"There is no way back"

As CEO of Philip Morris International Switzerland, Dominique Leroux has driven the fundamental transformation of the brand in recent years. He talks to m&k Werbewoche.ch about the challenges of educational work from the perspective of a tobacco company.

Werbewoche.ch: Dominique Leroux, time and time again you say that you have want to get people to stop smoking cigarettes. A rather unusual statement for the CEO of a tobacco company that has been in business for over 120 years.

Dominique Leroux: We are undergoing a profound transformation. Our goal is to replace cigarettes with science-based alternatives that have the potential to reduce the dangers to smokers, although these alternatives are not risk-free. However, it is always best not to start smoking in the first place or to quit accordingly. And for those who would otherwise continue to consume cigarettes, it is recommended to switch to better alternatives such as smokeless products. I ask myself daily how best to explain to smokers why they should switch to products that do not burn tobacco. After all, the burning process creates most of the harmful chemicals in smoke. But I have the feeling that the message is getting through. It shows in the numbers, too: Our smoke-free product "Iqos" has a market share of over 9.5 percent in Switzerland.

 

You have been working for the company for more than two decades. When was the "turning point" reached, when was this decision made? 

Our company has been working for many years to develop better alternatives. Over time, advances in science and technology have also enabled us to bring scientifically sound products to market. It is important for us to be able to scientifically prove the harm reduction potential of our products. To do this, we also invest heavily in the development, testing and marketing of smoke-free products - more than US$9.1 billion since 2008. So I would say that it was a challenging process rather than a turning point that led PMI to commit to a smoke-free future in 2016.

 

Did this decision come from conviction or because of ever more restrictions such as tobacco tax or smoking bans? 

We can understand the millions of people who smoke cigarettes. Many of them are looking for a less harmful but still satisfying alternative. Philip Morris offers them that option because today, thanks to science, technology and innovation, we can. We have a responsibility to our employees and our shareholders, which we fulfill by following this path to sustainable success. We also have an obligation to society, which expects us to act responsibly. And that's exactly what I think we're doing. By ensuring a smoke-free future.

 

How can you change a century-old, established company so fundamentally? What steps have you taken to achieve this?

As mentioned earlier, science and technology play an essential role in transforming PMI. Let me use the example of Switzerland to show measures we have taken to drive change: The big three tobacco companies have been self-regulating for many years, including restricting online advertising for traditional cigarettes. In 2018, I decided to go a step further and also stop advertising PMI's cigarette brands in Switzerland in newspapers, magazines, on billboards, at festivals and in cinemas. Since then, we have focused all our communications for adult smokers in these channels on smoke-free products and, in particular, on offering tobacco products for heating. We have also discontinued the age-protected e-commerce website for cigarettes. Steps like this are the way forward. And there is no way back.

 

Futurologist Tom Goodwin recently told me of four different strategies large companies can use to prepare for the future: "self-cannibalization" by letting new products compete with their own older products; making innovation a fixed part of the annual plan; limited experimentation with new product lines; and investing in startups and hedge funds. The former strategy, he says, is the riskiest path, but also the most rewarding. Which of these paths applies to your company? 

The self-cannibalization is clearly true. Our tobacco product for heating is not intended for non-smokers or ex-smokers, but for adults who already smoke. Eight years ago, we began recommending that our own consumers switch to Iqos. Thousands have switched. Today, our efforts to convince smokers to use our smoke-free products are no longer limited to our consumers. To achieve our goal of becoming smoke-free, we also had to innovate and develop new technologies, which we have today. In doing so, we have relied on the expertise of many SMEs and startups. So I would say that several of the factors I mentioned have come together.

 

How do you convince smokers that you really want to offer them a healthier alternative? Is it already advertising, or is it still educational work to a certain extent? 

The first thing to keep in mind is that our smoke-free products are not risk-free. Effective harm reduction for smokers is the result of the following equation: you need a scientifically based product that is accepted by smokers:inside. One cannot work without the other. And both must be explained and communicated to them. First, the fact that our scientific findings are peer-reviewed, and that many independent studies and government reports have confirmed many of our key findings. But also that our product provides the ritual and satisfaction of a cigarette, but without the smoke smell or ash. Both of these aspects are important, and we have accomplished much by educating adult smokers about better alternatives.

 

How can communication and advertising counter the prejudices that tobacco companies face? 

It is perfectly normal for there to be debate about our scientific research. And we invite independent researchers to conduct their own studies and draw their own conclusions. But when there is criticism just because we are a tobacco company, without taking into account what we have achieved, then that causes me trouble. In other words, if we want to continue to explain to smokers what smoke-free products are, we must have appropriate communication channels to do so. But the legal framework in Switzerland is becoming increasingly strict. We may soon be facing a total ban on advertising. The Federal Council's proposal on the popular initiative "Yes to protecting children and young people from tobacco advertising" is excessive and goes far beyond what the initiative originally called for. If we are no longer able to inform adult smokers about better alternatives, this will make efforts to reduce the harm of tobacco consumption more difficult. I think it is possible to keep minors from using tobacco and nicotine while making harm reduction efforts. We have proven that with the commercialization of Iqos.

 

What steps do you plan to take next on the road to a "smoke-free world"? 

Smoke-free products should account for more than 50 percent of our global sales by 2025. We are also convinced that the sale of cigarettes can be discontinued in certain countries within 10 to 15 years if the right legal framework is created, dialogue is promoted and we obtain the support of civil society. However, we cannot bring about this change alone: It will take scientists:inside as well as other professionals to help us do so by correctly informing the public about the relative risks of these products compared to continued cigarette smoking. And governments need to work with manufacturers to promote innovation in this area and create regulatory frameworks that make it easier for smokers to switch to these better alternatives.

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