Raahil Chopra
Jun 26, 2018

'We are promoting abstinence. Quitting is the best. Not starting is even better': Philip Morris International

A chat with André Calantzopoulos, global CEO, Philip Morris International, on the sidelines of the Cannes Lions festival of Creativity

'We are promoting abstinence. Quitting is the best. Not starting is even better': Philip Morris International
Philip Morris International (PMI) was in Cannes last week with a cabana by the beach during the International Festival of Creativity. Many onlookers questioned the presence of the tobacco company in Cannes, as brands and agencies seem to be looking to spread messages promoting health.
We caught up with the company’s global CEO, André Calantzopoulos, to learn more.  
Edited excerpts:
What brings PMI to Cannes? How can a tobacco brand stay relevant in a health conscious world?
We want to make a call to the advertising and marketing fraternity to go ‘smoke free’. We are promoting our smoke-free alternatives including heated tobacco products and e-cigarettes, to current smokers in the industry who would otherwise continue to smoke.
This is the reason why we are here. 
I think to close the subject on regulated industries and products in general, a product that is known remains known even with complete restrictions (on advertising). We have markets like Italy, where there has been no advertising allowed since 1974, but Marlboro is still the leading brand there. At the end of the day, it’s word of mouth that creates marketing. There are many marketers that believe the opposite, but word-of-mouth was the essence of advertising and that remains.
When we were in villages, there was no advertising, and we just relied on word-of-mouth. We are trying to roll out a new product and getting that information out is now the problem. 
Cigarettes are a known category. You don’t need to advertise Marlboro for people to know it exists. When you come to environments that are very restricted, then with a new product like this (smoke free), it’s an issue. If you cannot talk to consumers about that and tell them what it does, and how what it is and what it is not, then it becomes a complicated task.
This is a heated tobacco product. It tackles the problem of cigarettes which are smoked, and burn an organic matter like tobacco. Nicotine is the least of the problem and does not create the health problems that other inhaling toxic things do. 
So, eliminating combustion is the only way to address the risk problem of cigarettes. We started this in 2004 by rolling out products that do not burn tobacco. Of course these are the closest to cigarettes and so it’s the easiest mode to convince smokers to shift. The whole conversation is to move the men or women who smoke to this product.
How difficult do you find it to communicate this?
It’s very difficult to start a process where you can’t communicate. But if you look at the digital world, it’s word of mouth. You trust your friends more than any form of advertising. You would desire to get a conversation around your brand and have a positive net promoter score.
For us, the key thing if you focus on India – it’s first the government to accept that there can be reduction through better products. That seems to be the case in any category. When seat belts were introduced there was a debate that it would make people drive faster. So, should cars not have seat belts and that would make people drive slower?
Or should we not make drugs available for HIV and ask people not to have sex. 
Similarly, with these heated cigarettes, we’re promoting abstinence. Quitting is obviously the best. Not starting is even better. 
There are 1.1 billion people who smoke every day. Telling them that they need to go to zero is a nice thing to say. But, if nothing happens, there are still 1.1 billion people smoking. So, the alternative is a better product. 
We were asked for years to develop this better product, and now that we have it, some people don’t like it. Then, it’s more difficult for them to attack the company.
We have to take the interest of people who smoke too and forget the little bit of the ideology and politics. That’s why we are here, to tell the media, governments and people that there’s a better product, and ask them to evaluate it. Democracy was created to argue with the government. But this is a world we are slightly talking about. 
How do you go about that?
Invest a lot of money and put the product in the market. This year we will have close to 40 per cent of the marketing budget worldwide on this product, even though it’s available only in a few markets. It’s in 40 markets internationally, but the penetration isn’t that wide, because we are present just in a few cities within these countries.
We’re in Japan, Korea, almost national in Italy and Greece. 
We are very serious about this commitment, but on the other side of it we need help from governments. They need to differentiate tobacco products and allow a little more ability to explain to people. There’s a lot of ideological debate worldwide, and that includes India, about whether this product should be authorised. It’s not a dissimilar debate to what you see in other categories. In one part of the ideology you have people saying that there shouldn’t be any alternatives and people should quit. But the fact of life is that people don’t quit. In India, I don’t know how many people smoke bidis and cigarettes, but the fact is that the government looks at the latter only. 
If the product is less harmful, people should be informed about it. I think that’s the right of consumers. Some people will say, ‘my truth is the only truth’, and we have to live with that. 
Would you ever take to surrogate advertising? What are your views on it? 
We should not be doing things like that. In many countries, the laws are very clear and you cannot do it. And we will not do it, because it’s not even the worth of the effort.
The reputational and legal risk you take is not even worth the effort. I don’t think advertising in a known category is about getting new people. 
We should not be confusing prevalence and preference. Advertising in a known category is preference. In a new category you may need some communication to explain what it is. Otherwise you’ll take much more time. So, if governments have a sense of urgency, they should move to regulate these products and they have to start by accepting the principle. 
We are not asking for TV advertising, we want the ability to explain the product. We can ask governments to let us spread something like 50 per cent awareness about the product and once we reach there we can stop. If you have willing people on the other side, like you have in countries like Japan, then it can help.  
Marlboro was sponsor of Ferrari. How does that work with the ban you mentioned in Italy?
We still have the agreement with Ferrari, but we don’t have the brand on the cars. We use it for bringing customers to the races. But we don’t use branding on the car or grand prix.
What are your India plans for the heated products?
Eventually we want to be in all countries. In India, it’s about the government willingness to create some sort of regulatory pathway. Otherwise it’s almost impossible to enter the market. We do have Marlboro in India and the partnership with Godfrey Philips has Four Square, Red & White and Cavenders. It’s clearly a very large market. But the country also poses a business model challenge, where you have to compete with the cigarette manufacturers and the beedis. That’s why you need regulators to be part of it, because it’s a question of stuff like excise taxes etc. 
Campaign India