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Cigarette Maker Philip Morris Bets On Smoke-Free Products Source from: The Star Online 12/24/2018  Tobacco company Philip Morris (M) Sdn Bhd has mapped out its business plan which will place more emphasis on its smoke-free products next year at a time when the tobacco industry is hammered by the high tax environment and illicit trade. Its managing director Kang Tae Koo told StarBiz the priority for 2019 would be to accelerate in the company’s journey towards a smoke-free future, which he believes would take time for the initiative to bear fruit. Although there are some quarters which are doubtful that smoke-free products would reduce risks pertaining to smoking, especially from a standpoint of a cigarette maker, he said Philip Morris International (PMI) is committed to this objective. “This move by Philip Morris International is a bold and disruptive one in the industry and something it truly holds close to its heart although plagued with challenges. “The company will be shifting more resources soonest towards realising its ambition of a smoke-free environment on a global scale,” Kang noted. “As an affiliate of PMI, of which the latter has invested US$4.5bil in research and development for smoke-free products, we will expedite our initiative in the country to substitute our conventional cigarettes with less harmful smoke-free products as soon as possible. “We started the journey towards smoke-free products last month with the rolling out of the IQOS brand. “Unlike the conventional cigarettes, the crux of the heat-not-burn technology lies in the ability of heating up tobacco rather than burning it. Since there is no combustion, there is no smoke. As such, PMI’s scientific studies show this product has lower levels of harmful chemicals and toxins compared to the smoke generated from cigarettes,’’ he said during an interview. The move by the company would pave the way for all local adult smokers, who would otherwise continue to smoke, to better understand smoke-free products and provide an alternative choice. Nevertheless, he stressed that concerted efforts including having defined government policies and the cooperation of various stakeholders are needed to ensure the success of smoke-free products going forward. On the response of IQOS in the market, Kang added he was upbeat that this product as well as other smoke-free ones would be well received gradually. Malaysia became the first country in Asean to launch the IQOS brand besides the product making inroads to more than 40 markets worldwide. Amid the shrinking cigarette volume due to the high tax environment and illicit trade, he said Philip Morris’ domestic market share stands close to 20%. Among some of its rivals in the country are British American Tobacco The company’s best seller is Marlboro, followed by Chesterfield. Its other stable of brands include L&M and Sampoerna. On the current state of the tobacco industry in the wake of higher prices and regulatory environment, Kang noted since the last tax hike in 2015, there has been a dramatic spike in illicit cigarette trade which now puts Malaysia on the global map as one of the top countries in illicit tobacco trade. The imposition of about 40% tax on cigarettes instead has doubled the consumption of illicit cigarettes since 2015 amid lower revenue and earnings for the tobacco industry. Illicit trade since about three years ago has significantly risen by about 60% compared with the mid-thirty percent before the tax hike, he said. Based on estimates mentioned by the Finance Minister, Kang said the illicit alcohol and cigarette trade on the whole is worth about RM4bil a year. Kang, however, highlighted that he was pleased to see the Royal Malaysian Customs stepping up enforcement efforts as well as a firmer stance by the new government to curb illicit trade. This development is an encouraging sign for the legal cigarette industry, he noted. Enditem Related Updates |
