PMI Mulls Reboot of Production in Ukraine
Philip Morris International is exploring options to resume production in Ukraine. In an interview with Interfax Ukraine, PMI’s Europe Region President Massimo Andolina discussed the multinational’s operations in the country in the wake of Russia’s invasion of Ukraine.
Due to safety concerns caused by the ongoing war, PMI has halted production at its Kharkiv factory. Some of its brands in Ukraine are currently produced by Imperial Brands under a temporary arrangement.
However, PMI is committed to launching its own alternative production facility in Ukraine. Andolina highlighted two reasons for this: the desire to produce PMI’s own products within the country and to signal the company’s commitment to investing in Ukraine, even during the war. PMI, he said, is actively exploring various alternatives for establishing a new production facility and hopes to make an announcement in the near future.
The interview also addressed the decline of PMI sales in Ukraine. Andolina cited two factors: the loss of consumers as some left the country or were in occupied territories, and competition from illicit products.
PMI, he said, has engaged in discussions with the government to address this problem, acknowledging that resolving the issue will take time but expressing confidence in the government’s commitment to combat corruption and criminal activities. The company anticipates significant improvements in tackling illicit trade in the coming years.
Andolina commented also on the government’s decision to equalize taxes on cigarettes and heat-not-burn products. PMI, he said, believes that these products should be recognized as different and taxed accordingly. They noted the success of heated tobacco products in Ukraine and highlighted the need for differentiated tax treatment.
The interview also touched upon PMI’s position in Russia. Andolina emphasized that during the war, the company’s primary concern has been protecting the lives of its employees in Ukraine. As a result, it suspended investments and scaled down operations in Russia. While PMI had previously announced its intention to exit the Russian market, changes in the regulatory environment have made it difficult for companies with substantial presence and assets to leave.