation.
For Serbian smokers smoking is relatively normalized
What are the benefits that Serbia can have in lessons learned from experiences such as Sweden or France, or Greece, with regards to tobacco regulation, consumer protection, and innovation encouragement in the run-up to EU accession?
Smoking prevalence in Sweden of only 5%, shows that alternatives such as nicotine pouches can help in reducing a number of smokers. In the case of Serbia, that could be an element of inspiration. You have a smoking prevalence that is today between 36 and 40%. Access to products like Snus or products like nicotine pouches could allow Serbia to get onto a journey of alternatives like Sweden has done. The benefit that we are seeing now in Sweden is an accelerated quitting from smoking in favour of snus and nicotine pouches and that has a significant positive impact on public health because we see that the rate of incidence of smoking-related diseases is significantly reduced and much lower than the European average. Greece, in that sense, has been one of the inspiring cases in terms of countries and legislation among the EU member states because it’s been the first government that has passed into legislation its approach to tobacco harm reduction. And therefore, Greece is confronted with the opportunity offered by these alternative and safer products. They put the scientific validation framework in place, and products that pass the validation have the possibility to actually declare claims and therefore be treated differently from combustible products. In that sense, it’s an inspiring approach that should be followed by other countries in Europe. France, on the other hand, today has one of the highest smoking prevalences in the EU 27 member States, close to 30%, although a variety of traditional measures for the prevention of smoking has been put in place. So after introducing plain packaging, graphical health warnings, restricting the point of sales where it can be sold, and restricting marketing, and communication about the products and the brands, an accelerated increase of taxation in the past 20 years, led to tripled prices of cigarettes in France, we don’t see a significant reduction in the prevalence of smoking. That shows that traditional measures are obviously not enough.
I think there is a role for everyone to play, but it cannot become a jungle
Is a “smoke-free future” jeopardized by small producers of alternatives for cigarettes (e.g., vapes that are unfortunately attractive and heavily used by minors), or do you think that strategy “more the merrier” is always better as far as it is not a combustible product?
It’s not jeopardized, I think there is a role for everyone to play, but it cannot become a jungle. Alternative products do require a certain regulatory framework to be put in place in order to prevent unintended consequences. For instance, rules on legal access to a product, to make sure that these products that are intended as alternatives for smokers and always for legal-age users do not end up in the hands of minors. We have to make sure that the product is designed in a way that is, number one, safer for smokers, and therefore we must know what is in that product, and second, we don’t put things like flavors or sugars that implicitly try to attract people to initiate with that. Therefore it is necessary to put in place regulatory frameworks that allow access to those better products for smokers who would otherwise continue to smoke, but not for minors who should not have access to those products.