One television advert from the 1950s exclaimed: “Something wonderful happens when you change to Philip Morris … you’ll feel better.”  

Fast-forward to the 2010s and Philip Morris International (PMI) has laid out its vision for a “smoke-free future”, according to which it has developed a range of alternative nicotine products. 

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For the owner of Marlboro to say we are now committed to becoming a smoke-free company is a pretty bold statement

Emmanuel Babeau

Far from a mere advertising campaign, the company has stated its intention to kill off the cigarette industry altogether, with CEO Jacek Olczak telling the press in 2021 that PMI will stop selling to the UK within the decade and that the UK government should ban cigarettes from 2030.

In an interview with fDi, Emmanuel Babeau, chief financial officer at PMI, says that “for the owner of Marlboro to say we are now committed to becoming a smoke-free company is a pretty bold statement”, stressing that despite what cynics may say, this is not just “another way to keep selling cigarettes”. 

The company’s poster child for its alternative nicotine range is IQOS. Unlike electronic cigarettes, also known as “vaping”, IQOS is a “heat-not-burn” cigarette, whereby tobacco is only heated to extract nicotine, limiting the harmful effects such as the release of carbon monoxide. PMI counts some 21 million users of IQOS as of December 2021, with many of these being in the EU, Japan and Russia. 

But in numerous other countries, such as Australia, Brazil, Singapore and Thailand, heated tobacco products are banned as a result of laws that ban either smokeless tobacco or e-cigarettes.  

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Elsewhere, it has been pursuing an acquisition strategy that has expanded in tandem. Earlier this year, PMI put in a bid for Swedish Match, an alternative tobacco company which makes products such as Snus and nicotine pouches, at $16bn. 

PMI has identified two new areas in the company’s future development: healthcare and wellness. In this context, last year it purchased UK inhaler company Vectura for £1bn to develop new treatments such as medical cannabis and inhalable aspirin. Its acquisition of Danish pharmaceutical company Fertin for roughly $840m is to develop oral products to help with stress, anxiety and general wellbeing. 

This foray into wellness has come in hand-in-hand with an industry drive to refashion its image. According to 2022 research by Truth Initiative, a non-profit tobacco control organisation, PMI and Altria spent a combined $11.7m between January 2020 and August 2021 on major US news outlets to reposition themselves as aligned with public health.  

Meanwhile, as the inputs of its business change, PMI has also had to contend with newfound difficulties in building out a global technological product in a fractious world. In its annual report 2021, it cites slower growth during the second half of last year “due to the impact of the global semiconductor shortage” — a first for PMI.

Despite the global disruptions, Mr Babeau reiterates that the biggest challenge the company faces is “awareness among the billion people who smoke that they can keep the pleasure and ritual of smoking, but consume a significantly better product.”

A longer version first appeared in the October/November 2022 print edition of fDi Intelligence. This article has been edited for clarity and brevity. It first appeared in the October/November 2022 print edition of fDi Intelligence. View a digital edition of the magazine here.