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  • PMI Looking to Sell Off Cigar Biz

    PMI Looking to Sell Off Cigar Biz

    The Economic Times reported today (March 3) that Philip Morris International Inc. is exploring a potential sale of its cigar business in the United States. People familiar with the matter said the company is working with advisers to gauge buyer interest as it seeks more than $1 billion for the asset as the tobacco maker continues its shift toward smoke-free products.

    Although still known for its cigarette brands, PMI is trying to reduce its reliance on traditional tobacco-based products. Currently, 40% of the company’s sales come from smoke-free products, a number expected to reach 67% in the next five years.

    “The cigar business was part of Swedish Match AB, which Philip Morris acquired in a $16 billion deal that was completed in 2023,” Carmen Arroyo wrote for Bloomberg. “That deal, which added Zyn nicotine pouches to its portfolio, helped propel Philip Morris’s transition away from traditional cigarettes.”

    According to The Economic Times, deliberations on the cigar sale are ongoing and there’s no certainty they’ll lead to a sale, their sources said, asking not to be identified for discussing confidential information.

  • PMI Execs Speak at CAGNY

    PMI Execs Speak at CAGNY

    Yesterday, Philip Morris International participated in the Consumer Analyst Group of New York (CAGNY) conference in Orlando, Florida. Chief Executive Officer Jacek Olczak and Chief Financial Officer Emmanuel Babeau spoke about the company’s work toward a smoke-free future, current financial models, and future opportunities.

    (Some quotes were edited for brevity and clarity.) Highlights included:

    Jacek Olczak

    Working toward a smoke-free company

    “We have been quite successful for the first 10 years of the transformations and our quest to become predominantly a smoke-free company. A way to look at what we achieved is [comparing] Marlboro International, which is by far the biggest premium brand in the category. Two years ago in 2023, IQOS for the first time surpassed the revenues of Marlboro and last year exceeded $11 billion. If we take this from that perspective, it took Philip Morris International about 60 or 70 years to get Marlboro to that level, and IQOS, our heat-not-burn brand, has managed to get to that level of performance in roughly 10 years.”

    “What does it mean for us when we set this aspirational target of having two-thirds of our revenue come from smoke-free products by 2030? Obviously, it’s a nice number that looks very nice on a PowerPoint, but the reality is that unless we become a majority smoke-free company, country-by-country, market-by-market, while we operate… the miracle will not happen at the group consolidated level.”

    “There are some countries in the world that despite the science and knowledge and evidence about the new products in terms of the risk profile versus cigarettes, they will not ban cigarettes. But they [essentially] will ban the smoke-free product by allowing cigarettes to continue.”

    ZYN, the company’s acclaimed oral nicotine pouch

    “ZYN in the U.S. is essentially approaching $2 billion in revenues. However, it’s especially exciting for us that ZYN today is the No. 4 nicotine brand as of last quarter, and definitely is the No. 1 smoke-free brand on the U.S. market.”

    Nicotine and the FDA

    “The FDA and others should finally start clarifying what is nicotine. Maybe we don’t wait for FDA clarification. This is what we say about nicotine, and I am not saying what we know, we are just repeating what is known to the public health organizations including the FDA and many other reputable institutions: Nicotine is addictive and, obviously, is not risk-free, but it’s not the primary cause of smoking-related diseases.”

    “Everything else that you find in tobacco smoke is bad, but it’s not the nicotine. Now historically, because we only knew that nicotine can be consumed from cigarettes, nobody had to pay attention to the details or accuracy of the language and whether you call it nicotine or cigarette or smoking, there was not much difference. But over the last 10 years, this has become the fundamental difference.”

    “The most important thing, and I will be repeating this until we succeed, nicotine doesn’t cause cancer. And this is not PMI research. This is research that was done over the last 60 or 70 years when any public authority in the world was looking into cigarettes and the harm caused by cigarettes. And nobody has come up with any conclusion even close that nicotine causes harm and definitively not causes cancer. So that’s the starting point and the industry, and definitely PMI, is going in that direction.”

    “[Nicotine products] have no reason to be given to kids. So we, and Swedish Match, stand very strongly behind responsible sales practices, which go into the product design flavors, et cetera.”

    Future of the industry

    “I think the future will be more complicated, but it will actually create more opportunities. The smokers will not go away. They’re actually looking at these products from the repertoire perspective, because all of these products deliver a different opportunity.”

