Tag: pmi

  • Cautious on heat-not-burn

    Cautious on heat-not-burn

    The European Commission is in favor of a cautious approach to heat-not-burn products because it believes that there is a lack of evidence relating to the short- and long-term health effects of using such devices.

    This was part of the answer given by the Commission to questions raised by the Belgian MEP, Frédérique Ries.

    In a preamble to her questions, Ries said that Philip Morris International had said that it intended to market its new ‘device for smoking’ in the UK, following its initial launch in Japan, Italy and Switzerland.

    ‘The distinctive feature of this new product, which has been named iQOS, is that it stands on the borderline between traditional cigarettes and electronic cigarettes,’ she said.

    ‘The major difference between iQOS and electronic cigarettes is that while the latter use a liquid transformed into vapor, IQOS heats the tobacco and keeps it burning [iQOS has been designed so as not to burn the tobacco it contains, only to heat it, as is implied in part of the Commission’s reply], which is very harmful to health.’

    Ries asked whether the Commission concurred with health experts who claimed that marketing a hybrid tobacco product of this kind was a ploy to circumvent legislation in force and, in particular, all the requirements laid down in Article 19 of Directive 2014/40/EU concerning novel tobacco products.

    ‘What steps will the Commission take to thwart the strategies employed by cigarette manufacturers to sell alternative products that are still just as harmful to people’s health?’ she asked.

    ‘Will the Commission take this opportunity to alter its negative views on electronic cigarettes, which, as a growing number of cancer experts in the EU are now pointing out, do not contain any tobacco or tar and are helping many people to stop smoking?’

    In reply, the Commission said it was closely monitoring the developments related to new tobacco products, including “heated not burned” tobacco products.

    ‘Currently, there is lack of evidence relating to short-term and long-term health effects and use patterns of these products,’ it said. ‘Therefore the Commission is in favour of a cautious approach.

    ‘At the same time, the Commission would like to underline that with regard to the sale, presentation and manufacturing of these products within the European Union, the relevant provisions of the Tobacco Products Directive apply and should be enforced. This includes the ban on misleading elements foreseen by Article 13 and notably any suggestions that a particular tobacco product is less harmful than others. The Commission oversees whether member states fully and correctly apply the provisions of the directive.

    ‘With regard to e-cigarettes, given the lack of conclusive evidence relating to the long-term health effects, use patterns and potential to facilitate smoking cessation, Article 20 of the directive contains their regulation with an emphasis on safety, quality and consumer protection.

    ‘The rules for e-cigarettes nevertheless allow these products to remain widely available to consumers. A recent Commission report COM (2016) 269 underlines a number of potential risks to public health relating to the use of e-cigarettes, at the same time highlighting the need for further research.’

  • Tobacco giants sue Britain over plain-packaging

    Philip Morris International (PMI) and British American Tobacco (BAT) have sued the British government over plain-packaging legislation passed in March. The law, which would take effect from May 2016, requires cigarettes to be sold in packages of uniform shape and size that feature only the brand name and contain prominent graphic health warnings. England is the third and most populous country to introduce plain-packaging laws, following Australia and Ireland.

    PMI argues that England’s plain-packaging regulations “unlawfully deprive PMI of its trademarks” and should therefore be overturned, according to an article in The New York Times. London-based BAT stated that the British government had left the company “with no other choice” and released a statement saying that “any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.” Japan Tobacco International has also indicated it would challenge England’s legislation. The tobacco companies are seeking unspecified damages, which could total billions of dollars if granted.

    A statement released by the English Department of Health said it would “not allow public health policy to be held to ransom by the tobacco industry” and that it “would not have gone ahead with standardized packaging unless we had considered it to be defensible in the courts.”

  • PMI announces new U.S. tobacco purchasing model

    Philip Morris International is adopting a new leaf buying model in the United States. The company will transition from directly purchasing tobacco through contracts with U.S. growers to purchasing through two suppliers, Alliance One International Inc. (AOI) and Universal Corp. This new purchasing model will take effect on April 1, 2015.

    “Moving to a new system for leaf purchasing in the U.S. will help us achieve important supply chain efficiencies while remaining a major purchaser of U.S. grown tobacco,” said Nicolas Denis, vice-president leaf, PMI.

    “While we are changing our approach to buying tobacco in the U.S., PMI’s commitment to improving farm labor conditions on the farms from which we source tobacco has not changed. We require our suppliers to adhere to our practices, principles and standards, including our leading Agricultural Labor Practices (ALP) program. Through supplying leaf to PMI in many markets around the world, AOI and Universal are key partners in our efforts to implement our ALP program on the farms where we source tobacco. With these new U.S. supply agreements even more U.S. tobacco growers will come under PMI’s ALP standards,” said Denis.

