Moving On From Marlboro​

By Rachel Strickland​
The Story
Famed for their iconic ‘Marlboro’ cigarettes, Phillip Morris International (‘PMI’) have indicated they will stop selling their flagship product within the UK in the next 10 years. After comparing cigarettes to petrol cars, Chief Executive Jacek Olczak has called on the UK government to regulate a similar all-out ban on cigarettes by 2030 (Financial Times; Guardian).

It's a bold stance considering PMI was responsible for more than a quarter of worldwide cigarette sales in 2020, however, it's important to remember that diversification is central to PMI’s strategy. (BBC).

The World Health organisation has described the tobacco epidemic as “one of the biggest public health threats the world has ever faced” and the sector is undergoing a seismic shift in consumer and investor sentiment (CNBC).

PMI has already committed to earning half its revenue from non-smoking products by 2025. It has invested heavily in the development of its flagship ‘IQQS’ cigarette device, which delivers nicotine without the smoke and tar of a regular cigarette. PMI has this month agreed to acquire Fertin Pharma which manufactures nicotine-replacement chewing gums, powders and tablets. In addition, described as a “natural evolution into a broader healthcare and wellness company”, it appears ironic that PMI purchased Vectura – a company that develops inhalers (Reuters; Financial Times).

Impact on Businesses and Law Firms
Other tobacco companies are rightly evaluating their long-term sustainability. British American Tobacco (‘BAT’) has set targets for revenues of £5 billion from its “reduced risk” products by 2023 (Financial Times). Conversely, Imperial Brands PLC is now pivoting back to cigarettes after expanding into vaping devices too quickly (Reuters; Financial Times).

Meanwhile, some companies have faced the consequences of short-term thinking. In 2018, Altria Group Inc. invested $12.8 billion for a 35% stake in e-cigarette maker Juuls Labs. However, following political backlash and regulatory scrutiny over marketing and product safety, Juul's valuation has plummeted, leaving Altria with $11.2 billion in write-downs (Reuters).

In 2007, the UK banned smoking in public places. In 2016, regulation for plain packaging on tobacco products was introduced, and in 2019, the government set out ambitious plans for England to be smoke-free by 2030 (BBC; Independent). Within this ever-evolving regulatory sphere, law firms may advise on compliance with any regulations introduced to meet the UK's goals. Similarly, as companies continue to restructure in line with changing consumer behaviour, corporate lawyers could advise on acquisitions and divestments.

This is also a busy area for litigation and intellectual property lawyers. For example, BAT and PMI have been embroiled in a global patent dispute over purported infringements of the IQQS device. With the dynamic nature of alternative product development, law firms may advise on IP rights and regulations to protect novel creations.

Image Credit: Andres Siimon/unsplash.com