Philip Morris International (PMI) will invest more than $30 million to launch a new factory in the Lviv region, the company’s press service said Tuesday.
According to the report, preparatory work for the construction of the future factory will begin in July 2023. The company expects production to start in the first quarter of 2024. The new factory will employ more than 250 people, mostly in manufacturing. Employment will primarily be offered to employees of the Philip Morris plant in Kharkiv.
“By opening this new factory, we are once again demonstrating our support for Ukraine. This investment represents our dedication as a long-term economic partner of the country. The new production facility at the location proposed by UkraineInvest will create jobs, meet the demand of the Ukrainian market with quality products and support the Ukrainian economy in difficult times for the country,” said Maxim Barabash, CEO of Philip Morris Ukraine.
PMI European Region President Massimo Andolina expressed confidence that the new company will provide a reliable supply of products and employment opportunities for Ukrainians. “This investment is a powerful signal to other international investors – confidence in the Ukrainian economy, the Ukrainian people and the future of Ukraine,” he summarized.
“Philip Morris Ukraine” works in the Ukrainian market since 1994 and during this time has invested more than $700 million in the Ukrainian economy. In 2022, the company paid 25.3 billion UAH of taxes in Ukraine.
As reported in May, PMI said that at the present time considers it unsafe to resume production at its factory near Kharkiv (Dokuchaevskoe village, Kharkiv district, Kharkiv region), which was suspended in February 2022, and intends to run an alternative production in the country.
After the factory was suspended, PMI supplied products to Ukraine from the company’s eight plants abroad for some time. But then, in search of a solution that would allow the production of Ukrainian product in Ukraine, an agreement was signed to produce the company’s products at Imperial Tobacco’s facilities in Kiev, where they are now produced.
Since the start of a full-scale war in Ukraine, the company has ensured a steady supply of its products in Ukraine through imports from PMI’s 8 factories and a temporary partnership with another manufacturer in Ukraine.
According to PMI, the tobacco market in Ukraine in 2022 decreased by 30% and in the first quarter of 2023 by 26.7% due to the departure of some consumers from Ukraine, as well as the loss of some territories that are under occupation. In addition, the company noted the growth of the shadow tobacco market.
In March 2022, in response to Russia’s military invasion of Ukraine, PMI said it was suspending planned investments in Russia, including new product launches, investments in innovation, and commercial and manufacturing activities. In addition, the company has intensified plans to reduce production operations in Russia amid supply chain disruptions and changing regulations. PMI later announced that its board of directors and management were considering opportunities to exit its business in Russia.
Tobacco products manufacturer Philip Morris Ukraine is ready to cooperate with the Antimonopoly Committee of Ukraine (AMCU) in its initiated investigation into the legality of advertising of tobacco heating systems IQOS as a less harmful alternative to regular cigarettes.
The company’s press service told Interfax-Ukraine news agency that the claims used by the manufacturer of IQOS when advertising tobacco heating systems were and are clear, credible and scientifically confirmed.
“There is ample evidence to support that while IQOS is not devoid of all risks, it is the best alternative to continuing to smoke. Such evidence includes thorough laboratory studies and 10 clinical trials by the company, as well as numerous independent studies, including government agencies in several EU countries such as Germany, Belgium and the Netherlands,” the manufacturer’s press office stressed in a statement.
According to the company, the AMCU inquiry into the legality of advertising IQOS will begin the process of determining whether the charges against Philip Morris Ukraine are valid. At the same time, Philip Morris Sales and Distribution LLC has not received a single message from the AMCU about the initiation of an investigation against it.
“Thousands of smokers in Ukraine have switched to IQOS and stopped smoking. It is important that consumers continue to receive reliable information and not be misled, which may encourage them to continue smoking or return to cigarettes – one of the most harmful forms of nicotine use – that are harmful to both their health and public health in general,” the company’s press service comment states.
“Philip Morris Ukraine” also reminded that the reliability of the information distributed about IQOS has previously been confirmed when the AMCU considered the application on similar accusations of another complainant.
“The company also urges the AMCU and the press to avoid expressing or disseminating premature conclusions until the evidence in the case is fully completed and to comply with proper standards and principles of law,” the Philip Morris press service stated in a comment.
As reported, the AMCU December 30, 2022 initiated a case against “Philip Morris Sales & Distribution” for possible unfair competition, as the company in advertising their systems to heat tobacco IQOS claims their greater safety for the health of smokers compared with conventional cigarettes. The office called the cause of the case the Ministry of Health of Ukraine, according to which any heating tobacco systems are dangerous and do not reduce the risks of smoking.
Philip Morris International, which includes Philip Morris Ukraine, is one of the world’s largest tobacco manufacturers. It operates in Ukraine for more than 20 years, owns a factory in the Kharkiv region. Before the Russian armed invasion the company employed about 1.3 thousand people. Before the war the factory was an export hub for more than 20 countries, in particular large markets like Japan and Egypt.
The company’s brand portfolio includes Marlboro, L&M, Chesterfield, Parliament, Bond Street and other brands. PMI also produces IQOS tobacco heating systems and tobacco sticks for them.
The producer of tobacco products PJSC “Philip Morris Ukraine” in cooperation with DTF agency organized five social spaces “Spheres of the Sweet” with working areas in Kyiv, Odessa and Lviv, equipped with generators and Starlink satellite communication systems.
According to Philip Morris’ press service on Tuesday, the social spaces can keep you warm, recharge your devices, work and drink hot tea. They will be open until Dec. 30 and can accommodate about 100 people each at a time.
