Tag: Philip Morris International

Philip Morris To Produce at Imperial’s Kyiv Plant

Photo: Tobacco Reporter archive
Philip Morris Ukraine will start producing some of its cigarettes at Imperial Tobacco’s factory in Kyiv this month, following a deal between the two companies, reports Interfax Ukraine.
The arrangement allows Philip Morris to continue supplying customers even as production at its Kharkiv factory remains suspended in the wake of Russia’s military invasion. It also enables Imperial Tobacco to better utilize its production capacity, some of which has been idle due to the difficulty of exporting cigarettes.
“Since the beginning of the war, we have been looking for alternative ways to ensure the supply of products,” said Philip Morris Ukraine Managing Director Maksym Barabash. “We are very pleased that we have found a mutually beneficial solution with Imperial Tobacco, which will produce products in accordance with PMI’s high-quality standards. For Philip Morris, this is a temporary measure. We hope that we will be able to resume production at our Kharkiv factory as soon as it becomes safe for workers.”
“The Imperial Tobacco factory in Kyiv has a significant production potential and a strong professional team to ensure the production of additional volumes of products with high quality and in the right time,” said Halyna Vorobyova, head of Imperial Tobacco’s board in Ukraine. “Since the beginning of the war, our company cannot carry out export deliveries; therefore, the agreement with Philip Morris will allow us to load our capacity.”
Philip Morris employed about 1,300 people prior to the war. Its Kharkiv factory exported cigarettes to more than 20 countries, including major markets such as Japan and Egypt.
August 3, 2022
Altria Slashes Juul Value

Photo: steheap
Altria Group reduced the value of its investment in Juul Labs by about 70 percent, to $1.3 billion, following the Food and Drug Administration’s decision to order the e-cigarette company off the U.S. market.
The stake for which Altria paid $12.8 billion in 2018 is now valued at $450 million–below a level that allows Altria to exit a noncompete agreement and launch its own e-cigarettes. During a July 28 call with analysts and reporters, Altria said it had opted not to be released from that agreement because the arrangement was still beneficial to Altria.
On June 23, the FDA ordered Juul Labs to pull its e-cigarettes from U.S. store shelves, saying the e-cigarette manufacturer had submitted insufficient evidence that they were “appropriate for the protection of the public health.”
A federal appeals court then granted Juul Labs a emergency stay of the order to give the judges time to evaluate the merits of Juul’s appeal. The e-cigarette company separately asked the FDA to stay its own order pending the appeal.
In court filings last month, Juul said the FDA overlooked more than 6,000 pages of data the company had submitted on the aerosols that users inhale.
On July 5, the FDA temporarily halted its ban on Juul Labs products, saying there were scientific issues unique to the Juul application that warrant additional review.
The agency stressed that the stay suspends but does not rescind it the marketing denial order while the e-cigarette maker appeals the agency’s decision.
Altria’s revenue fell 4.1 percent to $12.44 billion in the first half of 2022, as consumers facing high inflation bought fewer cigarettes or switched from premium to discount brands.
Despite the challenges, Altria CEO Billy Gifford, was pleased with the results.
“Our tobacco businesses performed well in a challenging macroeconomic environment for the first half of the year,” he said in a statement. “The smokeable products segment delivered solid operating companies income growth behind the resilience of Marlboro, and our moist smokeless tobacco brands continued to drive profitability.
“Our financial plans for the year remain on track, and we reaffirm our guidance to deliver 2022 full-year adjusted diluted EPS in a range of $4.79 to $4.93.”

