30 May 2022
Philip Morris International (PMI) at its recent annual shareholders meeting recorded a net revenue of $31.4 billion in 2021. While steering the attention of its shareholders to its non-combustible business, cigarettes remain its core business as PMI shipped about 625 billion sticks which make up more than 70% of its revenue, amounting to US$22 billion.
PMI continues to promote sales of its cigarettes with Marlboro, Chesterfied, Parliament and Sampoerna A, registering increased sales in 2021 (Table 1). PMI sold more Marlboro cigarettes in 2021 than in 2020. So much for the rhetoric about transforming its business.
Table 1: PMI’s top cigarette brands’ global shipment (million sticks)
|PMI Cigarette Brands||2021||2020|
According to PMI, once IQOS is approved for sales in a country, they will stop marketing (but not stop selling) cigarettes in that country. However, since PMI started aggressively promoting its IQOS in 2017, the Marlboro market has remained stable at 10% of global cigarette market share in 2019 and 9.5% of market in 2021.
IQOS is being sold in Indonesia, Malaysia and the Philippines but cigarette promotions still continue in these countries, especially at points of sale (POS).
Corporate Accountability (CA) representatives who attended PMI’s 2022 shareholders meeting questioned PMI when they intent to stop producing and selling cigarettes? And what will happen to the Marlboro brand?
PMI’s Executive Chairman replied, “Yes we still sell cigarettes, their sales will decline naturally. … Yes sometimes in some countries you need to launch a new product because there is also competition out there. And despite the fact that we’re committed to phase out cigarettes, we are not going to necessarily hand market share to our competitors free of charge, but these efforts are absolutely minimal.”
Another CA representative, a tobacco control lawyer from Colombia, questioned PMI about its aggressive promotion of Marlboro at POS (same flavor to discover) despite simultaneously promoting IQOS through sponsorship of youth musical festival making them more attractive to youth, and circumvent Colombia’s tobacco control law.
PMI responded, “… we believe youth access can be curbed not only through one but many actions, education at school. And now we have a more complex problem because we have to tell teenagers that they should not experiment with any nicotine products, not only cigarettes. …”
Tobacco industry sponsored youth smoking prevention programs in the past decades have shown to be completely ineffective but PMI wants to continue running more of these sponsored youth education programs and have access to minors through the education system. This is a form of CSR and many countries have banned these sponsorships.
Meanwhile PMI along with other tobacco companies continue to oppose tobacco control measures under the WHO FCTC such as tax increases, prominent pictorial warning (or standardized packaging) and comprehensive ban on tobacco advertising promotions and sponsorship including pack display bans. Table 2 shows PMI’s control of cigarette market share in select ASEAN countries.
Table 2: PMI’s cigarette market share in each country (%)
Cigarettes are good for PMI business. PMI wants to remain in the nicotine addiction business hence both cigarettes and heated tobacco products will deliver good profits at the expense of public health.