Tag: Philip Morris International

Companies Strengthen Sustainability Creds

Photo: Deemerwha studio
Leading cigarette makers are strengthening their sustainability credentials.
Philip Morris International, for example, recently announced new ambitions to “preserve nature” via biodiversity and water stewardship.
These ambitions include protecting nature by achieving no net loss on ecosystems connected to PMI’s value chain by 2033; contributing toward a net positive impact on nature by 2050; scaling solutions toward a positive impact on water resources, measured as volume of water optimized and restored, by 2033; and contributing toward a positive impact on water resources by 2050.
“As our new ambitions demonstrate, PMI understands that decarbonization, biodiversity protection, forestry management and water stewardship are deeply connected. We aspire to lead by example in the responsible and sustainable management of natural resources that can allow the promotion and protection of natural ecosystems,” said Jennifer Motles, chief sustainability officer, in a statement.
PMI’s strategies to “tackle climate change” and “preserve nature” have been recognized by CDP, a not-for-profit charity that runs a global disclosure system for investors, companies, cities and regions to manage their environmental impacts. On Dec. 13, 2022, PMI received the Triple A score for its efforts across climate, forests and water stewardship.
Imperial Brands, meanwhile, recently received a CDP Climate A score for a fourth successive year. The company has committed to reaching science-based net zero emissions by 2040 through a five-step approach outlined in its 2022 annual report. Earlier this year, the business was named as a Supplier Engagement Leader by CDP for a third successive year and as a Climate Leader by the Financial Times.
“There is no other path than for all companies, all governments and all of society to pull together and get behind the decarbonization commitments that have been made,” said Tony Dunnage, global ESG (environmental, social and governance) director at Imperial, in a statement. “Our A score reflects our commitment to reducing our impact on the climate throughout our value chain, and we know that we can make a meaningful contribution.”
Imperial was also rated A- by CDP for water security—an improvement on the B rating achieved a year earlier—and a C for its first response in a number of years to the forests survey.
Japan Tobacco, too, has strengthened its commitment to sustainability. The company has been included in the Dow Jones Sustainability Asia-Pacific Index (DJSI Asia-Pacific) for the ninth consecutive year.
The DJSI is a globally recognized ESG stock index and sustainability benchmark that tracks the stock performance of the world’s leading companies in terms of governance and economic, environmental and social dimensions, with constituents selected on the basis of the S&P Global Corporate Sustainability Assessment. The DJSI Asia-Pacific is an index of companies in the Asia-Pacific region, which is reviewed once a year and whose constituents are selected from approximately 600 major companies in the region.
“We are honored that this year, again, JT has been selected in the DJSI Asia-Pacific,” said JT Senior Vice President and Chief Sustainability Officer Hisato Imokawa in a statement. “We believe that our inclusion in the index for the ninth consecutive year is the recognition of our earnest efforts to address ESG issues across our value chain. We are committed to promoting transparent and accurate disclosure of nonfinancial information, which has been a vital part of our agenda in recent years, and we recognize
that this is an important initiative to promote stakeholder engagement and dialogue.”
December 14, 2022
Swedish Match Calls Post-Takeover Meeting

Photo Swedish Match
Swedish Match will hold an extraordinary general meeting on Jan. 16 in Stockholm following Philip Morris International’s takeover of the company.
Shareholders can register online.
The total number of shares and votes in Swedish Match at the time of notice to the general meeting amounts to 1,525,000,000, of which 4,285,810 shares are repurchased own shares, which may not be represented at the general meeting.
The entrance to the venue for the general meeting will open at 10:30 CET.
December 14, 2022
Coalition Calls on Congress

