Philip Morris Focuses on The Global Market

Source from:  Boston (MA) Globe 04/25/2012

The first time I ever smoked a cigarette, I was in fifth grade, at a sleepover. My friend stole a Marlboro from her mother's purse and eight of us girls put it up to our lips in her back yard in the middle of the night. By the time I reached high school, some of my friends had already gotten hooked. They showed off by puffing smoke rings and pointing out subliminal pictures hidden on a pack of Camel Lights. But in recent years, the coolness of smoking has faded away, in one of the most profound cultural changes of our generation. Today, only 19 percent of Americans smoke, compared to 42 percent in 1965, when the surgeon general declared the habit deadly. The change was driven by successful lawsuits - as well as high taxes on cigarettes and bans on lighting up in public places. So it's ironic that an industry crippled by lawsuits in the United States is using that very same tactic to its advantage in the rest of the world. But before I get to that, let me set the stage: After a massive tobacco settlement came down in 1998, requiring tobacco companies to curb advertising and to pay more than $200 billion, the industry knew its business model in the United States was on life support. Its most faithful customers were dying, at a rate of nearly half a million a year. Replacing them with new customers was becoming harder than ever. So Philip Morris - the largest international producer of cigarettes - spun off a portion of its business to focus on the industry's best hope for staying alive: the international market. Today, about 80 percent of the world's smokers live in low- and middle-income countries - places that can ill afford the health costs of the habit. Philip Morris International (PMI) has sponsored music concerts in Argentina, sporting events in Indonesia, and Marlboro Man billboards in Macedonia and Ethiopia. In Russia, PMI markets slim cigarettes for ladies in pink, perfume-style boxes. Now the company has its eyes on the prize: China, home to some 300 million smokers. And it's working. Earlier this month, PMI reported profits for the first quarter had risen 13 percent, as falling growth in Europe was offset by a strong demand in Algeria, Saudi Arabia, Indonesia, Japan, Korea, Vietnam, and Latin America. Marlboros are the best selling cigarettes in the world. To keep them so popular, PMI has used an aggressive tactic: lawsuits. When Australia became the first country to mandate plain packaging for cigarettes, Philip Morris-Asia sued Australia under a bilaterial trade agreement with China. Enditem