July 29, 2022
CTP’s Matt Holman Joins PMI
Matt Holman
Matt Holman, director of the U.S. Food and Drug Administration’s Center for Tobacco Products (CTP) Office of Science, is leaving the agency to join Philip Morris International effective immediately, reports The Hill, citing a memo from CTP Director Brian King. Holman has been director since 2017.
“I know that he led the Office through a critical time, including preparing for and overseeing review for the bolus of PMTA [premarket tobacco product application] applications,” King said in the memo. “I’m grateful to Matt for his contributions to the Center and unwavering commitment to you all over the years, and I wish him well in his next chapter.”
Holman’s departure comes after Mitch Zeller, the longtime CTP head, retired in April. King was appointed director earlier this month.
According to King’s memo, Holman has been on leave and has recused himself from all CTP and FDA work while exploring career opportunities outside government.
While free to pursue employment outside of the government, FDA employees are required to immediately disclose that they are exploring opportunities outside the government.
In March, the FDA signed off on a third-generation version of PMI’s IQOS heat-not-burn product, which was first authorized for sale in 2019. In 2020, FDA authorized it as a Modified Risk Tobacco Product, allowing the company to legally claim that fully switching from regular cigarettes to IQOS can reduce a person’s exposure to harmful chemicals.
Holman leaves the CTP as the agency faces series of major tobacco-related decisions, including a potential ban on menthol cigarettes, lowering nicotine levels, and the next step in its ongoing attempt to regulate Juul and other electronic cigarettes.
A spokesperson for Philip Morris said Holman “is committed to helping existing adult smokers access scientifically substantiated smoke-free alternatives while protecting youth. We are looking forward to him joining our team as we continue to pursue a smoke free future.”
July 26, 2022
Kaival Launches PMI’s Veeba in Canada
Kaival Brands Innovations Group (KBI) announced the launch of Philip Morris International’s Veeba disposable e-cigarette in Canada.
In June, Kaival and PMI signed an agreement for the development and distribution of electronic nicotine-delivery system products in markets outside of the U.S.
“The agreement with Philip Morris Products was a remarkable accomplishment for the company, and now we have advanced to the next phase of international distribution with the actual launch of their custom branded product, Veeba,” said Eric Mosser, president and chief operating officer of Kaival Brands, in a statement.
“We are excited to support PMI’s efforts to provide a range of alternatives compared to cigarettes. The commercialization of Veeba complements PMI’s already strong smoke-free portfolio, providing adult smokers with an even broader range of usage, taste, price and technology options.”
The agreement licenses PMI to manufacture, promote, sell and distribute the Bidi Stick and any newly developed devices in certain markets outside of the United States, with potential royalties owed to KBI.
July 26, 2022
Swedish Match Beat Estimates for Quarter

Swedish Match on Friday reported second-quarter operating profit just above market expectations, boosted by growth in the U.S. market.
The target of an agreed $16 billion bid by Philip Morris International Inc, Swedish Match’s operating profit rose to 2.23 billion Swedish crowns ($22.47 million) from 1.96 billion a year earlier, according to Reuters. Analysts polled by Refinitiv had on average forecast a profit of 2.19 billion crowns.
The company’s snus in Scandinavia, cigars in the U.S. and tobacco-free nicotine product ZYN, according to CEO Lars Dahlgren, had shown an “impressive volume trajectory” in terms of sales in the quarter.
Group sales increased 23 percent to 5.56 billion Swedish crowns.
Elliot Investment Management is building a stake in Swedish Match and plans to oppose the pending PMI takeover.
It’s unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own, according to Mads Rosendal, an analyst at Danske Bank.
July 22, 2022
Activist Investor to Oppose Match’s Sale

Photo: Swedish Match
Elliot Investment Management is building a stake in Swedish Match and plans to oppose the pending takeover of the Scandinavian tobacco company by Philip Morris International under its current terms, according to Bloomberg.
In May, Swedish Match’s board of directors accepted Philip Morris International’s offer of SEK161.2 billion ($16.14 billion), which is subject to shareholder approval. Financial analysts said a deal has strategic merit for PMI given the Swedish Match’s strength in oral nicotine products and exposure to the lucrative U.S. tobacco market.
It’s unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own, according to Mads Rosendal, an analyst at Danske Bank.
“Even if they were to be successful in blocking the deal it would not necessarily be bad for Swedish Match spreads, as they were trading tighter than PMI before the deal announcement,” he wrote in a research note Friday.
Earlier this year, Swedish Match shareholder Bronte Capital also opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.
Another shareholder has also said it was not clear whether the long-term value of Swedish Match was reflected in PMI’s offer price.
Some 90 percent of shareholders need to agree to the deal for it proceed under Swedish law.
July 8, 2022
PM Eager to Partner in Ukraine Recovery