Image: Vitalii Vodolazskyi | Adobe Stock
The United to Safeguard America from Illegal Trade (USA-IT) coalition called on Congress to embrace new policies to combat illegal trade, including counterfeiting, smuggling, organized retail theft, drug trafficking and human trafficking, according to a press release following the coalition’s second annual national summit.
Opening the summit, Representative Bennie Thompson said, “Illicit trade not only damages our businesses and economy but can also pose health and safety risks for consumers and even undermines our security. When the government and private sector work together, hand in hand, we’re more efficient and effective at combating this threat. This is about protecting all of America.”
“Fighting these organizations for more than a decade, I’ve seen firsthand how the seemingly innocuous trafficking of illicit tobacco and nicotine products, like cigarettes and e-vapor products, has very serious consequences,” said Kristin Reif, director of government relations for Philip Morris International, at the summit. “But criminals don’t just traffic in one commodity; they will traffic in anything that earns them a dollar, whether that’s luxury purses or drugs or even human beings. That’s why USA-IT is so crucial—by bringing together such a diverse group of stakeholders, we can bring this pervasive problem into lawmakers’ focus and can more effectively counter the threat of illegal trade.”
The summit included five panel discussions from experts from companies, law enforcement, academia and policy.
USA-IT was launched in June 2021 and now works across 15 states facing illegal trade issues. USA-IT offers information and training programs for local officials and law enforcement and raises public awareness of the issues surrounding illegal trade.
December 2, 2022
Chasing Unicorns