    “I think the best strategy one can have is to actually keep on with the pace of developing these products and offering them to the consumers without spending too much time [wondering which] one category will win one versus the others.”

    Emmanuel Babeau

    Revenue growth

    “Let me start with a summary of our best-in-class growth and return. The first element is we are a strong growth company in terms of top-line with three drivers. The first one we talk about is growing volumes. If we achieve our objective of growing volume again in 2025, it will be five years in a row of growth in volume. It’s a total change of paradigm for the nicotine industry. Second is price increase, and you have seen over the last two years we’ve been growing and increasing our prices. First on combustible of course, but also on the smoke-free portfolio where we have started to post some nice price increases. Third is the very positive mixed impact that is coming from the growth of our smoke-free portfolio.”

    “What I think is super important is the mix impact and understanding of why the growth on smoke-free products is a very positive element for our growth, both at the top-line level and at the margin progression as well.”

    “Today we are spending a lot of time on AI and what AI can mean for us in terms of notably saving on our back-office cost. We believe that AI is pervasive to the organization. To be clear, AI will have a lot of impact in the way we connect with the consumer and in the way we develop our marketing activity. It’s also going to have a very positive impact on cost, in terms of standardization, in terms of automatization, and we’re going to leverage that.”

    Smoke-free products

    “Look at IQOS versus combustible cigarettes. IQOS reaches $80 per thousand in revenue, which is around 2.2 times higher than the average of our combustible portfolio. Therefore, when we grow IQOS, not only do we come with volume growth, but we accelerate the revenue growth with this positive mix effect on revenue. The level of gross profit is $54 per thousand. This is around 2.4 times higher than a combustible cigarette.”

    “Maybe the most spectacular impact in terms of positive contribution is the U.S. ZYN number. The revenue per thousand is about 6 times the average of our cigarette business. And at this level, the gross profit is $185, which is about 8 times the profit that we make on average for our combustible business.”

    “So obviously, when we grow IQOS and ZYN, we are growing very nicely in volume, remember close to 14% growth in volume for our smoke-free portfolio in 2024.”

    For more than 50 years, CAGNY has been connecting investors, management teams, and the media dedicated to the consumer industry. It asserts to be “the largest not-for-profit of its kind” and hosts various events throughout the year, highlighted by the CAGNY conference in Boca Raton, Florida.

  • PMI to Present at CAGNY

    PMI to Present at CAGNY

    Philip Morris International announced its participation in the 2025 Consumer Analyst Group of New York (CAGNY) conference, where CEO Jacek Olczak and CFO Emmanuel Babeau will present on February 19, 2025, at 1 p.m. EST. The presentation will be accessible via live audio webcast at www.pmi.com/2025CAGNY or through the company’s investor relations app at www.pmi.com/irapp.

    The company executives are expected to talk about PMI’s transformation toward a smoke-free future, having invested more than $14 billion since 2008 in developing and commercializing smoke-free products. Following its acquisition of Swedish Match, 39% of PMI’s annual net revenue now comes from the smoke-free segment with brands like IQOS and ZYN.

    For more than 50 years, CAGNY has been connecting investors, management teams, and the media dedicated to the consumer industry. It asserts to be “the largest not-for-profit of its kind” and hosts various events throughout the year, highlighted by the CAGNY conference in Boca Raton, Florida.

    The webcast replay will be available at the same link until March 21, 2025.

  • PMI Posts Strong Fourth Quarter Behind ZYN Demand

    PMI Posts Strong Fourth Quarter Behind ZYN Demand

    Philip Morris International (PMI) posted better-than-expected fourth-quarter results with net sales rising 7.3% to $9.71 billion, topping the $9.44 billion estimated. The company also forecasted adjusted annual earnings per share in the range of $7.04 to $7.17, above analysts’ estimates of $7.03. The positive news sent company shares up nearly 8% yesterday (February 5).

    Analysts say the strong quarter was driven by strong demand for PMI’s smoking alternatives such as ZYN nicotine pouches. In January, the U.S. Food and Drug Administration gave PMI a formal license to market ZYN in the country, saying it poses a lower risk of serious health conditions due to substantially lower amounts of harmful constituents.

    In the quarter, oral inhalable smoke-free products volumes grew by 25% in cans from a year earlier, fueled by ZYN nicotine pouch growth in the U.S., where shipments reached nearly 165 million cans, representing a growth of nearly 42% from the prior year.

