Panel SA: ‘Our intention is to stop selling cigarettes’, says president of Philip Morris in Brazil

Philip Morris, which last year announced the goal of ending the sale of its Marlboro cigarettes in the UK, is awaiting approval from Anvisa to launch its new smokeless tobacco product in Brazil.

With an electronic device used to heat tobacco refills without smoke, the product is part of the project to eliminate the consumption of traditional cigarettes in the world and sell less harmful alternatives, according to Philip Morris, which also acquired a drug company in 2021. for asthma.

How is the Philip Morris transformation going? Our company, globally, is making an industry transformation. Without a doubt, cigarettes kill. It is a product that generates negative impact.

We have a very clear purpose to stop selling traditional cigarettes. This is the transformation we are accelerating. We have a goal for 2025, which is: 50% of our revenue will come from the category we call smokeless, which has no combustion.

We started this process five years ago. The main problem with smoking is that it gets burned. And one of the products we have now is heated, not burned.

Burning generates combustion and releases substances harmful to health. With this process, we were able to develop products that prevent combustion. Minimizes negative impact. We are in more than 70 countries with the new category. We are strong in Western Europe, in Japan. We have already started in the United States, in Latin American countries, Colombia, Mexico. Today, 30% of our global revenue comes from this new category.

Is the target different for the UK? Our intention is to stop selling cigarettes. In the UK, we made a very clear statement: we want to stop selling Marlboro there. The process there is happening very fast. It’s important to be engaged, it helps to make that shift from one category to another.

And Brazil? It’s a very important market. It is an influential country in the region and in the world. We started this process here as well. We requested the specific registration of Heets, which has tobacco, and the electronic device, called Iqos, which prevents combustion. It only heats the tobacco. We have already started conversations with Anvisa, we made the request for formal registration. We are optimistic.

Why should the UK reach the target sooner?We started this journey five years ago. The first step was Japan, Italy and Switzerland. Basically it was a model to try to see the impact, the consumer acceptance. I’m talking about the smoker. Our focus is to convert the smoker to this new category. The UK has entered the second wave of releases, but is further along.

What is the forecast for Brazil? In what year will they stop selling?It’s hard to say that. There is a market that, in the next ten years, we will no longer sell cigarettes. And there are markets, like Japan, where we already have 50% to 60% of revenue in the new category. It’s accelerated.

We would like to have Brazil on this journey and accelerate. We have more than 20 million smokers here in Brazil. It would have a positive impact. But I think thinking about a decade is a good challenge.

Obviously, we cannot do this alone. We have to have approval from the regulator and understanding from society to be able to accelerate and make this conversion of smokers to this new category.

This is from the point of view of consumption, but, in this transition, how are Philip Morris plants in Brazil?Would it reduce the size from a production point of view? Tobacco production in Brazil is already being used for this new category in the world. Today, we are already exporting Brazilian tobacco to the Heets.

Do you use more tobacco or less?It uses less in quantity, but it is not the same tobacco. Need to work specs. There are process changes. It generates greater value in time for the producer in Brazil. In the South, we have more than 50 thousand families of independent producers. This generates an important social impact. This process would bring benefits to the value chain.

You recently announced the acquisition of an asthma product company. What is the perspective of this?As we started this transformation in the last few years, it took a lot of investment in research and development, a lot of work on inhalation therapy products. In this case, an aerosol and not smoke. This led us to learn a lot about the mechanisms of inhalation. Other opportunities arose. It has a very interesting line of non-nicotine inhalation therapy.

We are very active in this area because we believe this will be part of our long-term strategy. We have a public target for this category in our recipe in addition to nicotine. We also invested in a company in Canada to use the tobacco plant for other purposes, including therapeutics. We are exploring other areas.

How do anti-smoking movements evaluate the new product?It’s not easy, but I’m optimistic. It has mixed reactions. It depends on the country and the group. Some welcomed the evolution. The negative problem of smoking is so great that it requires several solutions. Don’t just stop smoking, which is obviously the best solution. There are alternatives that can help generate this impact.

X-ray

President of Philip Morris Brasil since 2018, with experience in sales and marketing. The executive holds a doctorate in administration from the IE Business School, a master’s degree from the IMD (International Institute for Management Development) and a law degree from the University of San Pedro Sula, in Honduras.

​Joana Cunhawith andressa Motterand Ana Paula Branco