Celebrations marking the 20th anniversary of the acquisition of the then Niš Tobacco Industries by company Philip Morris International were crowned with the announcement of a new investment that’s worth 100 million dollars and is expected to create 200 new jobs in the capital of Southern Serbia
With this latest PMI investment set to mark a major milestone in the transformation of the tobacco industry in Serbia and revolutionise this factory that has hitherto exclusively produced traditional cigarettes and will now begin manufacturing smoke-free alternatives, we spoke with Christos Harpantidis, Area Vice President of South East Europe Cluster at Philip Morris International.
In light of the announced major new investment in PMI’s factory here in Niš, how do you envisage this investment contributing to the continuing transformation of your company?
– This investment that’s been announced in Niš really represents a special moment for several reasons. One is that we are together celebrating 20 years of the presence of Philip Morris in Serbia, with the acquisition of the factory, as well as a series of investments and a very good growth story in the country. The second important element is the fact that this investment relates to innovative new products with a reduced risk, which take this factory into a completely new era. For years now, we have had a very successful business in Serbia and our local factory in Niš has been exporting to over 50 markets. However, until now, our business here has been focused on producing traditional products.
We are now opening a new chapter, with products based on innovations and technology, which is extremely important for Serbia and the region. So, we expect this – together with the more than 200 new jobs that it will generate – to provide a boost to the regional economy, and to Serbia overall. This thus represents a significant milestone, both for us and for the country, but also for the region of the City of Niš, as our operations here are now aligned with PMI’s vision of a smoke-free future.
Indeed, Philip Morris International is aspiring for smoke-free products to account for more than 50 per cent of its total net revenue by 2025. How will this plan reflect on local markets, for example here in Serbia, where most of the production still relates to traditional tobacco manufacturing?
– If we take the big picture perspective, at Philip Morris International we’ve committed to over 50 per cent of our net revenue being generated with the new products by 2025. Of course, 50 per cent is just a number, while the essence of this is that we are striding, with both feet, towards our vision of moving away from cigarettes. At the moment we’ve reached 35% at the global level, so we are progressing very well towards our 2025 target.
With today’s announced investment, PMI has to date invested a total of over a billion dollars in Serbia
The transformation that we are going through has multiple elements. There is the element of product transformation – in that we are changing to the new generation of products that will be produced here, while we are also changing the way we operate, our culture, but also the way we commercialise our products. And we are obviously also trying to evolve and change the world around us, in terms of how the scientific community and the regulations treat these new products. This is essential to achieving our vision for a smoke-free world. We cannot do it alone: other companies also have to produce these kinds of products that are significantly better than cigarettes, and are scientifically proven as such; while regulators also need to create the right kind of regulatory environment in order to be able to give consumers accurate, science- based information.
Given that the prevalence of smoking remains high in this part of Europe, what steps is PMI taking to address potential scepticism or resistance from local communities with regard to smoke-free products?
– We firstly recognise the problems that are related to smoking, and we did so a long time ago. For over a decade, PMI invested more than 10.5 billion dollars to scientifically research, develop and commercialise smoke-free products. These scientific studies and findings are open to third-party reviews. We are therefore opening a dialogue and inviting everyone to the table in order to do something about the problem of smoking. The WHO predicts that, in 2025, we will still have a billion smokers around the world, so the question is what we can do about that.
As with many other major challenges of today’s society, the idea is to produce solutions that are increasingly better until you find the ultimate solution. So, just as in the energy sector we are moving from fossil fuels to renewable energy, which is not completely harmless. That’s why we’ve taken this very seriously, done our best, placed the products on the market and opened the dialogue to discuss and make sure that we help the society move in this direction.
How would you characterise the progress of the business environment in Serbia since Philip Morris initially entered the market, 20 years ago?
– I think our continued presence here proves that we recognise the progress that the country has made. That’s also why we’re continuing to invest. We were just discussing the numbers since the acquisition of the traditional business 20 years ago until today. With today’s announced investment, PMI has to date invested a total of over a billion dollars in the country. And this didn’t come with one shot, but rather has been a series of repeat investments that create new, highly-skilled jobs and advance the country’s exports. We are thus contributing to a society and country that is positive and open to new investments, especially when that’s for the benefit of consumers. I strongly believe that this is also a responsibility across the wider region of the Balkans and that we will continue to contribute in this way.
Yet more proof that we recognise the positive environment in Serbia is provided by our collaboration with the Serbian state in supporting initiatives that benefit the society, or in creating our own initiatives in collaboration with the government. One example of that is the StarTech Project, which is intended to support innovation in different places across Serbia and has received an investment of five million dollars on our side over the last few years. It is yielding results and we plan to continue financing it. Initiatives like this form part of our sustainability efforts, as sustainability is a core strategy of Philip Morris International. Or rather, to correct myself, sustainability is THE core strategy of Philip Morris International, and we are doing our utmost across all parts of our operations – in our governance, in the way we treat our employees and business partners, in the way we measure our impact on the environment and try to improve it, and, obviously, in the way we interact with society, with projects like StarTech and others, which have very specific measurable KPIs that we use to check our progress towards ESG and the pace of our own transformation towards being a smoke-free company and one of the most sustainable companies in the world.