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22 Jul, 2022 19:42

Tobacco giant to quit Russia

Philip Morris, the maker of Marlboro and L&M cigarettes, will give up its presence in Russia by 2023
Tobacco giant to quit Russia

Philip Morris International CEO Jacek Olczak said on Thursday that the tobacco firm will wrap up its business in Russia by the end of the year. The corporation, whose cancer-causing products are sold in 180 countries worldwide, announced the pullout in March, in the wake of Russia’s military operation in Ukraine. 

“We are working hard to conclude our presence in Russia but I don’t think it’s going to happen in the time frame of the next quarter,” Olczak told Bloomberg Television. The CEO added that withdrawing from Russia is “a pretty complicated process,” which should be finished “around year end.”

Marlboro posted record second-quarter financial results earlier on Thursday, with Bloomberg noting that the increased profits were driven by strong sales of its IQOS “smoke-free” heated tobacco devices and rising cigarette prices worldwide.

However, kicking Russia may be harmful to the cigarette firm’s financial health. According to figures from the company, Russia accounted for 8.4% of Philip Morris’ cigarette sales and 17.1% of sales of the aforementioned IQOS products in 2021. Only in Indonesia did the company sell more cigarettes, while Japan was the only country that consumed more IQOS products.

Nevertheless, Philip Morris announced in March that it would reduce production volumes and suspend planned investments in Russia. While the company continued to pay its more than 3,200 employees in Russia, Olczak said it was scaling down its Russian operations “in solidarity with the innocent men, women and children” of Ukraine. 

Rival companies British American Tobacco and Imperial Brands also announced plans to withdraw from Russia and transfer their assets in the country to Russian owners. Imperial Brands has since gone through with its pullout, while British American Tobacco – which controls around a quarter of the Russian market –  has not finalized its own withdrawal.

Russian President Vladimir Putin likely won’t be troubled by Western cigarettes leaving Russian shelves. Putin’s government has clamped down on smoking in public and restricted cigarette advertising, while placing health warnings on cigarette packaging and raising the excise duty on tobacco products.