Quitting cigarettes is hardly an unusual New Year’s resolution, but one would hardly expect to hear it from the lips of one of the world’s largest tobacco firms. Yet there Philip Morris International was, in black and white, proclaiming its vision for a smoke-free future in ads across several newspapers yesterday.
‘The commitments announced today are practical steps that could accelerate that goal,’ said UK MD Peter Nixon about plans to support quitting services and request to put information about quitting onto its packages. ‘We recognise that never starting to smoke - or quitting altogether - are always the best option.’
Erm, this is Philip ‘Marboro Man’ Morris, right? You know, the company that sells tobacco to hundreds of millions of customers in 140 countries, with 15% of a global market including one billion smokers? What’s going on?
Where there’s smoke...
For the avoidance of doubt, Philip Morris is not getting out of the smoking game, but it is trying. Or at least, it wants you to think it’s trying.
When CEO André Calantzopoulos received a letter last year from charity Unfair Tobacco, signed by 123 health groups, asking the company to ‘do the right thing by immediately ceasing the production, marketing and sale of cigarettes’, he replied that it would be pointless to do so. If Philip Morris stopped selling tobacco tomorrow, its competitors would simply step in to fill the gap, he quite correctly reasoned.
‘People need persuasion to switch from smoking to smoke-free alternatives, which requires intensive, direct work with consumers, as well as huge resources — all of which is part of PMI’s absolute commitment to a smoke-free future,’ Calantzopoulos said.
It all sounds very virtuous, but at best it’s enlightened self-interest. Smoking is on the way out, in developed countries like Britain, where governments are actively hostile to the practice. Beyond heavy taxation and plain packaging rules, the UK has introduced a tobacco control plan that aims to reduce the number of smokers in the UK from 15.5% of the population in 2016 to 12% by 2022.
Through prevention schemes, support for quitters and even heavier taxation, the government intends to create a ‘smoke-free generation’, which presents something of a problem for a tobacco firm.
One part of the answer is vaping, which turns out to be more than a passing hipster fad. The latest data from the Office of National Statistics last year reveals that 4% of the UK’s population, about 2.3 million people, said they used e-cigs in 2015. (A further 4 million said they were former users, which makes sense, as many smokers use vaping as a stepping stone to quitting altogether.)
Big Tobacco is trying to compensate for the decline in smoking by getting into e-cigs, in much the same way as Big Oil is investing in renewable power. Philip Morris has spent over £2.5bn developing smoke free alternatives, including brands Iqos, Vivid, Nicocig and Mesh, and currently devotes 70% of its R&D budget to them.
But that’s only half the story. Smoking may be a declining, dirty business in the UK, but worldwide it’s still growing. For decades, Big Tobacco has been pivoting to low and middle income countries, where 80% of the world’s smokers live according to the World Health Organisation.
For Philip Morris, the decline in its developed markets has been largely mitigated by growth in less developed markets: 70% of net revenues are now from eastern Europe, North Africa, Asia and Latin America, ignoring excise duties.
This doesn’t mean that Philip Morris isn’t in earnest about working towards a smokeless future –indeed, it knows that eventually the habit will decline everywhere and that therefore it needs to find a sustainable replacement in developed markets first. But that fact that it’s loudly championing smokeless alternatives – in the knowledge that it will continue for the foreseeable future to make most of its money selling tobacco in the developing world – may leave a bad taste in the mouth.
Image Credit: Wikimedia Commons/ Nikita2706