Road map to a smoke-free future

Only the agile—and committed—will survive the changes disrupting multiple industries, including the tobacco industry. 

By Branislav Bibic, International Area Vice President Sub-Saharan Africa, Philip Morris

The only constant, they say, is change, and that’s certainly true of the business world at present. It’s virtually impossible to identify a sector that is not in the throes of major change, often driven by technology. For some industries, the disruptions are existential, and developing the right strategy to manage a complex transition is vital. 

The tobacco industry is crossing its Rubicon, as is the automotive industry.  Vehicle manufacturers face the daunting challenge of investing in an effective transition process that will provide internal-combustion vehicles that emit significantly less carbon and fewer other pollutants, while at the same time developing new vehicles that utilise totally carbon-free energy sources. 

A similarly difficult - and even more delicate - transition faces long-established tobacco companies.  Some of the transitional phases resemble those that vehicle manufacturers will have to go through but, in the end, companies like Philip Morris International are reinventing our business model as we cease manufacturing the very product on which our business was made.

We have built the world’s most successful cigarette company, with the world’s most popular and iconic brands, yet we want to stop selling cigarettes. Why are we doing this? Because it’s the right thing to do. We want a world where smoking ceases altogether whereas by contrast, vehicle manufacturers will continue to make vehicles, just ones that use a different energy source. 

Reducing the harm from tobacco

It goes without saying that the ultimate end goal of our strategy is to eliminate smoking altogether. There are an estimated one billion-plus smokers in the world, and they should be encouraged to quit. But for those adult smokers who would otherwise continue smoking, we want to provide them with smoke-free alternatives. However, it must also be recognised that 22.3% of the global population still  smoke, a figure that is growing by 1.29% a year. 

Broadly speaking, today’s smokers are analogous to those millions who will continue to rely on internal-combustion vehicles until the new technologies are fully commercialised and affordable. We need to find ways of helping these existing smokers to switch to less harmful substitutes on their journey towards quitting. 

To this end, we have moved aggressively into the development and commercialisation of nicotine-based products that are scientifically substantiated to be significantly less harmful than cigarettes, and that they are available to adults who would otherwise continue to smoke. Because those who wish to use nicotine have a palatable alternative, we are committed to reducing, and ultimately phasing out, smoking. 

Returning to the analogy with the vehicle manufacturing industry, what we are doing is creating hybrid vehicles that, while still petrol and oil dependent, use much less of it and so pollute less. In our industry, this means heated tobacco or e-vapour products. The former are electronic, smoke-free devices that eliminate combustion, which is when the harmful chemicals are released, while the latter use heat to create a vapour from a liquid containing nicotine and other flavours. Other alternatives are oral smokeless products such as nicotine pouches. 

The good news: it’s working. Already, 39% of our net global revenues come from our smoke-free business, so we are on track to having a substantially smoke-free business by 2030, with two-thirds of our revenues derived from this sector. The real-world impact of this shift is significant: an estimated 33 million adults use our smoke-free products, and 20.8 million adults are estimated to have switched to these products and stopped smoking altogether. 

Of course, to achieve this has meant a substantial investment in R&D. To date in excess of $12.5 billion has been directed to develop, scientifically test and commercialise smoke-free products since 2008. We have also had to develop new markets to take these products to existing smokers, most notably in the United States. 

In tandem, we have implemented strict marketing and design guidelines to ensure that our products are aimed at existing smokers, not non-smokers, and are not available to under-age individuals. The latter goal has necessitated constant use of sophisticated technologies for age verification. Our ultimate aim is that more than 90% of our product is sold to markets with a youth-access prevention programme in place. 

Thankfully, independent studies have shown that our heated tobacco products are of limited interest to both youth and adults who have never used nicotine products or have stopped using them, and that we are reaching our intended audience. 

And then?

Clearly, there is a business case for developing products that will reduce the harm to tobacco users as well as a moral one. What then, you might ask? What’s the all-electric vehicle, so to speak, for the tobacco industry? 

The answer will vary from company to company, of course. Some will go out of business, not least because they do not have a properly funded and mapped out transition plan, whereas others will change business entirely. For our company, the intent is to leverage what we have learned during the transition period to identify and then exploit opportunities in adjacent sectors such as wellness, lifestyle and healthcare. 

In these fast-changing times, you can always choose to do nothing. Instead, we’ve set a new course for the company - we have chosen to do something really big. We have chosen to consign cigarettes to the past and move into a world with a smoke-free future.