    As a result of this transition, approximately 35 PMI employees based out of Richmond, Virginia, will be impacted.

    “It is unfortunate that this decision will impact some of our employees and it is our priority to provide them with the best possible support and assistance during this transition,” said Denis.

     

     

     

  • AOI to supply PMI

    Alliance One International has been selected to supply U.S. tobacco to Philip Morris International (PMI), as PMI adopts a new leaf procurement model in the United States and Canada.

    On Nov. 5, 2014, PMI announced its decision to transition from direct contracting and purchasing of tobacco from U.S. growers to sourcing its U.S. tobacco requirements from Alliance One International  and another global leaf merchant, effective for the 2015 crop.

    PMI’s supply chain modification will position AOI to expand its North American footprint to include additional tobacco growers, and further expand the availability of North American tobacco to the wider, global market.

    AOI and its predecessor companies have supplied tobacco to PMI for many decades. The two companies work closely together to advance continuous positive change in tobacco-growing communities on a global basis.

    This work includes the promotion of Good Agricultural Practices that provide growers knowledge and skills to produce higher quality cash and food crops with improved yields, while striving to mitigate environmental and social impacts. Alliance One says it is committed to action-oriented social responsibility and the best practices set forward in its Agricultural Labor Practices code.

    “The U.S. tobacco market has undergone substantial changes over the past decade, and continues to evolve at a rapid pace,” said Pieter Sikkel, president and CEO of Alliance One International. “PMI remains committed to sourcing in the U.S. market, and this transition ensures that PMI will continue to purchase high quality U.S. leaf through an optimized and efficient supply chain, while Alliance One expands its U.S. grower base and full service business. “

    “We remain proudly committed to our current, well-established U.S. grower partners and look forward to working with a new grower base as well as other service providers,” said Herbert Weatherford, AOI’s regional director for North and Central America. “The broader grower base better positions Alliance One to expand the availability of U.S. and Canadian tobacco to domestic and international markets.”

     

  • PMI buys Nicocigs

    Philip Morris International has purchased Nicocigs, a leading U.K.-based vapor company whose principal brand is Nicolites. The transaction is not subject to regulatory approval and is not material to PMI’s 2014 consolidated financial position.

    “This acquisition is complementary to our previously announced agreement for the license and distribution of Altria Group’s e-vapor products,” said Drago Azinovic, PMI’s president, European Union region.

    “In addition, it provides PMI with immediate access to, and a significant presence in, the growing e-vapor category in the U.K. market, as well as a strong retail presence, which further complements the current restructuring of our distribution arrangements in the U.K.”

    Nicocigs was founded in 2008 and is headquartered in Birmingham, U.K. The company employs a field force of approximately 40 sales representatives, and its products are distributed to more than 20,000 points of sale within the U.K.

    Nicocigs 2014 April year-to-date retail share was 27.3 percent according to Nielsen.

  • PMI and Altria to cooperate on e-cigs

    Philip Morris International and Altria Group have established a strategic framework to commercialize reduced-risk products and e-cigarettes. Under the terms of a set of licensing, supply and cooperation agreements, Altria will make available its e-cigarette products exclusively to PMI for commercialization outside the United States and PMI will make available two of its candidate reduced-risk tobacco products exclusively to Altria for commercialization in the United States.

    The companies expect PMI’s products in the U.S. to be regulated as Modified Risk Tobacco Products. Any commercialization would be subject to Food and Drug Administration (FDA) authorization.

    The agreements also provide for cooperation on the scientific assessment and regulatory engagement and authorization related to these products with the FDA, and for a similar framework for e-cigarettes with the relevant regulatory authorities in international markets. In addition, the agreements provide for the sharing of improvements to the existing generation of products.

    “PMI firmly believes that reduced-risk tobacco products, as well as e-cigarettes, represent an important step toward achieving the public health goal of harm reduction, a potential paradigm shift for the industry and a significant growth opportunity for the company,” said PMI CEO André Calantzopoulos.

    “Further to our plans for international test market introduction of our candidate reduced-risk products as of the second-half of 2014, this agreement establishes a roadmap for commercialization in the U.S., subject to FDA authorization. At the same time, it provides us with a platform to accelerate our entry into international e-cigarette markets while we continue to develop future versions,”

     

  • PMI and JTI acquire stakes in Russian distribution firm

    Photo: scaliger

    Philip Morris International and Japan Tobacco International are acquiring equity stakes of 20 percent each in Megapolis Distribution, the holding company of CJSC TK Megapolis, a major distributor in Russia.