Photo: pimmimemom
In their quest for cutting-edge innovations, tobacco companies have set up venture capital subsidiaries.
By Stefanie Rossel
Incessant innovation is at the heart of tobacco companies’ transformation process. Eager to move their businesses away from combustible cigarettes toward less hazardous alternatives and opportunities beyond nicotine, cigarette manufacturers have invested billions of dollars into innovation and scientific research. They have substantially expanded their research and development teams, recruiting talent from sectors such as consumer electronics while acquiring companies in adjacent business areas, including pharmaceutics.
To avoid missing out on innovative trends and new technologies, however, tobacco companies in their transformation process need to think out of the box, or rather outside the organization, and keep an eye on the startup scene. For this purpose, the leading players have established platforms to serve windows on future technologies. In addition to using corporate venture capital (CVC), they are working with incubators, accelerators and universities.
Japan Tobacco International has chosen the latter approach. In March 2019, it teamed up with Silicon Valley-based Plug and Play Tech Center, a technology incubator, to run Vapetech, a program aimed at bringing together innovators and data experts to develop technology that improves the user experience and health benefits of vaping. Each year, Plug and Play selects about 20 startups that will develop ideas and solutions for a more enhanced vaping experience, JTI said in a statement. Startups with new devices or technology applicable to the Internet of Things (IoT), biometrics, data and lifestyle will enter a three-month program to develop their products and services and have access to investment and corporate partnerships.
“We need new innovative products coming on in future years, so the Vapetech process will be really instrumental,” explains Suzanne Wise, senior vice president of corporate affairs and communications at JTI. “We surround startups with the right ecosystem and provide them with all they need. It’s a process where you get people completely from outside the industry, with different mindsets, who are looking at what we are facing as challenges, and they just come up with stuff that we say, gee, why not us?”
Wanted: Extraordinary Solutions
With PM Equity Partner (PMEP), Philip Morris International was the first tobacco company to set up a CVC division in 2016. CVC is a variant of venture capital where the required capital comes from a corporation outside of the financial sector. In contrast to risk financing, which primarily aims to generate a return for the venture capitalist, CVC also pursues strategic goals.
Established companies use their CVC arms to develop new technologies or new business models, to explore other markets or for diversification. Staying ahead of competitors in a specific market is another motivation for CVC. In turn, startups benefit not only from the funding but also from getting access to technological know-how, distribution channels and cooperation partners.
PMEP invests in early stage and growth-stage companies with technology-based business models and proven commercial traction, such as existing revenue or contracts, that fit into the focus it shares with its parent company: the ambition to replace cigarettes with smoke-free alternatives and explore new markets beyond nicotine.
Candidate companies should be able to make a positive, significant and sustainable contribution to PMI’s core business and science-centric, technology-driven smoke-free vision, and they should operate in one of the four investment corridors defined by PMEP: life sciences, industrial technologies, consumer engagement and product technologies. Aspirants could, for example, offer innovations in inhaled therapeutics and computational research methodologies, industrial robotics and automation, or technology-based process optimization. Or they could bring in their solutions for bioauthentication, user identification or innovative customer care.
“The startup should have developed an innovation in one of these areas that substantially differs from other technologies currently used in its respective market segment,” explains Alexander Stoeckel, head of PMEP. “Furthermore, it should have left the startup phase behind and ideally have customer relations or a testable prototype because usually we test the startup’s innovation together with PMI’s respective departments and decide on an investment after we have understood which contribution this technology could contribute to our success as PMI.”
Strong Funding Basis
Being the CVC arm of a well-known company such as PMI helps generate business, according to Stoeckel. The fact that PMEP’s parent company is a tobacco corporation hasn’t been any hindrance yet, he says. “Founders are regularly surprised to find out how professional and broadly positioned PMI is.”
The CVC team is in constant communication with PMI’s division heads to identify their challenges, suggestions, problems and innovation requirements in order to find startups that develop or already market matching solutions. In return, the investee companies will be able to make use of PMI’s extensive R&D capabilities, operational and marketing excellence, and deep involvement in supply chain. PMPE says it provides its entrepreneurs with long-term support not only in financing but also for mutual benefits at strategic and commercial levels. More precisely, it helps entrepreneurs strategize, steer partnerships, help with negotiations and raise and utilize capital.
In October 2021, PMI allocated a further $200 million to the CVC’s initial $150 million investment. According to the company, ideal investments are between $2 million and $10 million in Series A stage companies, with flexibility to also consider investments in seed or late-growth companies. (Series A funding is the first round after the seed stage; companies need to have a strong plan for developing a business model that will generate long-term profit.)
To date, PMEP has invested in 13 companies, according to Pitchbook.com. Among the companies still in PMEP’s portfolio is BOW Group, a startup specializing in wearables, connected vehicles and smart home products. The company is supporting PMI to deliver on its commitment of a consumer-centric ecosystem. Another investee company, Biognysis, enables PMI with its disruptive technology to identify biomarkers and understand the biological impact of switching to PMI’s IQOS heated-tobacco product.
Driving the Change
BAT created BTomorrow Ventures (BTV) in 2019 and established a £150 million ($176.33 million) fund to help accelerate BAT’s transformation. As BTV’s managing director, Lisa Smith, pointed out during the recent GTNF in Washington, D.C., “Transformation requires innovation, and BTV has set up a number of innovation ecosystems. It’s a highly competitive market, and finding the best innovators out there is difficult. Our role is to be the outward-looking ‘handshake’ to the outside world to show that we are the preferred partner of choice.” BTV’s job, she said, was to channel these innovators to the right part of its business. “There are many tasks in transformation, such as to quickly move the environmental, social and governance (ESG) agenda and to build the science and credibility to be able to operate in the beyond-nicotine world.”
The CVC therefore invests in specialist categories, including consumer brands, digital transformation, new technologies, future sciences and sustainability. BTV has also established an accelerator and growth platform called BTV Labs and divided them it three categories: Consumer Delight Lab (focusing on consumer brands), Futures Lab (focusing on science, technology and digital) and an ESG Lab. In its portfolio are businesses from the functional food and beverage, electronic equipment and instruments, and cannabinoid sectors. To date, BTV has invested in 22 companies. Unicorn-nest.com estimates that the average round size was $3 million. With building a community a core part of BTV’s value proposition, the corporate venture unit stages “Binspired” events, a collaborative forum for CEOs or founders, investment partners and senior executives. In addition, it runs the “Battle of Minds” in partnership with BAT, which is a “business pitch” competition for students, graduates and early stage startups from around the globe.
Lexy Prosszer, BTV’s investment principal who previously worked in BAT’s merger and acquisitions department, says that BTV was established to accommodate a different type of deal. “M&A was not set up to deliver on that in terms of speed, scale and credibility to get these entrepreneurs at the table to want a conversation with us and believe that BAT has got the right intentions to change and transform. With BTV, we’re meeting a real need that the corporate [sphere] has.”
According to Prosszer, collaborating and engaging with startups has contributed to shift in mindset among BAT employees, encouraging them to do things faster. “They’re excited, engaged and love working with the entrepreneurs. Much has been achieved. It’s been a cultural shift to being open to how an entrepreneur might do things and how that can be leveraged to us to get our result faster.”
Through BTV, observes BAT Finance and Transformation Director Tadeu Marroco, the company suddenly has access to understanding better products that otherwise would take ages to develop internally. “We can be closer to them and see how they perform in the markets. For entrepreneurs, it means that they can leverage on the massive strengths that BAT has as a multinational company with massive distribution capabilities.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