“We work for a large international company with offices and stores in many Ukrainian cities. Like all Ukrainians, we look for communication during blackouts, sit in shelters during alarms and worry if we can’t contact our families. We believe that resilient companies can help to survive a blackout together, so we organized autonomous stations with electricity, internet and heat”, – the company quotes the general director of “Philip Morris Sales and Distribution” Dmitry Zinchenko.
According to him, from the first days of the launch, social spaces have been very popular among city residents and help out in very unexpected situations.
“Employees of different companies during blackouts often make a field office with us. In Odessa, for example, during a blackout, girls from a nail salon nearby moved into the sphere. And in Kiev, our space even became a place for a wedding ceremony”, – added Zinchenko.
Social spaces are located in Kiev on Lesya Ukrainka Square, 1 (Central Election Commission) and Kontraktova square (near the Ferris wheel), in Odessa in the Park of enthusiasts (Akademika Zabolotnogo 66/2v) and in the Square “Ray” (Levitan 95a), and in Lviv on Vinnichenko Street 24 (Powder Tower).
Philip Morris International, which includes “Philip Morris Ukraine” is one of the world’s largest tobacco manufacturers. It operates in Ukraine for more than 20 years, owns a factory in the Kharkov region. Before the Russian armed invasion the company employed about 1.3 thousand people. Before the war, the factory was an export hub for more than 20 countries, in particular such major markets as Japan and Egypt.
The armed invasion of the Russian Federation into Ukraine had a strong impact on the operations of PJSC “Philip Morris Ukraine”, the tobacco company had the most difficulties with logistics, since its factory and the largest warehouses of products are located in the Kharkiv and Kiev regions, where active battles are now being fought with Russian invaders.
“You can imagine the difficulty we faced when it comes to logistics and delivery of the product. It took us two weeks to resume deliveries in 12 regions and the product is still quickly disappearing from the shelves. Some of our partners stop paying on contracts, so we have to to cover this at the expense of our reserves,” said Maxim Barabash, CEO of the company, in a blitz interview with the Interfax-Ukraine agency on Wednesday.
Philip Morris was able to reopen ten branded Iqos smoke-free food stores across the country in the past week, he said, and plans to open two more this week.
Barabash stressed that during the war with the Russian Federation, the company focuses on the safety of its employees.
“Those who work in stores and warehouses have an air raid shelter nearby. The rest of the teams work remotely, helping both in commercial and volunteer projects, for example, our colleagues with evacuation and delivery of humanitarian aid,” the CEO explained.
He recalled that Philip Morris International Inc. (PMI) in March took concrete steps to wind down the work of its branch in the aggressor country Russia: it stopped the planned investments and withdrew the current ones, namely the installation of a new line for the production of tobacco sticks for Iqos Iluma worth $150 million. In addition, the company canceled the launch of new commercial projects in 2022 and removed a number of cigarette brands from sales in Russia
“Currently, the company is working on options for a proper exit from the Russian market,” Barabash said about the corporation’s plans in the Russian Federation.
Philip Morris International, which includes PJSC “Philip Morris Ukraine”, is one of the world’s largest manufacturers of tobacco products. It produces cigarettes in more than 50 factories and sells them in 180 countries.
The company has been operating in Ukraine for more than 20 years, owns a factory in the Kharkiv region. More than 1.3 thousand people work at the company’s enterprises.
PJSC “Philip Morris Ukraine” in 2020 increased its net profit by 5% compared to 2019 – up to UAH 2.73 billion, assets increased by 18% over the year – up to UAH 11.51 billion, and retained earnings – by 55, 5%, up to UAH 7.79 billion.
Philip Morris International Inc. (PMI) is suspending planned investments in Russia, including new product launches, investments in innovation, as well as commercial and manufacturing activities, the tobacco concern said in a statement.
PMI has also stepped up plans to reduce manufacturing operations in Russia amid supply chain disruptions and changing regulations, the company said.
“Given the situation, the board of directors and management have decided to halt all of our planned investments in Russia and to step up plans to reduce our production operations. We will support our employees in Russia during this period, including by continuing to pay their wages,” PMI CEO Jacek Olczak said in the statement.
PMI’s Russian business in 2021 accounted for nearly 10% of cigarette and heated tobacco sales, and around 6% of PMI’s global revenue.
The company started operating in Russia in 1992, opening a representative office in the country. PMI has more than 3,200 employees in Russia.
PMI owns a tobacco factory in the country’s Leningrad Region, CJSC Philip Morris Izhora; and it owns Philip Morris Sales and Marketing that distributes cigarettes through a branch network in more than 100 Russian cities. Last autumn, PMI decided to close a factory in the Krasnodar Territory amid a shrinking tobacco market.
The brand portfolio includes Marlboro, L&M, Bond Street, Parliament, and others. The company also produces tobacco sticks for its Iqos tobacco heating systems.
PMI’s share in the Russian tobacco market is 31.7% according to data for the fourth quarter 2022.
The U.S. tobacco company Philip Morris handed over 500,000 packs of cigarettes to the Ukrainian army, MP from the Servant of the People party Danylo Hetmantsev has said.
“Philip Morris donated 500,000 packs of cigarettes to help the army! Lviv Tobacco Factory and JT International Ukraine also handed over cigarettes to the military today in all regions where there are logistics warehouses,” Hetmantsev wrote in Telegram.
