Philip Morris International Inc. is trying to burnish its image, most recently among the international, socially conscientious elite at Davos. But even as its upcoming earnings are expected to underscore its migration away from cigarettes, the World Health Organization says it’s not buying into the idea that the tobacco giant is “healthier” than before.
The maker of Marlboro cigarettes has been working hard to change its narrative by pushing what it calls lower-risk alternatives. With its earnings on Thursday, the company will reveal just how pressing the need for reinvention is: Cigarette sales are expected to fall yet again, and a new nicotine device in which it’s placing most of its hopes, IQOS, may have mixed results in its biggest market, Japan.
But Chief Executive Officer Andre Calantzopoulos says it’s hard to make headway in a shift away from cigarettes with the WHO still characterizing it as a bad actor.
“The WHO continues to refuse to even have a conversation with us,” Calantzopoulos said in an email after the company returned from the World Economic Forum in Davos, where it called for a truce between “anti-tobacco lobbies” and the industry. If the WHO and tobacco companies are able to work together, Philip Morris says they can better encourage adult smokers who would otherwise keep buying cigarettes to switch to vaping or other alternatives it calls lower risk. It projects that by 2025, at least 40 million Philip Morris cigarette smokers will have switched to smoke-free products.
“If I get support from the World Health Organization, and we stop the ideological debates and focus on the real needs of the people, that can happen much faster,” Calantzopoulos said in an interview at Davos.
But the health organization doesn’t want to work with a company that still supplies 813 billion cigarettes a year to smokers outside the U.S. WHO spokesman Tarik Jasarevic said the organization’s rules prevent it from engaging directly with tobacco companies “partly because tobacco companies have misled health authorities and the public about the risks associated with tobacco use.”
“This includes promoting so-called light and mild tobacco products as an alternative to quitting, while being fully aware that those products were not less harmful to health,” he said in an emailed statement.
The WHO couldn’t immediately provide an expert to explain any scientific differences between the company’s research and its own.
New Tactics
Meanwhile, Philip Morris continues to try to reshape its image. In January, it took out a full-page ad in the Wall Street Journal, titled “A Tobacco Company That Actually Cares About Health. How Did That Happen?” Around 300 employees at the company’s digital unit are working on projects like how to use publicly available data to encourage smokers who would otherwise continue using cigarettes to switch to smoke-free products, said Chief Digital Officer Jamie Suarez.
The company got a good reception at Davos from parties other than the WHO, Suarez said, noting that he understands it’s difficult for the world to believe that a solution to the harms of cigarettes have come from cigarette companies themselves. “We’re a tobacco company with a history we can’t change,” he said. “But what we’re saying is true.”
With fourth-quarter results on Thursday, the company that spun off from U.S.-focused Altria Group Inc. in 2008 will reveal how IQOS sales are going. Investors will also look for more information on how Philip Morris plans to deal with the potential for new competition as sister company Altria seeks to help its new investment, Juul Labs Inc., sell its rival vaping device internationally.
“Time is of the essence for them to demonstrate there’s a future beyond cigarettes,” said Bloomberg Intelligence analyst Ken Shea. On IQOS, “the jury’s still out on whether this can be the transformational platform that the company is hoping it can be.” Philip Morris sells IQOS, which it says has less toxicants than cigarettes, in around 43 countries, and is still seeking approval for Altria to sell it in the U.S.
