Philip Morris International


Philip Morris International Inc. is an American multinational cigarette and tobacco manufacturing company, with products sold in over 180 countries. The most recognized and best selling product of the company is Marlboro.
Until a spin-off in March 2008, Philip Morris International was an operating company of Altria. Altria explained the spin-off, arguing PMI would have more "freedom" i.e. leeway outside the responsibilities and standards of American corporate ownership in terms of potential litigation and legislative restrictions to "pursue sales growth in emerging markets", while Altria focuses on the American domestic market. The shareholders in Altria at the time were given shares in PMI, which was listed on the London Stock Exchange and other markets.
The company's legal seat is in New York City, yet it does not operate in the United States of America. Philip Morris USA, a subsidiary of PMI's former owner American parent Altria group owns the Philip Morris brands there. Operational headquarters are in Lausanne, Switzerland.
With tobacco being addictive and the single greatest cause of preventable death globally, the company is highly controversial, not least because of its history of obfuscating scientific evidence around the health impacts of smoking. It has been the subject of litigation and restrictive legislation from governments.
In response to burgeoning awareness of the harm to health of cigarettes, PMI has declared on its homepage the intention to replace cigarettes with smoke-free products, and to "switch... adult smokers" to these products as the first phase of a business strategy, as a decision for the benefit of "adult smokers" and the companies shareholders and employees.
With the world-wide decrease in smoking in the 21st century, shares of Philip Morris were no longer considered the "safe haven" they once were. The company ranked No. 108 in the 2018 Fortune 500 list of the largest corporations by total revenue.

History

Early development

The company states its history is traced to a London tobacconist, Philip Morris, opening a single shop on London’s Bond Street in 1847 which sold tobacco and cigarettes. In 1881, Philip Morris' son, Leopard Morris, established "Philip Morris & Company and Grunebaum Ltd" with Joseph Grunebaum. In 1885, the company changed its name to "Philip Morris & Co. Ltd."
In 1894, William Curtis Thomson and his family began to control the company, and in 1902 the company was incorporated in New York. In 1919, the American business was acquired and incorporated as "Philip Morris & Co. Ltd., Inc." in Virginia.

Later development

In 1954, Philip Morris became the first affiliate of Philip Morris & Co., Ltd, Inc. outside the U.S. In 1972, the company's Marlboro became the world's top-selling cigarette brand.
In 1987, Philip Morris International was incorporated as an operating company of Philip Morris Companies Inc.
, SwitzerlandIn 2001, the operations center of the company was transferred from Rye Brook, New York, to Lausanne, Switzerland. On January 27, 2003, Philip Morris Companies Inc. formally changed its name to the Altria Group. In March 2008, Philip Morris International was spun off from Altria.
In April 2014, Philip Morris International announced that it would close its Moorabbin plant in Australia by the end of 2014 after operating for 60 years, due to the gradual decline of sales in the last ten years and difficulties conforming to 2010 Australian government regulation about reducing fire risks. In 2015, the company sold 850 billion cigarettes.
In August 2018 Reuters reported that Philip Morris "has been among foreign companies with exposure to Russia’s tobacco market. The company’s sales exposure to Russia is 7 percent, according to a note from Goldman Sachs."
As of 2019, main institutional investors are The Vanguard Group with an 8% stake, Capital Research & Management with 5% and BlackRock Fund Advisors with 4%.

Brands

Philip Morris International has six multibillion US$ brands including:
  1. Dji Sam Soe 234 was launched in 1913 and is a brand of Kretek cigarettes. It is the best seller of Kretek cigarettes in Indonesia.
  2. L&M was launched by Liggett & Myers in 1953 with the tagline: "American cigarettes of the highest quality with the best filter." L&M variants include full flavor shorts, full flavor 100s, lights, ultra lights, menthol shorts, menthol 100s, menthol light shorts, menthol light 100s, Turkish Blend shorts, Turkish Blend 100s, and L&M Mild Kretek.
  3. Longbeach include in Australia and Indonesia in 1999. Longbeach variant include: Longbeach Filter and Longbeach Mild.
  4. Marlboro was launched in 1904. Marlboro is the premium brand. Marlboro variants include: Marlboro Special, Marlboro Menthol, Marlboro Lights, Marlboro Lights Menthol, Marlboro Mix-9 Filter Kretek, Marlboro Flavor Plus, Marlboro Black Menthol, and Heatsticks, a heated tobacco product. The company's Marlboro brand ranked first among the most valuable tobacco brands of 2017 on BrandFinance's website, which uses the royalty relief method of brand valuation.
  5. ST Dupont Paris is the brand cigarette designed by Simon Tissot Dupont in 1902. With the black packaging. ST Dupont Paris variants include: filter, lights, menthol, and menthol lights.
  6. U Mild was launched in Indonesia on 22 May 1998 after the Indonesian revolution. U Mild is a Mild Kretek cigarette sold in Indonesia.