Photo: alphaspirit
Philip Morris may act as a partner and advisor in Ukraine’s recovery in line with the concepts adopted during the recent Ukraine Recovery Conference in Lugano, Switzerland, Philip Morris Ukraine CEO Maksym Barabash told journalist on July 6.
According to Barabash, Philip Morris has a solid record of operation in Ukraine. “Philip Morris is a key American investor, employer and taxpayer in Ukraine,” Barabash was quoted as saying by Interfax. “And this is how we see our future in Ukraine.”
The company has experience in both upgrading outdated production facilities building a new ones, he added.
“Therefore, I see our role not only as an exporter, one of the biggest taxpayers, and an employer, but also as a partner and advisor on the country’s recovery,” Barabash said.
Philip Morris has operated in Ukraine for more than 20 years and owns a factory in the Kharkiv region. Before Russia’s invasion on Feb. 24, its Ukrainian facilities employed about 1,300 people. The factory served as an export hub for over 20 countries, including major markets such as Japan and Egypt.
In 2020, Philip Morris Ukraine reported a net profit of UAH2.73 billion ($92.38 million), up 5 percent from 2019.
July 6, 2022
PMI’s Swedish Match Offer Document Now Public

Photo: Swedish Match
The Swedish Financial Supervisory Authority has approved and registered the document of Philip Morris International’s offer for Swedish Match.
Last month, PMI’s Philip Morris Holland Holdings affiliate offered SEK161.2 billion ($16.14 billion). Swedish Match’s board of directors has advised the company’s shareholders to accept the offer.
The offer document is available on the offer website in English and Swedish and will be available on the Swedish Financial Supervisory Authority’s website in Swedish.
A copy of the offer document and a preprinted acceptance form will be sent to shareholders of Swedish Match whose shares were directly registered with Euroclear Sweden as of June 29, 2022.
The acceptance period ends on Sept. 30, 2022.
June 29, 2022
KPMG: Illicit Trade up in Europe

Photo: Europol
Illicit cigarette consumption increased by an estimated 3.9 percent, or 1.3 billion cigarettes, in 2021, reaching 35.5 billion cigarettes consumed across the European Union, according to a KPMG study commissioned by Philip Morris International. Meanwhile, the study estimates that total EU cigarette consumption declined over the same period.
The increase of illicit consumption was largely driven by an estimated 33 percent increase in counterfeit consumption in France, where it grew to 8 billion cigarettes last year. Overall, France remains the largest market for illicit cigarettes in the EU, with a total of 15.1 billion illicit cigarettes consumed in 2021, comprising 29 percent of total cigarette consumption in the country, which represents a significant growth from 13 percent in 2017.
“The findings of the KPMG Report should be a real wake-up call. It’s alarming that in countries that maintain high excise taxes on cigarettes, such as France, instead of driving a decrease in smoking prevalence, we see a rise in counterfeit cigarette consumption. In fact, in France in the past five years, while the average price of a pack of legitimate cigarettes has increased by more than half, the number of adult smokers has only marginally decreased,” said Gregoire Verdeaux, senior vice president, external affairs, PMI, In a statement.
“But there is also hope. Other EU countries have adopted differentiated policies on alternatives to cigarettes that support the continued decline of cigarette consumption while reducing illicit trade, and they are already yielding encouraging results. The European Commission in Brussels should make this the foundation for the future.”
The annual KPMG report focuses on the consumption and flows of illicit cigarettes in 30 European countries—the 27 EU member states, as well as the United Kingdom, Norway, and Switzerland—and indicates that had these cigarettes been legally purchased, an additional €10.4 billion ($10.93 billion) in taxes would have been collected by governments in the EU.
Tax revenue losses will limit governments’ ability to invest in areas such as public safety, public services, or infrastructure, at a time when people across Europe are also facing higher prices of many basic goods. The risk that more adult smokers—especially those among the lower-income population—turn to illicit trade is now significant. This creates an even more urgent need to ensure that smoke-free alternatives are available and affordable for all, to enable them to make a better choice instead of buying from the black market,” said Verdeaux.

