PMI BANKS ON INNOVATIVE PRODUCT
Philip Morris International’s innovative smoke-free product IQOS highlights the company’s transformation and sustainability initiatives, according to a top communications executive of the company.
PMI vice president for international communications Tommaso Di Giovanni said that for the company, sustainability means taking care of tobacco-farming communities; protecting the health, safety and wellbeing of employees; investing in novel technologies; and reducing waste and carbon emissions, among others.
“These are the important key elements of sustainability, and we take them very seriously. It is equally clear to all of us that our biggest positive impact, the biggest contribution to society is to address the core issue—that our traditional products, cigarettes cause diseases. And this objective sits at the top of all our sustainability priorities,” Di Giovanni said during the webinar, “Sustainability: The New Norm of Innovation & Sustainability," organized by South China Morning Post (SCMP) on August 24, 2020.
Di Giovanni was among the four executives who spoke during the online conference moderated by Clark Hill and Winnie Chung of SCMP. Other speakers were Natalie Chan, managing director of PIE Strategy Limited; Donald Low, director of HKUST Institute for Emerging Market Studies; and Michael McComb, vice president for communications and sustainability of SAP Greater China.
Di Giovanni said PMI is now moving towards a new set of products that are better alternatives to cigarettes. “We know that combustion is what generates the vast majority of toxic compounds found in cigarettes. Twenty years ago, we didn't have the technology, the science, the innovation that are needed to address that issue. Today, we can,” he said.
“Science sits at the core of sustainability. We are moving towards a world where we hope cigarettes are replaced with products that are based on science. But we cannot get there alone; others need to play their part. We are definitely moving in that direction. So that is our sustainability,” Di Giovanni said.
He said such sustainability initiatives started 20 years ago, but it was only in 2016, after successfully launching the first smoke-free products in Italy that PMI CEO André Calantzopoulos publicly announced plans to replace cigarettes with better alternatives based on science.
“What this entails is a huge change in the company,” said Di Giovanni. “We're moving from a relatively simple product—cigarettes that have been sold almost in the same shape and form for one 150 years—to an innovative product based on technology and deeply rooted in science. We're moving from a company that is very stable and consistent to a company that needs to be agile. That requires a big cultural change in the company, a big transformation that to my knowledge, no company has done proactively and voluntarily,” he said.
Di Giovanni said PMI continuously invests in research and development to develop more innovative products. “Since 2008, we have invested more than $7.2 billion into the science and research of developing smoke-free products, and we employ more than 400 world-class scientists, engineers and technicians to help us,” Di Giovanni said.
“Today, 11 million smokers are already using our smoke-free IQOS product which is already available in 57 countries,” he said.
Di Giovanni noted that the U.S. Food and Drug Administration has recently authorized the marketing of IQOS as “modified risk tobacco products” (MRTP) with reduced exposure claims in the United States.
He said the current health pandemic has further highlighted the need to continue the company’s transformation path. “I think it has strengthened us in our belief that we are going in the right direction. It strengthened us because the pandemic highlighted the importance of health and health protection. Obviously, that's what is in everyone's mind everywhere. Doing something to improve the health of your consumers is the way to go. It also strengthened our belief that science is the key,” he said.
Di Giovanni said it is an important part of PMI’s four pillars of sustainability initiatives—health, science, dialogue and information.
“The pandemic has strengthened the importance of information for everyone. Adult smokers, for instance, should have information on new alternatives to cigarettes. About 600,000 smokers in Hong Kong, for example, deserve to have access to information to better alternatives. Those are really the four considerations that we made out of the pandemic,” he said.
One of the panelists, Donald Low, director of HKUST Institute for Emerging Market Studies, said other companies should follow the lead of PMI in allowing disruption to take root in their business for the sake of sustainability.
“I really like PMI's story of how they are willing to disrupt, in fact, cannibalize themselves and the industry that has been left unchanged for the last 150 years.
It is extremely difficult for a company like PMI to disrupt itself to diversify its business from a single product to experiments with different ways of delivering safer tobacco products. But if a company like PMI can do that, I think most other companies could be able to find alternative or diverse business models,” Low said.