You Will Not Recognise Niš in Three Years

Philip Morris International (PMI) is a very bold company, changing the rules of the game while being on the top and leading the game. We are talking to Massimo Andolina, President of the Region Europe at Philip Morris International, about smoke-free future and the tobacco industry perspective and this “Bowie-sque” attitude.

Does this significant investment in the Niš factory shed new light on what a small market Serbia is in terms of contribution to the transformation of the company and the mission of a smoke-free world?

Serbia is moving well in this transformation. Looking at the data, around 10% of smokers already switched to smoke-free alternatives, while 1/3 of the population smokes heavily (seen from the number of cigarettes smoked daily). So, the people resonated with our message. We are happy to be on the 20^th anniversary since we can say that we are closing an important chapter while starting a new one with the new products of the future. We are starting with the new product that we have just finished testing in very few markets. I am sure during our next visit, when we finish that step, you will not be able to recognise Niš in 3 years or even after the first phase of the investment. This is not incremental, even from the manufacturing perspective. This is massive. A quantum leap. When you visit our factory in Romania, newer than in Niš, you will see the factory of the future – bright, clean, with the latest technologies, and laboratories where the contents of the products are allowed. When you bring technology, the quality control gets to a new level, the equipment is fully digital and automatic, and you get 2 things: invest in people, and connect with the people in the territory, the youngsters that are technologically advanced. As PM Brnabić said in her speech, the investments of the Government are absolutely crucial: the innovation hubs and sci-tech centres. Once you create these innovations, you create the complete ecosystem, so it becomes a fantastic place for companies to invest. It is beneficial for both people and the company. In Bologna, we had the problem 3-4 years ago: they told me that Lamborghini, Porsche, etc. are poaching our engineers, skilled workers… I explained that it is beautiful that we created people who are wanted for their skills, so the companies come to Bologna.

Mentioning the smoke-free world, what do you think can be done better so that a smoke-free world becomes a reality, not a mission? What is the future about, and what are today’s obstacles? Can you state some specific measures that governments around the world need to take for the progress you are talking about?

There are lots of things that we as a company can do better. We constantly take feedback from the consumers, making better products more satisfactory. I.e. the new product, IQOS ILUMA, is not an incremental innovation – it is a whole new level, it transforms the whole process. We have been learning how to pass the messages to the consumers daily, but there are still opportunities to improve, 7-8 years into the journey. In Europe, we are trying to gather all the countries to communicate the message, but we cannot do it alone. We are confronted in several places with obstacles. Some countries say: oh, it is a tobacco product. You cannot communicate. They do not get it is significantly better than classical cigarette, so they condemn the users to the classical, more toxic way of nicotine consumption. They prevent people from knowing. The example of Sweden is a leading one. Sweden was on nicotine pouches for 3 years prior to the EU accession. They managed to avoid the ban on nicotine pouches as an exception and commercialize it, and after 30 years, the average use of tobacco fell from 25% to 5%, so they are smoke-free virtually. They also lowered the tobacco-related illness rate. The nicotine pouches is forbidden in the EU, but there is also a tendency to forbid other type of smoke-free products. It leaves users only one option – to go to the tobacconist and buy another pack of classic cigarettes. If you don’t go one-to-one with the person, a proper trial, find the proper taste, a follow-up – well, this conversion is not full. People like the taste of cigarettes, but sometimes they revert after only a week. Prior to COVID-19, in 2018-2019, we sent thousands of people on the ground to explain the products face-to-face. In some countries like France, you cannot even tell the people these products exist, only on the shows. And the people just taste it, saying, “well, it is nothing like cigarettes,” and returning to the classics. We have 25-30% of people who go through this process and quit the classic cigarettes altogether.

Well, it was promoted by films, by personalities like Humphrey Bogart, lasted for several decades, and became so accepted, a part of life’s experience. To undo this and introduce a “new cool” takes an enormous amount of time and effort. Yes, they have to become attractive, but not too attractive – we want the old smokers to convert, but we don’t want to make them too attractive so the non-smokers start using them. We have to be careful with flavours, because they make the difference. Especially Spain, Germany, and France – they are “full-flavored tobacco” countries, they are attached to it. Some countries like more light or menthol. The menthol segment was, for instance, a very small segment of cigarettes in Italy, but if the switch, now approximately 1/3 of the market of smoke-free products is menthol-flavored. But they can also attract new users. We are clear with that – we want the users to switch, not to create new users.