December 1, 2022
PMI Announces New Regional Structure
Photo: PMI
Philip Morris International has announced a new regional structure and related senior management changes.
“We are changing the company’s regional structure to further support the growth of our smoke-free business, reinforce consumer centricity and increase the speed of innovation and deployment—all in alignment with our ambition of becoming a majority smoke-free business by net revenues by 2025,” said PMI CEO Jacek Olczak in a statement.
“The new structure will also create new opportunities to further grow our senior talent, deepening the bench of leaders who will spearhead PMI’s progress toward a smoke-free future for the years to come. I am confident of the exceptional caliber and determination of our people and wish them the best in their new roles.”
By the end of January 2023, PMI will rearrange its operations in four regions, down from the current six, under the leadership of the following members of senior management:
Paul Riley, currently president of the East Asia and Australia region, will be appointed president of the East Asia, Australia and PMI duty-free region;
Frederic de Wilde, currently president of the European Union region, will be appointed president of the South and Southeast Asia, Commonwealth of Independent States (CIS), Middle East and Africa region;
Massimo Andolina, currently senior vice president of operations, will be appointed president of the Europe region; and
Deepak Mishra will continue as president of the Americas region.
Drago Azinovic, currently president of the Middle East and Africa and PMI duty-free region, will leave the organization after a transition period.
In addition, the following appointments will also take effect:
Marco Mariotti, currently president of the Eastern Europe region, will be appointed president of CIS, Central Asia and Israel, reporting to Frederic de Wilde;
Stacey Kennedy, currently president of the South and Southeast Asia region, will be appointed CEO of PMI’s U.S. business, reporting to Deepak Mishra; and
Scott Coutts, currently vice president of global manufacturing, will be appointed senior vice president of operations, succeeding Massimo Andolina and reporting to Jacek Olczak.
“We are changing the company’s regional structure to further support the growth of our smoke-free business, reinforce consumer centricity and increase the speed of innovation and deployment.”
Jacek Olczak, CEO, PMI
According to PMI, the new regional structure better aligns with the business strategy in the approximately 180 markets where the company’s products are sold. It is designed to accelerate smoke-free product growth in markets where IQOS already holds double-digit market shares while also driving the transition from cigarettes to smoke-free products in untapped markets, including the United States.
Furthermore, the new regional structure will support PMI’s efforts to broaden access to smoke-free products worldwide for those adults who would otherwise continue to smoke, including in low-income and middle-income markets, which the company aspires to account for at least half of the markets where its smoke-free products will be available by 2025. Each region will comprise individual markets as well as clusters of markets and will provide opportunities to accelerate career development within PMI’s diverse talent pipeline.
The company’s quarterly results reporting and related filings will reflect the new regional structure as of the first quarter of 2023.
November 26, 2022
Philip Morris Launches Bonds by IQOS

