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Published by: Institute for Management Development (IMD)
Originally published in: 2020
Version: 05.10.2020
Revision date: 09-Mar-2021

Abstract

This is an abridged version. Philip Morris International (PMI) CEO Andre Calantzopoulos announced in 2016 a radical pivot in the Marlboro cigarette manufacturer's strategy: the company would shift to 'smoke-free' products in more than 180 countries around the world. One of these products was IQOS, a new 'heat-not-burn' (HNB) device aimed at providing the world's over 1 billion 'adult smokers with better options.' The innovation of the products which, PMI claimed, were less harmful than cigarettes was welcomed by many investors and PMI. Calantzopoulos and PMI's Board of Directors believed that its sustainability strategy was critical to the company's long-term success. Nevertheless, convincing important stakeholders that a tobacco company could be part of the solution to rid the world of cigarettes by offering better alternatives was a different matter. The United Nations, World Health Organization (WHO), regulators, public health advocates, and some sustainable investors said that there was no safe level of use and no opportunity for effective engagement with tobacco companies. After a two-year wait, the US FDA issued an order authorizing the sale of IQOS in the US market of 40 million smokers. The FDA found that IQOS was 'appropriate for the protection of health.' PMI organized the 2020 Stakeholder Engagement Meeting in Lausanne, Switzerland to convene key stakeholders to engage with PMI's smoke-free business transformation.

Time period

The events covered by this case took place in 2016 to present.

Geographical setting

Region:
World/global

Featured company

Philip Morris
Employees:
10000+
Turnover:
USD 28.7 billion
Industry:
Tobacco

About

Abstract

This is an abridged version. Philip Morris International (PMI) CEO Andre Calantzopoulos announced in 2016 a radical pivot in the Marlboro cigarette manufacturer's strategy: the company would shift to 'smoke-free' products in more than 180 countries around the world. One of these products was IQOS, a new 'heat-not-burn' (HNB) device aimed at providing the world's over 1 billion 'adult smokers with better options.' The innovation of the products which, PMI claimed, were less harmful than cigarettes was welcomed by many investors and PMI. Calantzopoulos and PMI's Board of Directors believed that its sustainability strategy was critical to the company's long-term success. Nevertheless, convincing important stakeholders that a tobacco company could be part of the solution to rid the world of cigarettes by offering better alternatives was a different matter. The United Nations, World Health Organization (WHO), regulators, public health advocates, and some sustainable investors said that there was no safe level of use and no opportunity for effective engagement with tobacco companies. After a two-year wait, the US FDA issued an order authorizing the sale of IQOS in the US market of 40 million smokers. The FDA found that IQOS was 'appropriate for the protection of health.' PMI organized the 2020 Stakeholder Engagement Meeting in Lausanne, Switzerland to convene key stakeholders to engage with PMI's smoke-free business transformation.

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Time period

The events covered by this case took place in 2016 to present.

Geographical setting

Region:
World/global

Featured company

Philip Morris
Employees:
10000+
Turnover:
USD 28.7 billion
Industry:
Tobacco

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