  • PM Korea Says Science Demands E-Cigarette Recognition

    PM Korea Says Science Demands E-Cigarette Recognition

    The head of Philip Morris Korea cited scientific evidence today (February 5) in defense of the global tobacco company’s ongoing efforts to shift from traditional cigarettes to electronic vaping products for healthier living. Managing Director Hannah Yun emphasized the importance of scientifically proven data in persuading the government about the benefits of electronic cigarettes. Her remarks were directed at the Korean government, which has highlighted their harmfulness, urging citizens to quit both tobacco and electronic smoking.

    Yun acknowledged that, as a cigarette company, it has often faced criticism regarding public health. She added that the company’s efforts to encourage smokers to quit by promoting a potentially less harmful alternative have rarely received outright support from outside the industry, including from the Korean government.

    The government has consistently criticized smoking without distinguishing between e-cigarettes and traditional cigarettes or acknowledging the potential benefits of the former. Instead, it has treated e-cigarettes as “just another type of smoking you must quit” through various advertisements and TV campaigns.

    The Ministry of Health and Welfare in November released the results of an external report, which studied synthetic nicotine used in vaping, a type of e-cigarette smoking. The report concluded that synthetic nicotine contains multiple types of hazardous chemicals, which is contrary to what vaping product makers have said.

    “We have been stacking up scientific data and making reports promoting those data to prove the benefits of e-cigarettes. This is our only way to get at the government,” Yun said at a press conference in Seoul, where Philip Morris International (PMI) and its Korean subsidiary unveiled a new model for its flagship e-cigarette device brand IQOS to Korea.

    “We want the government to know that our e-cigarette business is not about pursuing our own business interests. It is rather our campaign promoting a healthier way to smoke based on scientific data. We wish the government would look at our business and understand it scientifically.”

    Philip Morris Korea’s External Affairs Director Kim Joo-han asked the government to “check a broader range of data before introducing policies or pursuing campaigns” to better understand e-cigarette smoking.

    “Member states of the Organisation for Economic Co-operation and Development [OECD] have introduced e-cigarette-friendly policies to promote the practice and help the public quit smoking more effectively,” Kim said. “The Korean government should look into those examples.”

    During the event, Philip Morris Korea unveiled IQOS Iluma i, the latest version of its IQOS product, which was first launched globally in 2014 and in Korea in 2017.

    As of last October, the company occupied a 40 percent share of Korea’s e-cigarette market, while KT&G led with 49 percent and BAT Rothmans accounted for 11 percent. Meanwhile, JTI Korea, a Korean subsidiary of Japan Tobacco International, also released its new e-cigarette device model, Ploom X Advanced, in October 2024.

    “One out of every five adults in Korea are now smoking e-cigarettes,” Yun said. “We believe we are truly doing the right thing by helping the rest four out of every five adults quit tobacco smoking.”

    Vassilis Gkatzelis, PMI’s president of East Asia, Australia, and Duty-Free Region, said during the press conference that PMI aims to log two-thirds of its entire sales from e-cigarette products by 2030.

    “What is truly expected of a tobacco company? The answer is straightforward,” Gkatzelis said. “It is introducing the smoke-free future.”

    Gkatzelis said that among PMI’s 180 market countries, Korea “holds a very special place” because it is among the top five countries in its global e-cigarette market. “IQOS is accelerating the transition away from tobacco cigarettes,” he said. “It is ushering in the world where combustion smoking is increasingly becoming obsolete and will [just be seen in] a museum.”

  • PMI Considers Expansion in Egypt

    PMI Considers Expansion in Egypt

    Philip Morris International (PMI) has enjoyed success in Egypt with its IQOS heated tobacco product and is looking to expand to other smoke-free products in the market, said Tommaso Di Giovanni, vice president for International Communication and Engagement at PMI. With an estimated 15 million adult smokers in the country, IQOS has already made significant progress in providing a reduced-risk alternative to traditional cigarettes.

     “We were—and we are—selling a product that causes diseases and is addictive: cigarettes,” Di Giovanni said. “Anyone who sells a product that causes disease and is addictive would like to do better,” stressing PMI’s dual responsibility to society and to the company itself.

    He further emphasized that improving the health of adult smokers is not only a moral obligation but also a sound business strategy. “It’s a win-win for our company and for public health,” he explained, adding that addressing societal concerns can help PMI stay ahead of the competition while positively impacting global health.