Photo: PMI
Philip Morris International has launched its latest heat-not-burn tobacco-heating system, Bonds by IQOS, along with its compatible tobacco sticks, Blends, in a pilot market in the Philippines. The company intends to further commercialize the product during the remainder of 2022 and next year.
Equipped with bladeless resistive external heating technology, Bond emits 95 percent less harmful chemicals compared to cigarettes, according to PMI.
“Bonds by IQOS represents another step forward in our ambition to replace cigarettes with innovative, science-based, smoke-free alternatives,” said PMI CEO Jacek Olczak in a statement.
“We know that no single smoke-free product will appeal to all adult smokers. Providing a range of alternatives to continued smoking—with a variety of taste, technology, usage and price options—is imperative and helps us to address a range of preferences as diverse as adult smokers themselves—ultimately encouraging them to leave cigarettes behind.
“Bonds by IQOS provides an opportunity to address consumer acquisition barriers for this segment, most notably up-front device costs and authentic tobacco taste satisfaction—providing further options of innovative smoke-free options to help ensure they do not go back to cigarettes. Through continuous innovation, we want to ensure that all adult smokers who would otherwise continue smoking switch and abandon cigarettes.”
According to PMI, Bonds by IQOS is designed to be used only with Blends tobacco sticks to deliver a variety of tobacco tastes. At the time of launch, Blends tobacco sticks will be available in five different flavors, including classic, menthol and aromatic. When fully charged, Bonds by IQOS delivers up to 20 uses, including three consecutive experiences. Bonds by IQOS comes in four different colors.
November 22, 2022
European Support for Smoke-Free Technology

Photo: trodler1
Smoke-free technologies should complement the EU’s existing tobacco control measures, according to participants in a survey commissioned by Philip Morris International, according to Eureporter.
Carried out Nov. 10–15 by Povaddo and presented in Brussels on Nov. 17, the poll surveyed 13,000 adults spread over 13 European countries.
Among the participants, 73 percent said that industries should be incentivized to develop innovative products that are better for consumers and the environment. Sixty-nine percent said interested adult smokers should be encouraged to switch to scientifically substantiated, smoke-free alternatives by taxing these products at rates that are lower than cigarettes but high enough to deter youth and nonsmokers. Additionally, six in 10 respondents agreed that government endorsement of innovative tobacco products would have a positive impact on smokers.
“We know the potential to do better for adult smokers exists, as several member states have carried out similar policy approaches in, among others, energy, cars and alcohol,” said PMI Senior Vice President for External Affairs Gregoire Verdeaux during the presentation of the survey results.
“Pragmatic policies have the power to improve people’s lives, incentivizing companies to innovate for the better and provide equitable access to technological advances, especially in a time of economic instability.”
Povaddo Research President William Stewart said he hoped the results would encourage EU and national authorities to assess the results of current policies and consider other approaches, including “sensible regulation and taxation, while creating an environment that fosters innovations.”
November 21, 2022
Framtiden Tenders its Swedish Match Shares

Photo: Swedish Match
Framtiden Management Co. has tendered its Swedish Match shares to Philip Morris International despite reservations about the takeover.
“As a Swedish Match shareholder since 2003, I believe that this deal does not make sense for long-term shareholders,” said the Framtiden Partnerships managing member Dan Juran in a statement. “Through a press release and white paper, my partner Chris Anderson and I shared our view in the hope other shareholders would see the merits of our position. Philip Morris has since acquired nearly 86 percent of shares.
“Failing our preferred outcome, an independent public company, our intention was to continue on the Swedish Match journey as a minority shareholder of a majority-owned public company. Unfortunately, during the current offer ending Nov. 25, or soon thereafter, we believe the odds are high Philip Morris will attain the 90 percent threshold necessary to delist the shares and commence a compulsory offer. Given a likely choice between tendering now or owning private shares for a short period before a compulsory offer, we have regretfully tendered our shares.”
In May, PMI bid about $16 billion for Swedish Match. Swedish Match’s board of directors recommended shareholders accept the offer, but some investors, including Elliott Management Corp. and Framtiden, objected, saying the bid undervalues their firm.
In October, PMI increased the price of its bid to SEK116 per share from the SEK106 per share offered in May. Swedish Match’s board of directors advised shareholders to accept PMI’s revised offer.
Elliot Management Corp. then accepted the sweetened bid, contributing to PMI’s 86 percent shareholding.
Under Swedish law, PMI needs 90 percent of shareholders to agree to the deal in order to get full control over the company.
The Framtiden Partnerships owned over 14.5 million Swedish Match shares, representing about 1 percent of outstanding shares.
November 18, 2022
Firms Urge Crackdown on Illicit Trade

