Foto: Philip Morris România

You took over the position of Managing Director of Philip Morris Romania in January 2021. How did you adapt and what were the most important milestones of your mandate in your first year here? What priority goals are on your agenda for the next period?

In total honesty, I can say that my arrival was quite strange and challenging… Landing in a new position in a new country in the middle of a pandemic is quite a challenge! But I have to say that everything was smoother and easier than I could have ever imagined thanks to the amazing team I found here. I adapted quickly and started working with this amazing and talented team to further accelerate our vision of delivering a smoke-free Romania. This was one of the priorities together with keeping our employees safe and improving the quality of their lives during this difficult period.

Among the milestones we have achieved I would name three. The first, working relentlessly to better explain to adult smokers and society in general that, today, there are better alternatives to cigarettes for those that continue smoking. So, one important point on my agenda was and still is to increase the awareness and understanding of smoke-free products. The second one is to put the consumer at the core of everything we do – listening and adapting constantly to our consumers, always offering better products and services like IQOS 3 DUO or the recent launch of lil SOLID 2.0, KT&G’s smoke free product introduced by IQOS in Romania. The third milestone is continuing the investments in our state-of-the-art factory in Otopeni, with almost 1,000 high qualified direct employees and with up to $500 million invested since 2017 in the development of manufacturing capacities for smoke-free products. And, on top, the commitment to invest over the next two years more than $100 million. Our aim is to continue developing production capacities for innovative smoke-free products which position Romania at the forefront of Philip Morris International’s transformation just like other highly innovative countries like Japan, Switzerland, Italy, Greece.

How has the local market for cigarettes and tobacco products evolved in 2021 versus 2020 and to what extent has the pandemic affected the activity of this sector? How do you see the evolution of the market in 2022?

2021 has not been an easy year, the pandemic continued to have a big impact on everybody. However, as I mentioned before, we kept our direction and accelerated our efforts to explain to adult smokers that the best thing they can do is to quit smoking completely, but for all those that would otherwise continue to smoke they should be aware there are better, scientifically substantiated alternatives to traditional cigarettes.

We have taken important steps in this direction in 2021, opening new points of sales and enlarging our user base compared to 2020, but there are still many things to be done. Combustible (traditional) cigarettes still account for more than 90% of the Romanian market and better alternatives are a niche product despite the growth recorded these past years.

We have been present on this market for six years, but there is still a high degree of misinformation about smoke-free alternatives, especially heated tobacco products. We need to trigger this debate in society as people have the right to know about these alternatives and the science behind them. But clearly this is something we cannot achieve alone. We need key opinion leaders from the society like journalists to be much more vocal in understanding and explaining the difference between traditional cigarettes and available scientifically substantiated better alternatives. Just like it is happening when talking about fossil fuels and renewable energy or traditional and electric cars.

With this support and by providing accurate information to the public about these products versus cigarettes we have the chance to improve the lives of millions of adult smokers. We need governments to continue promoting innovation and to put into place regulatory frameworks that help those adults who would otherwise continue to smoke to switch to these better alternatives. Frameworks similar to the one provided by the Food and Drugs Administration in the US or like those in other neighbouring EU countries such as Greece.

The investments made since 2017 so far in the Philip Morris Romania factory in Otopeni have reached the $ 500 million landmark. When did you intend to complete the modernization project of the production unit and what could be the total investment value?

The conversion of the factory in Otopeni is an ongoing process as Philip Morris International’s (PMI) vision of delivering a smoke-free future is unfolding. As the company’s transformation continues, the investments made by PMI in Romania will also continue. In the period 2022-2023, an additional $100 million will be invested in the expansion of the smoke free production capacity and of the product portfolio, which include consumables for lil SOLID 2.0 and will include consumables for IQOS ILUMA, the latest device launched by PMI in Japan and Switzerland. Investments are also being made in sustainability – we aim for the factory to become carbon neutral by 2024. So, the total amount invested by PMI in Romania will reach more than $600 million by 2023. To ensure this happens and to have a constant evolution in the coming years, it is very important to have a predictable fiscal and regulatory environment.

I will mention that Philip Morris Romania factory is currently the second European site in terms of production of consumables for IQOS, after the one in Bologna (Italy), and the third in the world, after Bologna and Izhora (Russia).

We are really proud of the incredible job our approximately 1,000 employees are doing placing Romania as one of the most advanced countries worldwide in this advanced technology.

Current data show that over 90% of the factory’s production is exported. What are the top foreign destinations? On the other hand, how do you predict the evolution of shipments on the Romanian market in the future?

More exactly, 92% of the factory’s output is exported to 54 markets on five continents, and 8% covers the domestic consumption. The main markets where our smoke-free products are exported are Japan, Hungary, Poland, and the Czech Republic.

Unfortunately, the IQOS consumables represented less than 4% of the total cigarettes and heated tobacco products market in the third trimester of 2021. However, as the Romanian adult smokers will become more aware of the smoke-free products and that they are less harmful than cigarettes, the demand and the market will continue developing. The recent growth in the heated tobacco product market is evidence of this demand. And I am proud to say that in Romania and elsewhere around the world, our company is clearly leading the heated tobacco products category.

To what extent are Romanian smokers willing to give up cigarettes in favor of using smoke-free products? What is the profile of the Romanian IQOS user, the product developed by Philip Morris International that heats tobacco?

In Romania, the level of misinformation about alternatives that have the potential to be less harmful, such as heated tobacco products, is very high. The consequence is that very few adult smokers out of the existing 5 million switch to these products. By comparison, in countries such as Greece or Italy, with a similar infrastructure, the percentage of those who switch to these products is much higher. For example, few smokers know that nicotine is not, as it is generally believed, the primary cause of smoking related diseases. The vast majority of harmful compounds found in cigarette smoke, which is generated by combustion, are the primary cause of smoking related diseases. This is a scientific truth that many people do not know.

The Romanian IQOS user is on average someone with higher educational level, who is well informed, who loves innovation and design and who wants the best for them and their families. They tend to be early adopters of anything that brings a real tangible benefit. They are curious and open to new things if they are really improving people’s lives.

Interview by Ioan Dornescu

Share

Share