10 May 2023
By Irene Reyes
At the recent Philip Morris International annual Shareholders Meeting held on May 3, 2023, the company celebrated its USD 31.76 billion profits for 2022, claiming the company is building a “smoke-free” future through its new products – electronic smoking devices. Nothing can be further from the truth about its smoke-free rhetoric and so-called shifting customers to safer alternatives.
In 2022, PMI shipped about 621 billion cigarettes globally and made 67.9% of its profits from cigarettes in 2022. PMI’s global market share of cigarettes and electronic smoking devices is 14% in 2022.
Electronic smoking devices are not harmless as they are still addictive, cause harmful effects and may lead to use of other nicotine-containing products, such as cigarettes. By simply replacing one addiction with another, PMI is not truly promoting a “smoke-free” society. It is just creating more products and they are still in the business of selling addictive substances to consumers. Therefore, the argument that PMI is pursuing a sustainable future and responsible conduct is unfounded, as it continues to profit from cigarette sales that pose serious threat to public health.
During the Q&A session, I called out the contradictory actions of PMI’s stated goal of moving away from selling cigarettes as part of their company’s strategy to focus on “smoke-free products” by highlighting the aggressive cigarette promotions of the company in the Philippines.
PMI’s local subsidiary, Philip Morris Fortune Tobacco Corporation (PMFTC), is the largest cigarette company operating in the Philippines where it controls about 70% of the cigarette market share as of 2021. Recently PMFTC sponsored new Marlboro sign boards in small shops call sari sari stores, where Marlboro cigarettes are being sold for as little as 5 pesos a stick (US 10 cents) each. This shrewd pricing strategy often targets low-income individuals and children, who may be more likely to purchase single sticks.
PMI is enjoying a lucrative cigarette business through its two factories and 40 sales offices throughout the country claiming to sell seven out of the top 10 best-selling cigarette brands.
It is paradoxical to claim to be working towards a “smoke-free society” while simultaneously promoting smoking by offering discounts and incentives to shop keepers to sell even more cigarettes.
Smoking-related diseases claim the lives of about 117,000 people each year in the Philippines and Philip Morris has a dominant cigarette market share in the country. So far the company has not taken any responsibility and pay compensation for lives lost from smoking-related diseases.
Two questions were posed to PMI’s chairman, Andre Calantzopoulos, during the meeting: 1) How much is PMI spending on promoting cigarettes in the Philippines? and 2) Now that PMI is admitting that smoking is harmful, what is it willing to pay for each Filipino life lost from smoking?
However, the Chairman did not answer either question. PMI does not want to stop selling cigarettes because apparently they do not want to hand the market over to their competitors. In short, PMI won’t reveal what it spends promoting cigarettes and it won’t take any responsibility for the lives lost due to smoking. Instead, the Chairman focused on promoting their new “smoke-free” products, such as IQOS and Bonds, with the latter introduced to target low-income consumers.
Despite acknowledging that cigarettes cause diseases and premature deaths, PMI will continue to sell and promote cigarettes for the sole reason of increasing profits. The company spends huge amounts on advertising and promotions in developing countries but refuses to divulge their expenditures.
During the meeting, a shareholder resolution to reduce nicotine levels to non-addictive levels was tabled. A shareholder, Trinity Health and their other co-filers, made a proposal for the preservation of the health of PMI customers by making information on the level of nicotine on its products, how those levels are determined, reducing nicotine level to a non-addictive level. The resolution was aimed at reducing experimentation by the young and save them from a lifetime of tobacco-related diseases and reduce the level of nicotine dependence in adults who smoke, making it easier for them to quit. This proposal was defeated by the shareholders.
In summary, PMI’s aggressive promotion of cigarettes in the Philippines and in the countries where it operates, contradicts their stated goal of moving away from selling cigarettes and promoting “smoke-free” products.
Unfortunately, PMI will continue to prioritize profit over people, as evidenced by its refusal to disclose cigarette promotion expenditures and unwillingness to take responsibility and compensate customers who have suffered and lost their lives because from its deadly products, nor prevent new customers for its cigarettes.