In an exclusive interview with Business Monthly, we spoke with Ali N. Karaman, Philip Morris newly appointed Managing Director for Egypt & Levant, where we discussed PMI’s smoke-free transformation, the concept of harm reduction, and his views regarding the Egyptian economy.
Prior to his appointment as MD of Philip Morris Egypt & Levant, he served as the Director of Smoke Free Products for the Middle East cluster, where he led the commercialization of Smoke Free Products in many Middle East markets, while laying the foundation for a successful multi-category transformation of PMI’s business and organization. Throughout his 23 years at PMI, Ali established deep industry knowledge and strong commercial expertise across various complex markets.
Ali joined PMI in 1999 as a Planning Analyst in Turkey, and since then he worked in Sales and Marketing roles across several regions and functions. In 2006, Ali moved to Ukraine to assume the role of Director Sales and then moved to Brazil as Director Sales and Distribution in 2009. Three years later, he relocated to the Philippines as Director Sales Integration in PMFTC, before joining PMI Sales Strategy in Lausanne in 2013. As of 2017, Ali returned to the Middle East, Africa and Duty-Free region, first as Director Commercial PMI Duty Free, then as Director of Smoke Free Products in GCC based in Dubai. Since June 1st, 2022, Ali took on the challenge of leading the Egypt & Levant cluster based in Cairo and joined the Middle East, Africa & Duty-Free Regional Management.
How has your experience been in Egypt so far?
Egypt has been very welcoming to me so far. It is amazing how Egyptians are joyful, hospitable and open to interaction with foreigners. Since I am Turkish, my integration and adaptation to the life in Egypt was very smooth as our nations share a lot of similarities.
I also consider myself lucky to be working alongside an exceptional team in Egypt. This team achieved a lot of successes and drive the business forward. Our people are our main asset that will help us to deliver exceptional results and maintain our successful relations with our stakeholders, business partners, consumers and regulators.
Can you discuss the transformation taking place at PMI and the company’s new vision?
PMI’s global business transformation is about delivering on our vision to create a smoke-free future, a world without cigarettes. To make our vision a reality, we have been transforming our company and working on developing scientifically substantiated smoke-free products that are a much better alternative for all adult smokers who would otherwise continue smoking. PMI’s ambition is for smoke-free products to account for more than 50% of total net revenues by 2025. Moreover, we believe that with the right regulatory frameworks, dialogue, and support from civil society, cigarette sales can end within 10 to 15 years in many countries.
Why is Philip Morris pursuing a smoke-free future? Are you simply replacing one product with another?
We want to be far more than a cigarette company. We are leading a transformative change in our industry because it is simply the right thing to do, as we have a commitment to society, our employees and our stakeholders, which expects us to act responsibly.
There are an estimated one billion-plus adult smokers in the world, and they should be encouraged to quit. But for those adult smokers who would otherwise continue smoking, we want to provide them with scientifically substantiated smoke-free products that are a better alternative.
How much did the company invest to develop its smoke-free products? What is the role of R&D in driving the company’s transformative change?
Since 2008, we have invested more than USD 9 billion in the development, scientific substantiation, manufacturing, commercialization, and continuous innovation of smoke-free products.
As PMI is a science and technology-driven company, 73% of our commercial efforts and 99% of our R&D expenditures were dedicated to our smoke-free products in 2021. We also employ over 930 R&D positions, including scientists, engineers, and technicians.
Can you explain the concept of harm reduction and how it applies to smoking?
Harm reduction means making a behavior less risky, without ceasing the behavior completely.
Advances in science, technology, and regulation have changed the way we live. Harm reduction uses these advances to reduce the negative effects of potentially harmful behaviors. Harm reduction is present in many areas of our lives. Some are simple, and part of our everyday lives, like seatbelts in cars or sunscreen.
Harm reduction can be applied to tobacco consumption through scientifically substantiated smoke-free products that are a much better alternative than continued smoking. We know that the development of smoking-related diseases is triggered by the inhalation of harmful and potentially harmful constituents (HPHCs) found in cigarette smoke. The best thing smokers can do is quit smoking altogether, but the reality is that many don’t. Products that eliminate combustion, such as heated tobacco products, are a much better alternative to continued smoking, since they have the potential to reduce the harm caused by cigarette smoking. It is important to note that they are not completely risk-free and as they provide nicotine, which is addictive.
How do heated tobacco products work? How are they different from traditional cigarettes?
Heated tobacco products are a new class of breakthrough products that do not rely on the principle of burning—and which are scientifically substantiated as a much better choice for adult smokers than continued smoking.
Our heated tobacco product, IQOS, heats real tobacco within a specific temperature range, using an electronic heat-control system to prevent it from burning. It uses heating systems to generate an aerosol inhaled by adult users. Our findings demonstrate that IQOS emits on average 95% lower levels of harmful chemicals compared to cigarettes*. This does not necessarily equal a 95% reduction in risk and does not mean that IQOS is risk-free, of course.
*Reductions in levels of a range of harmful chemicals (excluding nicotine) compared to the smoke of a reference cigarette.
How do you view the investment climate in Egypt right now?
Egypt is one of the largest and most influential markets in the MENA region, and it has an attractive and welcoming climate for investors. We will continue to work and invest in this strong market, as Egypt is a key market for PMI and has great potential for a smoke-free future. Having said that, I am happy to say that we have launched our very first heated tobacco product – IQOS – in Egypt exactly one year ago as a better alternative to cigarettes.
*This content is brought to you by Philip Morris Misr.