    “For us, the first goal of sustainability is to address the public health issues posed by cigarettes. The ultimate goal is to offer a portfolio of products that meets the diverse needs of the market while supporting sustainability goals.”

  • PMI Expands in Medical Cannabis

    PMI Expands in Medical Cannabis

    At the end of last week, Avicanna Inc., a commercial-stage, international biopharmaceutical company based in Canada, announced a “scientific and medical affairs” collaboration agreement with Vectura Fertin Pharma, a subsidiary of Philip Morris International (PMI). Avicanna, who specializes in cannabinoid-based medicine, has a clinical R&D department that has led to the commercialization of more than 30 proprietary, evidence-based finished products.

    The two companies formed a Scientific and Medical Affairs Committee that will focus on improving the understanding of medical cannabis access and applications in Canada.

    “PMI has consistently shown interest in the medical side of cannabis,” Aaron Grey, managing director at Alliance Global Partners, an investment firm highly active in the cannabis space, told Forbes. “Their 2016 investment in Syqe Medical was medical-focused, and this Avicanna partnership continues in that vein. PMI’s public-facing interest in cannabis has been more about the medical side than recreational or consumer products.

    “I think this is a multi-decade strategy. Usage trends among young adults are shifting—they’re moving away from tobacco and alcohol and toward cannabis. Big Tobacco sees this and wants to capture that new, growing consumer base. Companies like British American Tobacco have divisions like ‘Beyond Nicotine’ to address these trends, and cannabis is part of that vision. This isn’t just about hedging; it’s about preparing for a long-term consumer shift.”

    Forbes’ Javier Hasse wrote that PMI’s entry into Canada’s well-regulated cannabis market gives it a strategic testing ground with an eye on the U.S. market.

    “For big tobacco in general, most of the major players have made investments in cannabis,” said Grey. “For example, Altria invested $1.8 billion in Cronos Group, and Imperial Brands invested CAD 125 million in Auxly. In November 2023, BAT invested CAD 125 million in Organigram, forming an investment pool and an R&D partnership. These are all ways Big Tobacco is exploring the cannabis space, and I see PMI’s partnership with Avicanna as part of that broader trend.”

  • PMI to Further Expand U.S. Zyn Production

    PMI to Further Expand U.S. Zyn Production

    Photo: PMI

    Philip Morris International’s Swedish Match affiliate will invest $232 million to expand the production capacity of its Owensboro, Kentucky, USA, manufacturing facility, which produces the popular Zyn nicotine pouches.

    The expansion is expected to create an additional 450 direct jobs with an ongoing annual economic impact of $277 million and 410 indirect jobs for the Commonwealth of Kentucky.

    “Philip Morris International’s Swedish Match affiliate has been an important partner and job creator in this region for many years, and I’m excited to see this incredible new investment and the 450 great job opportunities it is creating for families in Owensboro and the surrounding region,” said Kentucky Governor Andy Beshear in a statement.

    Construction of the expanded facility is already underway, including adding more production space. Progressive production increases are expected during the project, which is targeted for completion by the second quarter of 2025. The construction phase alone is expected to create nearly 2,800 jobs and have an economic impact of about $414 million.

    In addition to facility expansion and ongoing optimization of processes to increase capacity progressively over the coming quarters, the Kentucky facility will move from a 24-hour, five-days-per-week schedule to a 24-hour, seven-days-per-week schedule to boost production, starting in the fourth quarter of this year.

    The Swedish Match Owensboro facility currently has about 1,100 employees. The ongoing expansion of the facility in Kentucky is expected to provide around 900 million cans of capacity by 2025.

    In July, PMI announced an investment of $600 million over the next two years through its U.S. affiliate to open a nicotine pouch manufacturing facility in Aurora, Colorado. The Aurora facility and Owensboro expansion are designed to provide the capacity needed in the near term and midterm to meet the ferocious U.S. demand for Zyn.

  • PMI Accused of ‘Manipulating Science’

    PMI Accused of ‘Manipulating Science’

    Image: Xistudio

    Philip Morris International has been accused of “manipulating science for profit” through funding research and advocacy work with scientists, according to The Guardian.

    Leaked documents from PMI and its Japanese affiliate revealed plans to target politicians, doctors and the 2020 Tokyo Olympics as part of the company’s marketing strategy to attract nonsmokers to its IQOS heated-tobacco product. Japan is a launch market for IQOS.