Board of directors

''Information from company website.
For the fiscal year 2017, Philip Morris reported earnings of US$6.021 billion, with an annual revenue of US$78.098 billion, an increase of 4.2% over the previous fiscal cycle. Its shares traded at over $105 per share, and its market capitalization was valued at over US$138.4 billion in October 2018.
YearRevenue
in mil. US$		Net income
in mil. US$		Total Assets
in mil. US$		Price per Share
in US$		Employees
200545,3165,616
200648,3026,130
200755,2436,03831,777
200863,6406,89032,972
200962,0806,34234,55229.38
201067,7137,22635,05036.76
201176,3468,54235,48849.55
201277,3938,75237,67066.44
201380,0298,53138,16871.3391,100
201480,1067,45935,18770.3482,500
201573,9086,84933,95672.7580,200
201674,9536,94836,85188.0379,500
201778,0986,02142,968105.3580,600

Research

Philip Morris International's research center is located in Neuchatel, Switzerland and houses Philip Morris International's product research and development program. As of April 2018, earnings reports showed the company had spent $4.5 billion on four products: two that heat rather than burn tobacco, and two other nicotine products. One of these heat-not-burn tobacco products is IQOS.
It is funding the Foundation for a Smoke-Free World to purportedly fund scientific research for the global elimination of tobacco smoking and has adopted a goal of making cigarettes obsolete by 2035. Its claims to independence have been challenged and it has been criticised by the Campaign for Tobacco-Free Kids, Action on Smoking and Health, and Corporate Accountability International. The American Cancer Society stated, "This attempt by Philip Morris International to paint itself as a public health partner is manipulative and dangerous. It is a new twist out of the tobacco industry’s deadly playbook, but nobody should be fooled. It’s a continuation of a decades-long effort to paint over tobacco’s role in spreading death and misery around the globe." Advocacy groups that are indirectly funded by Philip Morris International through the Foundation for a Smoke-Free World are contradicting public health officials, who say smoking puts individuals at greater risk for a more serious case of COVID-19.

Controversies

Australia

The Australian Government announced it would introduce "Tobacco Plain Packaging Laws" on 29 April 2010. Philip Morris International, arranged for its wholly owned Hong Kong subsidiary Philip Morris Asia to 'takeover' two Australian subsidiaries – Philip Morris Australia Limited and Philip Morris Limited on 23 February 2011. In June 2011, Philip Morris International announced that it was using ISDS provisions in the Australia-Hong Kong Bilateral Investment treaty to demand compensation for Australia's plain cigarette packaging anti-smoking legislation. It was one of several tobacco companies to launch legal action against the Australian Government.
British American Tobacco, Philip Morris, Imperial Tobacco and Japan Tobacco International are taking the Australian government to the High Court of Australia to try to stop the government of Australia from introducing plain packaging for tobacco products.
Two challenges to the tobacco plain packaging legislation were heard by the High Court of Australia between 17 and 19 April 2012: 'British American Tobacco Australasia Limited and Ors v. Commonwealth of Australia' and 'J T International SA v. Commonwealth of Australia'.
On 15 August 2012, the High Court handed down orders for these matters, and found that the Tobacco Plain Packaging Act 2011 is not contrary to s 51 of the Constitution. On 5 October 2012, the Court handed down its reasons for the decision. By a 6:1 majority the Court held that there had been no acquisition of property that would have required provision of 'just terms' under s51 of the Constitution.
On 18 December 2015, the Tribunal instituted by the United Nations Commission on International Trade Law issued a unanimous decision agreeing with Australia's position that the Tribunal has no jurisdiction to hear PMA's claim. This was due to the fact that PMI used its wholly owned subsidiary PMA to takeover the Australian-based PM subsidiaries in order to specifically sue the Australian Government for bringing in plain packaging laws. PMI was unable to do this itself as the Australia–United States free-trade agreement signed in 2004 did not have any investor-state dispute settlement clauses included—by design.
In 2017, the Dispute Settlement Body of the World Trade Organization supported Australia's right to enforce plain packaging. In 2017, PMI was instructed to pay the Australia government's legal costs, an estimated 50 million dollars.
In March 2018, the Tobacco giant announced that it will cut 150 jobs as part of a major restructure. Tammy Chan, the managing director in Australia, said more efficient ways to deal with retailers were introduced based on digital technology development.