Photo: Ivan Semenovych
Tobacco companies have called on the government of Ukraine to crack down on the illegal cigarette trade, reports Interfax Ukraine.
Speaking during a roundtable discussion organized by the American Chamber of Commerce in Ukraine, Philip Morris Ukraine General Manager Maksym Barabash noted that war, inflation and the associated drop in consumer incomes had accelerated the growth of the illegal tobacco market in Ukraine.
In August 2022 alone, the share of illegal tobacco products grew by 5 percentage points to 21.9 percent from 16.9 percent in 2021. According to Barabash, the state misses out on UAH44 ($1.19) from each illegal pack of cigarettes. To date in fiscal year 2022, the state budget has already lost UAH20.6 billion in unpaid tobacco taxes.
To facilitate the fight against illegal cigarettes, tobacco companies proposed the creation of a joint working group with a coordination center in the Office of the President.
“Countering illegal turnover of tobacco products belongs to the competence of several regulatory and law enforcement agencies,” said Svitlana Sharamok, general manager of Japan Tobacco International Ukraine. “However, due to the unclear division of powers, these agencies do not always work in a coordinated manner and sometimes even compete with each other.”
Sharamok added that the work of the new group should not be judged by the number of raids or confiscated cigarettes but by the decrease in illegal sales.
November 10, 2022
Philip Morris Clinches Swedish Match

Photo: Swedish Match
Philip Morris International is moving forward with its $16 billion takeover of Swedish Match despite securing less than the 90 percent stake it sought, reports Reuters.
In a press note dated Nov. 7, PMI said it had secured 82.59 percent of the Swedish company, short of the 90 percent level at which it can start a compulsory purchase of the remaining shares.
This suggests that Elliott Management Corp., which had built a 10.5 percent stake in Swedish Match and opposed PMI’s offer, has tendered its shares.
PMI also announced it would further extend the acceptance period for remaining shareholders until Nov. 25, 2022, adding that the price in the offer for shares tendered during the further extended acceptance period will be reduced to SEK115.07 in cash per share.
“We are pleased that 82.59 percent of Swedish Match shareholders, including—we believe—the top 10 shareholders, have tendered their shares at the best and final price of SEK116 per share. This achievement of a high controlling stake should allow us to harness the strategic potential of the transaction, including anticipated revenue synergies,” said PMI CEO Jacek Olczak.

“We look forward to welcoming Swedish Match’s employees and leading oral nicotine portfolio into the PMI family to create a global smoke-free champion.”
Jacek Olczak, CEO, PMI
“We are today extending the acceptance period until Nov. 25 to allow those shareholders who have not tendered—including outstanding index funds—additional time to accept the offer while waiving the 90 percent acceptance condition to provide certainty to those shareholders who have already tendered. Our objective is to delist the shares of Swedish Match from the stock market after reaching an ownership of more than 90 percent. We, therefore, encourage the remaining retail and other institutional shareholders to tender in the extended time.
“We look forward to welcoming Swedish Match’s employees and leading oral nicotine portfolio into the PMI family to create a global smoke-free champion, notably bringing IQOS and ZYN together in both the U.S. and international markets. We will be working together to create value as we accelerate toward our shared vision of a smoke-free future.”
Mark Kelly, managing director of Cowen’s Event Driven Group, welcomed the acquisition.
“History will likely prove this as a successful transaction all around,” he said. “Swedish Match shareholders engineered a material improvement to the already healthy premium that Philip Morris had offered, and Philip Morris has now secured ownership of a world-class smokeless operation. Swedish Match will help PMI accelerate its goal of going 50 percent smokeless by 2025 and also brings it a U.S.-wide distribution network to facilitate its own rollout of IQOS heat-not-burn products going forward.”
November 7, 2022