    A Tobacco Control Research Group paper from the University of Bath stated that Philip Morris Japan (PMJ) funded a Kyoto University study into smoking cessation via a third-party organization. The researchers found no public record of PMJ’s involvement, however. According to a PMI spokesperson, the company’s involvement was attributed when the results were presented at a scientific conference in Greece in 2021.

    PMJ reportedly paid £20,000 ($25,287.48) a month to FTI-Innovations, which is a life sciences consultancy run by a professor from Tokyo University. The payments were for tasks like promoting PMI’s science and products at academic events, which, according to an internal email, a PMJ employee claimed they had been told “to keep it a secret.”

    The paper, which was published in Nicotine & Tobacco Research, is based on 24 leaked company documents from between 2012 and 2020.

    “These activities resemble known strategies to influence the conduct, publication and reach of science and conceal scientific activities,” the researchers said.

    “The manipulation of science for profit harms us all, especially policymakers and consumers trying to make potentially life-changing decisions,” said Sophie Braznell, one of the paper’s authors. “It slows down and undermines public health policies while encouraging the widespread use of harmful products.”

    The leaked documents undermined PMI’s claims to conduct “transparent science,” according to Braznell, who called for reforms to funding and governance of tobacco research “to protect science from vested corporate interests.”

    In a different report from Stopping Tobacco Organizations and Products (STOP), also based on leaked documents, PMJ appeared to lobby for IQOS to be permitted in places where smoking was banned.

    Entities like medical and hospitality groups and Japan’s Fire and Disaster Management Agency were targeted for endorsements, “which, if secured, could give the appearance of organic, widespread acceptance of IQOS,” said STOP.

    Moreover, the report stated that aiming for a presence at the Tokyo Olympics “echoes a known industry tactic of advertising addictive, harmful tobacco products at sports events—associating these products with health, misleading consumers and reaching children and young people.”

    “PMI’s intentions with IQOS seem to extend far beyond what they’ve stated,” said Jorge Alday, director of STOP. “This revelation adds weight to the mounting evidence questioning the credibility of PMI’s claims about their intentions and their products.

    “Disturbingly, it hints at a broader pattern of deceptive tactics, potentially laying the groundwork for a new chapter in the tobacco epidemic,” he said.

    “This is yet another specious story from an organization more interested in criticizing our company than helping reduce the harm from cigarettes,” said a PMI spokesperson. “Like any highly regulated multinational company, PMI regularly seeks to share our positions on issues that affect our consumers, our company and our communities. Not only is this type of engagement entirely legal and appropriate, [but] it is essential to the type of inclusive policymaking that will lead to better outcomes for the people affected by those policies.”

  • PMI to Support Female Empowerment

    PMI to Support Female Empowerment

    Image: Sanele Gobinduku/peopleimages.com

    Philip Morris International announced the launch of an extended partnership via its U.S. business to support female empowerment with a $5 million investment in the Women’s Business Development Council (WBDC), a 501(c)(3) charitable organization dedicated to providing tools and resources to help women entrepreneurs thrive in business throughout Connecticut.

    Beginning January 2025, in coordination with the WBDC, PMI’s U.S. business will contribute $1 million per year over a five-year period toward the Women’s Economic Empowerment Initiative to help remove barriers that prevent women from full participation in Connecticut’s entrepreneurial ecosystem.

    “Philip Morris International is committed to making positive impact throughout Connecticut communities and beyond. Our partnership with WBDC and investment through the Women’s Economic Empowerment Initiative enables us to better support Governor Ned Lamont’s vision of positioning our state as a catalyst for women and their families,” said Stacey Kennedy, president of the Americas region and CEO of PMI’s U.S. business, in a statement.

    Since 1997, the WBDC has educated and trained more than 18,900 clients in all of Connecticut’s 169 towns—helping women to launch, sustain and scale more than 14,170 businesses, create and maintain more than 31,400 jobs and access more than $57 million in capital.

    “This investment from PMI will enable us to continue the critical work we do to support economic independence through entrepreneurship for women in Connecticut,” said WBDC CEO Fran Pastore. “We are pleased that PMI has trusted us to use these funds to continue to help women access capital, education, and resources to support themselves and fuel employment within our state. Over the past few years, we have seen a 275 percent increase in the number of women who come to us seeking to launch or scale their business. Without the support of corporations in our community like PMI, this growth, and the growth we anticipate in the future, would not be possible.”