    The companies are paying $750 million each for their stakes. If Megapolis’ operational performance meets certain benchmarks during the four fiscal years following the closing of the agreement, PMI and JTI will each pay an additional $100 million.

    Megapolis is one of Russia’s leading consumer goods distributors focusing principally on tobacco and beverages. It employs almost 15,000 employees and commands a direct store delivery system that reaches more than 150,000 points of sale. Megapolis handles approximately 70 percent of the cigarettes sold in Russia through its distribution agreements with PMI, Japan Tobacco International and Imperial Tobacco Group.

    “We are delighted to reach this agreement with Megapolis, our proven distribution partner, which will support our business expansion in this profitable market,” said Miroslaw Zielinski, PMI’s president, Eastern Europe, Middle East & Africa Region and PMI Duty Free.

    “Megapolis has been our partner since 2007 and has contributed to JTI’s success in the important Russian market,” commented Kevin Tomlinson, JTI’s regional president, commonwealth of independent states. “This acquisition will strengthen their distribution platform allowing us to implement our growth strategy in the region more efficiently and effectively.”

  • PMI buys remaining shares of PM Mexico

    Philip Morris International will buy Grupo Carso’s 20 percent share in Philip Morris Mexico (PMM)) for approximately $700 million. The purchasing price is subject to a potential adjustment based on PMM’s performance over three years ending two fiscal years after the closing of the purchase.

    The transaction, which will give PMI a 100 percent share in PMM, is expected to be completed by Sept. 30, 2013, subject to the approval of the Mexican antitrust authority.

    PMI’s relationship with Grupo Carso, and its founder Carlos Slim Helú, spans more than 30 years. “We would like to express our profound gratitude to Carlos Slim Helú and Grupo Carso, with whom we have built a successful partnership that has positioned PMM as the leading tobacco company in Mexico,” said André Calantzopoulos, CEO of PMI.

    “We have benefited greatly from our partnership with Grupo Carso and we remain confident in our ability to excel in this important market in the years ahead,” added James Mortensen, PMI’s president, Latin America and Canada Region.

    “After more than 30 years of a very successful partnership of great harmony and cooperation that led PMM to continuous market share growth in the Mexican tobacco market, it is now time to leave PMM in the hands of one of the best management teams and organizations in the world, led by Louis C. Camilleri and André Calantzopoulos,” said Slim Helú, who is also a member of PMI’s board of directors.

    In 2012, PPM held a 73.5 percent share of Mexico’s 33.6 billion-stick cigarette market. PMI’s flagship brand, Marlboro, is the leading brand in Mexico with a 2012 market share of 53.6 percent.

  • PMI to webcast symposium presentation

    Philip Morris International is due to host a live audio webcast at www.pmi.com/webcasts of its remarks and question-and-answer session by CFO Jacek Olczak at the Goldman Sachs Consumer Products Symposium on May 14, starting about 9:05 a.m. Eastern Time.

    The webcast, which will be in listen-only mode, will provide live audio of the entire PMI session.

    An archived copy of the webcast will be available at www.pmi.com/webcasts until 5 p.m. on June 12.

    Remarks and slides will be available at www.pmi.com/presentations.

  • PMI celebrates performance at annual meeting

    Philip Morris International held its annual meeting of shareholders today. Louis C. Camilleri, chairman of the board and CEO, addressed shareholders and answered questions. Chief Operating Officer André Calantzopoulos gave the business presentation, focusing on PMI’s performance since its spin-off in March 2008, which has seen total shareholder return reach 135 percent through April 30, 2013.

    “I firmly believe that we still have great opportunities to continue to grow our existing tobacco business through the further expansion of our terrific brand portfolio, additional investments in consumer-relevant innovation and communication, the continued roll-out of our commercial approach, judicious pricing, and a continued focus on efficiency and productivity savings,” noted Calantzopoulos.

    He went on to describe the company’s mid- to longer-term additional growth opportunities of further geographic expansion, reducing the prevalence of illicit trade and the commercialization of “next-generation” products.

    Calantzopoulos also paid tribute to Camilleri, whom, as announced on March 13, 2013, he succeeded as CEO effective immediately following the meeting. He cited Camilleri’s “passion for the company, his vision and critical and insightful analysis, his regard for the wellbeing and development of our employees, and his devotion to the integrity and transparency of communications to investors and to enhancing shareholder value.”

    Camilleri will continue to serve as chairman of the board.

    An audio webcast of PMI’s shareholder meeting will be available until June 6 at www.pmi.com/webcasts.