European Union

In 2004, Philip Morris and the European Union reached an agreement according to which Philip Morris would pay $1.25bn until 2016 to end a lawsuit over smuggling charges.

Norway

Philip Morris also sued Norway over the country's ban on displaying tobacco products in stores. It lost the case in 2012.

Uruguay

In 2010, the company lobbied against Uruguay's strong anti-smoking laws and filed a complaint against the country under the Switzerland-Uruguay bilateral investment treaty. On 8 July 2016, the International Centre for Settlement of Investment Disputes ruled in favour of Uruguay.

United Kingdom

In August 2014, the company foreshadowed legal action against the Government of the United Kingdom if it went ahead with plans to introduce plain packaging. In a submission to the government, Philip Morris International said it would seek compensation running into "billions of pounds," if the proposed legislation went ahead.
In 2018, an advertising campaign was criticized as hypocritical for urging smokers to quit while promoting other products such as heated tobacco.

IQOS

In 2017, according to two editors of the journal JAMA Internal Medicine, after publication of a research letter describing harmful chemicals in heat-not-burn tobacco products, people from Philip Morris International contacted the institutions where the researchers worked and questioned the methods used in the study; the editors described this as a form of "pressure to suppress discourse that could harm commercial interests".
In December 2017, Reuters published documents and testimonies of former employees detailing irregularities in the clinical trials conducted by Philip Morris International for the approval of the IQOS product by the FDA.

Other

From the 1970s to the late 1990s, Phillip Morris along with British American Tobacco, was involved in campaigns to undermine bans against smoking in Muslim majority countries by branding Muslims who opposed smoking as a "'fundamentalist’ who wishes to return to sharia law," and be "a threat to existing government as” according to leaked documents. A 1985 report from Philip Morris squarely blamed the World Health Organization: “This ideological development has become a threat to our business because of the interference of the WHO The WHO has not only joined forces with Muslim fundamentalists who view smoking as evil, but has gone yet further by encouraging religious leaders previously not active anti-smokers to take up the cause." Philip Morris has refused to comment on these findings.
Philip Morris International has announced an overhaul of its human rights protections of tobacco workers in Kazakhstan and 30 other countries after critical reports.
The company runs an information web site outlining the health issues of tobacco. However, it has been criticised in an article in the journal Public Health Nursing as merely a "public relations effort" intended to "undermine public health".
In the 1930s, the company's tobacco advertisements were a steady source of income for numerous medical organizations and journals, including the New England Journal of Medicine and the Journal of the American Medical Association.
In February 2015, John Oliver highlighted the company's many international legal cases on an episode of his television show Last Week Tonight. He also attempted to raise awareness for his campaign using the hashtag #JeffWeCan.

Sponsorship

Philip Morris is a long-term main sponsor of the Formula One team Scuderia Ferrari. The sponsorship is subliminal in the logo these days due to restriction in tobacco sponsorship, but Marlboro-branded Ferrari and McLaren cars won several world titles with famous drivers such as Alain Prost, Ayrton Senna and Michael Schumacher. Philip Morris also sponsored several title winners in MotoGP in road racing and Indy Cars. The Ferrari Formula One deal before direct sponsorships was banned was estimated to be worth £45 million a year as well as paying the multi-million salary of Schumacher.
Despite no longer being able to display the Marlboro logo on Ferrari cars, Philip Morris renewed its sponsorship deal with Ferrari in 2011, 2015, 2017, and 2018 up until 2021. The 2017 deal was reported to be worth $160 million a year.
Philip Morris's sponsorship of Ferrari was seen visually on the car again at the 2018 Japanese Grand Prix, with the cigarette company's "Mission Winnow" branding. This branding has been seen by authorities as an attempt to flout laws and rules banning tobacco advertising, and it was removed by Ferrari for the 2019 Australian Grand Prix after Australian authorities launched an investigation. Ferrari also decided to remove the branding for the 2019 Canadian Grand Prix and the 2019 French Grand Prix to avoid problems with bans on tobacco advertising.
with 'Mission Winnow' branding at the 2019 Chinese Grand Prix