Consumers need to be incentivized so that they don’t have to turn to illicit cigarettes. This means focusing on education and awareness, and ensuring the availability of better alternatives.
Gregoire Verdeaux, senior vice president, external affairs, PMI
The KPMG report also shows that roughly half—16 out of 27—of the member states experienced declining or stable consumption of illicit cigarettes in 2021. Among these countries, Poland saw one of the largest declines in illicit volumes, showing a 3.7 percentage point decrease in its share of illicit cigarette consumption.
“The decreasing consumption of illicit cigarettes in countries like Poland is remarkable and reassuring. It showcases the impact of effective law enforcement against criminals profiting from illicit trade in a market where better alternatives to smoking are available and more affordable to adult smokers. These are outcomes other countries should aspire to emulate,” said Alvise Giustiniani, vice president, illicit trade prevention. “It has never been more important to provide in particular the most vulnerable in society with access to information, as well as to develop and implement innovative policies that truly include everyone and facilitate access to better alternatives.”
Counterfeit consumption was the main driver of illicit trade in the EU; consumption of fake cigarettes reached an estimated total of 12.3 billion—accounting for 34.6 percent of total illicit consumption. The study indicates that due to continued travel and border restrictions related to the Covid-19 pandemic, organized criminal groups shifted their focus toward manufacturing counterfeit cigarettes directly within EU borders. Interviews conducted by KPMG with seven different law enforcement agencies found that illegal manufacturing sites are increasingly moving west in Europe to get closer to higher-priced end markets, such as France and the U.K.
The continued growth of a black market where fake and unregulated cigarettes are easily available seriously undercuts legitimate efforts to reduce and eventually eliminate cigarette smoking.
“We are convinced that consumers need to be incentivized so that they don’t have to turn to illicit cigarettes. This means focusing on education and awareness, and ensuring the availability of better alternatives, such as scientifically substantiated smoke-free products,” said Verdeaux. “Making them accessible as a better option for millions of adult smokers in Europe who don’t quit should be our common top priority.”
June 23, 2022
‘Bloody Complex’: PMI’s Tricky Exit From Russia

Photo: Anton Gvozdikov
Exiting Russia represents a considerable headache for Philip Morris International, according to an article in The Wall Street Journal. The process, begun in March shortly after Russia’s invasion of Ukraine, includes navigating Moscow’s shifting regulations, avoiding missteps that could prompt the government to seize the business and trying to protect employees from becoming targets for arrest.
Russia’s February invasion triggered Western sanctions, and hundreds of businesses, including tobacco companies, have pledged to exit or cut back operations in Russia. In early March, PMI announced it would suspend its investment and scale down its manufacturing operations in Russia. Later that month, the company announced it would exit the market altogether.
PMI is trying to sell its Russian business and has had talks with suppliers interested in buying it. However, from the outset, it hasn’t been clear which Russian authority would approve such a sale or what the process was for seeking that approval. “It’s so bloody complex,” The Wall Street Journal quoted PMI CEO Jacek Olczak as saying. “This one is really mind-blowing.”
Russia is a significant market for PMI. In 2021, it accounted for almost 10 percent of PMI’s global volume of cigarette and heated-tobacco shipments and around 6 percent of its $31.4 billion in net revenue. At the beginning of this year, PMI had more than 3,200 employees in the country.
The company entered the Soviet Union in 1977, when it signed a licensing agreement with the state-owned industry to manufacture Marlboros. It now has a factory in St. Petersburg and sales offices in about 100 cities.
Because of the withdrawal, the company will meet a global sales goal for its smoke-free products a year later than expected, Emmanuel Babeau, the company’s chief financial officer, said at a conference in May.
June 22, 2022