Tobacco Company PMI, a name that resonates with innovation, bold strategy, and a rich history. An entity that has made its mark as a leader in the tobacco industry. But who are they, really? What is their story, their impact, their legacy?
Philip Morris International Inc. (PMI) is a household name in the global tobacco industry. This American multinational is known for its widespread reach, with products sold in over 180 countries, and its status as a prominent member of ‘Big Tobacco’.
The Origin of PMI
Tracing its roots back to 1847, PMI began as a single shop on London’s Bond Street. Philip Morris, a London tobacconist, established this shop which sold tobacco and cigarettes. By 1919, the company had crossed the Atlantic and was incorporated as “Philip Morris & Co. Ltd., Inc.” in Virginia?14†source?.
Spin-off from Altria
Until 2008, PMI was an operating company of Altria. However, in a strategic move to expand its reach in emerging markets and operate with more freedom, PMI was spun off from Altria. This spin-off opened up a new chapter for PMI, setting it on a path to further growth and innovation.
International Presence and Operations
While PMI’s legal seat is in Stamford, Connecticut, it does not operate in the United States. Instead, its operational headquarters are located in Lausanne, Switzerland. This global presence has enabled PMI to establish a significant footprint in the international tobacco market.
Controversy Surrounding the Company
However, PMI’s journey has not been without controversy. The addictive nature of tobacco and its role as a leading cause of preventable death worldwide has subjected PMI to restrictive legislation and litigation from various governments.
Global Success of Marlboro
Marlboro, PMI’s flagship brand, is the most recognized and best-selling product of the company. Marlboro’s global success started in 1972 when it became the world’s top-selling cigarette brand, a testament to PMI’s marketing prowess and the brand’s appeal among smokers.
Shift Towards ‘Smoke-Free’ Products
Fast forward to the present, PMI is making significant strides in its commitment to a future without smoking. By 2025, the company plans to be a majority “smoke-free” business, gradually replacing cigarettes with IQOS, PMI’s line of vape products.
Challenges in the Shift
Despite this bold ambition, PMI faces several challenges. Transitioning from cigarettes to vapes posesnew issues, particularly in terms of sourcing materials for vape pens and ensuring the recycling of disposable cartridges. To address the latter, PMI has implemented a ‘Take Back’ initiative in certain markets, allowing consumers to return spent cartridges for recycling.
Impact on Tobacco Farmers
The shift to smoke-free products also has implications for the many tobacco farmers dependent on PMI’s orders. A sudden cut in cigarette production could potentially upend their livelihoods. The transition toward vapes, which consume roughly 50% of the tobacco volume, still results in a significant loss for these farmers.
The Role of the Chief Sustainability Officer
At the helm of these changes is Jennifer Motles, the Chief Sustainability Officer at PMI. Despite the challenges, Motles believes that a cigarette company willing to stop making cigarettes and transition to less harmful products is a better model for the industry. She sees this as a relative ‘yes’ to the question of whether a business based on addiction can ever truly be a source of good.
PMI’s Ambition for Industry-wide Change
Motles envisions PMI’s shift towards a smoke-free future triggering a paradigm shift in the entire tobacco industry. She hopes that the rest of the industry will follow PMI’s lead, either out of understanding that it’s the right thing to do or simply because they won’t have a choice. PMI’s ambition, she believes, will be recognized and rewarded by the market, including ESG-prone investors.
Conclusion
PMI’s journey from a small shop in London to a multinational tobacco company is marked by innovation, controversy, and ambition. Despite the numerous challenges it faces, the company is resolute in its vision for a smoke-free future. Whether or not it succeeds in instigating industry-wide change, PMI’s efforts to transition away from traditional cigarettes and towards less harmful alternatives represent a significant moment in the tobacco industry’s history.
Statistics:
As of 2019, the main institutional investors in PMI were The Vanguard Group with an 8% stake, Capital Research & Management with 5%, and BlackRock Fund Advisors with 4%. In 2015, the company sold 850 billion cigarettes. The company’s sales exposure to Russia was reported to be 7% in 2018. As part of its transition to a “smoke-free” business model, PMI reported that sales of its “heated tobacco” products made up 29% of company revenues in 2021, with 72% of those customers being cigarette quitters.
Sources of information:
- Wikipedia page on Philip Morris International https://en.wikipedia.org/wiki/Philip_Morris_International
. - Fortune article on PMI’s transition to a smoke-free business https://fortune.com/2023/03/23/philip-morris-international-smoke-free-business-plan/
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