[corp-focus] Philip Morris Int'l Commences New Plans to Spread Death and Disease

[robert weissman]

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Philip Morris International Commences New Plans to Spread Death and Disease
By Robert Weissman
March 31, 2008

Philip Morris International today starts business as an independent 
company, no longer affiliated with Philip Morris USA or the parent 
company, Altria. Philip Morris USA will sell Marlboro and other 
cigarettes in the United States. Philip Morris International will 
trample over the rest of the world.

Public health advocates have worried and speculated over the past year 
about what this move may mean, but Philip Morris International has now 
removed all doubts.

The world is about to meet a Philip Morris International that will be 
even more predatory in pushing its toxic products worldwide.

The new Philip Morris International will be unconstrained by public 
opinion in the United States -- the home country and largest market of 
the old, unified Philip Morris -- and will no longer fear lawsuits in 
the United States.

As a result, Thomas Russo of the investment fund Gardner Russo & Gardner 
tells Bloomberg, the company "won't have to worry about getting 
pre-approval from the U.S. for things that are perfectly acceptable in 
foreign markets." Russo's firm owns 5.7 million shares of Altria and now 
Philip Morris International.

A commentator for The Motley Fool investment advice service writes, "the 
Marlboro Man is finally free to roam the globe unfettered by the legal 
and marketing shackles of the U.S. domestic market."

In February, the World Health Organization issued a new report on the 
global tobacco epidemic. WHO estimates the Big Tobacco-fueled epidemic 
now kills more than 5 million people every year.

Five million people.

By 2030, WHO estimates 8 million will die a year from tobacco-related 
disease, 80 percent in the developing world.

The WHO report emphasizes that known and proven public health policies 
can dramatically reduce smoking rates. These policies include indoor 
smoke-free policies; bans on tobacco advertising, promotion and 
sponsorship; heightened taxes; effective warnings; and cessation 
programs. These "strategies are within the reach of every country, rich 
or poor and, when combined as a package, offer us the best chance of 
reversing this growing epidemic," says WHO Director-General Margaret Chan.

Most countries have failed to adopt these policies, thanks in no small 
part to decades-long efforts by Philip Morris and the rest of Big 
Tobacco to deploy political power to block public health initiatives. 
Thanks to the momentum surrounding a global tobacco treaty, known as the 
Framework Convention on Tobacco Control, adopted in 2005, this is 
starting to change. There's a long way to go, but countries are 
increasingly adopting sound public health measures to combat Big Tobacco.

Now Philip Morris International has signaled its initial plans to 
subvert these policies.

The company has announced plans to inflict on the world an array of new 
products, packages and marketing efforts. These are designed to 
undermine smoke-free workplace rules, defeat tobacco taxes, segment 
markets with specially flavored products, offer flavored cigarettes sure 
to appeal to youth, and overcome marketing restrictions.

The Chief Operating Officer of Philip Morris International, Andre 
Calantzopoulos, detailed in a March investor presentation two new 
products, Marlboro Wides, "a shorter cigarette with a wider diameter," 
and Marlboro Intense, "a rich, flavorful, shorter cigarette."

Sounds innocent enough, as far as these things go.

That's only to the innocent mind.

The Wall Street Journal reported on Philip Morris International's 
underlying objective: "The idea behind Intense is to appeal to customers 
who, due to indoor smoking bans, want to dash outside for a quick 
nicotine hit but don't always finish a full-size cigarette."

Workplace and indoor smoke-free rules protect people from second-hand 
smoke, but also make it harder for smokers to smoke. The inconvenience 
(and stigma of needing to leave the office or restaurant to smoke) helps 
smokers smoke less and, often, quit. Subverting smoke-free bans will 
damage an important tool to reduce smoking.

Philip Morris International says it can adapt to high taxes. If applied 
per pack (or per cigarette), rather than as a percentage of price, high 
taxes more severely impact low-priced brands (and can help shift smokers 
to premium brands like Marlboro). But taxes based on price hurt Philip 
Morris International.

Philip Morris International's response? "Other Tobacco Products," which 
Calantzopoulos describes as "tax-driven substitutes for low-price 
cigarettes." These include, says Calantzopoulos, "the 'tobacco block,' 
which I would describe as the perfect make-your-own cigarette device." 
In Germany, roll-your-own cigarettes are taxed far less than 
manufactured cigarettes, and Philip Morris International's "tobacco 
block" is rapidly gaining market share.

One of the great industry deceptions over the last several decades is 
selling cigarettes called "lights" (as in Marlboro Lights), "low" or 
"mild" -- all designed to deceive smokers into thinking they are safer.

The Framework Convention on Tobacco Control says these inherently 
misleading terms should be barred. Like other companies in this regard, 
Philip Morris has been moving to replace the names with color coding -- 
aiming to convey the same ideas, without the now-controversial terms.

Calantzopoulos says Philip Morris International will work to more 
clearly differentiate Marlboro Gold (lights) from Marlboro Red 
(traditional) to "increase their appeal to consumer groups and segments 
that Marlboro has not traditionally addressed."

Another, related initiative is Marlboro Filter Plus, which claims to 
reduce tar levels. First launched in Korea, in 2006, Calantzopoulos says 
it has recorded "an impressive 22 percent share" among what the company 
designates as "Young Adult Smokers."

Philip Morris International also is unrolling a range of new Marlboro 
products with obvious attraction for youth. These include Marlboro Ice 
Mint, Marlboro Crisp Mint and Marlboro Fresh Mint, introduced into Japan 
and Hong Kong last year. It is exporting clove products from Indonesia.

Responding to increasing advertising restrictions and large, pictorial 
warnings required on packs, Marlboro is focusing increased attention on 
packaging. Fancy slide packs make the package more of a marketing device 
than ever before, and may be able to obscure warning labels.

Most worrisome of all may be the company's forays into China, the 
biggest cigarette market in the world, which has largely been closed to 
foreign multinationals. Philip Morris International has hooked up with 
the China National Tobacco Company, which controls sales in China. 
Philip Morris International will sell Chinese brands in Europe. Much 
more importantly, licensed versions of Marlboro are expected to be 
available in China starting this summer. The Chinese aren't letting 
Philip Morris International in quickly -- Calantzopoulos says "we do not 
foresee a material impact on our volume and profitability in the near 
future." But, he adds, "we believe this long-term strategic cooperation 
will prove to be mutually beneficial and form the foundation for strong 
long-term growth."

What does long-term growth mean? In part, it means gaining market share 
among China's 350 million smokers. But it also means expanding the 
market, by selling to girls and women. About 60 percent of men in China 
smoke; only 2 or 3 percent of women do so.

The global vilification of Big Tobacco over the last decade and a half 
is one of the world's great public health stories. Directly connected to 
that vilification has been a reduction in smoking, and adoption of 
life-saving policies that will avert millions of deaths.

Yet here comes Philip Morris International, now the world's largest 
nongovernmental tobacco company. It is permitted to break off from 
Altria with no regulatory restraint. It proceeds to announce plans to 
subvert the public health policies that offer the best hope for reducing 
the toll of tobacco-related death and disease. The markets applaud, 
governments are mute.

What an extraordinary commentary on the political and ideological 
potency of the multinational corporation -- and the idea that 
corporations should presumptively be free to do what they want, with 
only the most minimal of restraints.


Robert Weissman is editor of the Washington, D.C.-based Multinational 
Monitor, <http://www.multinationalmonitor.org> and director of Essential 
Action <http://www.takingontobacco.org>, which works to curb the global 
tobacco epidemic.

(c) Robert Weissman

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