Can Big Tobacco redeem itself?

Philip Morris International says it wants to end smoking.

Smoke-free products on display by Philip Morris International in Washington DC

In the last decade or so, tens of millions of people have quit cigarettes by switching to safer nicotine products – e-cigarettes like JUUL, pouches like ZYN and devices that heat tobacco without burning it, like those sold under the IQOS brand.

In Sweden, Japan and New Zealand, alternative nicotine products have driven unprecedented declines in cigarette sales. Even in the US, where the government and tobacco-control groups have opposed them, e-cgarettes and pouches now make up about half of the tobacco market, according to Goldman Sachs. Fewer than 10 percent of adults smoke. Teen smoking has fallen to a 25-year low.

All of this is welcome news. Combustible cigarettes are lethal; the safer products are not risk-free but there’s no evidence that they kill people.

Here’s the problem, though: The smoke-free products are produced and sold by Philip Morris International, Altria and British American Tobacco, a.k.a. Big Tobacco. Few in the public-health establishment trust them to fix the problem they helped to create. Their reputations are toxic.

Consequently, the safer products they sell continue to face fierce opposition, onerous regulation and outright bans – all of which are slowing down what should be a more rapid transition away from cigarettes.

Leading the transition is Philip Morris International (PMI), the world’s largest publicly-traded tobacco company, with annual revenues of about $40bn last year and a market capitalization of roughly $250bn.

"We built the world’s most successful cigarette company,” says Jacek Olczak, PMI’s soft-spoken chief executive. "But now we’ve committed to stop selling cigarettes for good.”

PMI has a long way to go: Combustibles still account for nearly 60 percent of its sales and profits. But nearly all of its investment and R&D spending is flowing into the smoke-free products. PMI spent about $16 billion to acquire Swedish Match, which owned ZYN, and another $2.7 billion for the rights to commercialize IQOS in the U.S.

Last week, Olczak brought a contingent of PMI executives to Washington for a day-long event, branded as Technovation, designed to tell the company’s transformation story. It was, unfortunately, a lackluster affair. Low-energy, scripted panels skirted the controversies that have roiled the world of tobacco control over the alternative nicotine products.

That’s a shame because the stakes are so high. Smoking is estimated to cause 480,000 deaths annually in the US and 8 million worldwide. E-cigarettes have “potential life-saving benefits,” according to some of the world’s leading tobacco-control experts, and they clearly help people who smoke quit the habit. A commentary published this week in Nature Health says:

The rapidly evolving market for smoke-free nicotine products, combined with their increasing uptake among people who smoke, presents an unprecedented opportunity to rethink global tobacco control ambition.

Yet US politicians, particularly Democrats, government regulators, the World Health Organization and tobacco-control prohibitionists like the Campaign for Tobacco Free Kids still want to limit access to the safer products, while exaggerating their dangers and minimizing their benefits. Most Americans believe—wrongly—that the alternative products are no safer than cigarettes.

Behind the opposition is persistent animus towards Big Tobacco. “I’d like to just destroy the tobacco industry,” the anti-smoking crusader Stanton Glantz has said. Tobacco Tactics, an anti-industry website funded by Bloomberg Philanthropies, says flatly that “tobacco industry interference is the greatest barrier to progress in reducing tobacco’s deadly toll.”

“PMI continues to thrive on a global addiction to tobacco,” The Lancet wrote in an unsigned editorial about the company’s smoke-free goal. “Calling for a smoke-free future starts with the courage to cease all cigarette production instantly.”

Mistrust of the tobacco companies runs so deep that academic journals like Nicotine & Tobacco Research won’t publish work by industry scientists; people with industry ties are routinely barred from participating in academic conferences about tobacco.

The hostility is understandable, to a point. PMI, Altria and British American Tobacco continue to sell lethal cigarettes. For decades, the industry lied to governments and the public about the dangers of smoking. They made false health claims about low-tar and “light” cigarettes.

And yet, there’s this: More than 43 million people use smoke-free products from PMI, and 70 percent of them have abandoned cigarettes, the company says. The smoke-free products are sold in more than 100 markets. By 2030, the company says, it intends to generate more than two-thirds of its global net revenues from smoke-free products.

“We’re a completely different company,” Tomasso Di Giovanni, a PMI vp for communications, said last week in DC.

PMI has big plans to expand in the US, with ZYN, IQOS and an e-vapor product called VEEV. As of now, only ZYN is widely available. A next-generation IQOS device and the VEEV e-cigarette have yet to be authorized for sale by the FDA, which is slowly making its way through thousands of applications to sell nicotine products.

With mentioning the FDA, Olczak expressed frustration with the regulatory obstacles facing PMI. People want to regulate smoke-free products like cigarettes, he said, but they are not cigarettes. To encouraging switching to the safer prodcuts, they could and should be taxed at lower rates than cigarettes.

Speaking of cigarettes, one word went unspoken during the day of speeches and panels: Marlboro. It’s PMI most valuable brand, by far. The company sells Marlboros in about 170 countries, just about everywhere except the US, where the brand is owned by Altria. (Altria and PMI were once units of Philip Morris.). Selling cigarettes remains fabulously profitable; fewer people smoke but PMI has been able to grow revenues and earnings from cigarettes by raising prices.

Indeed, Marlboro generates the cash that is financing the company’s smoke-free transformation. Let that sink in for a moment.

The truth is, PMI can’t stop selling cigarettes. It has a legal obligation to shareholders to maximize profits. It could, in theory, sell the cigarette business but that would do no good; any buyer would continue to produce Marlboros and people would continue to smoke them. They’re legal as well as lethal.

Marlboro generates the cash that is financing PMI’s smoke-free transformation.

We live in a messy world, people. On his Substack, Alan Gor, an Australian advocate of tobacco harm reduction, put it this way:

The end of smoking, if it comes, may not arrive in the way people expected. It may not be delivered solely by governments or public health campaigns. It may also be shaped, accelerated, and complicated by the very companies that once defined the problem.

What Big Tobacco is doing is no mystery. Companies threatened by new technologies can adapt or die. (See: Kodak, Blockbuster Video, Encyclopedia Britannica.) PMI has chosen to adapt. It is very visibly trying to disrupt the declining and dirty business of selling cigarettes with cleaner and safer products.

If the goal of public health is to reduce the death and disease caused by combustible cigarettes, it should embrace all efforst to accelerate the end of smoking — no matter who profits along the way.