Global cigarette producer Philip Morris International (PMI) and its Philippine subsidiary PMFTC Inc. opened a new manufacturing facility, valued at P8.8 billion or $150 million, for its “smoke-free” tobacco product line in Tanauan City, Batangas.
Leading the inauguration of the new plant on Monday, April 15, were Department of Agriculture (DA) Secretary Francisco Tiu Laurel, with special guest First Lady Luisa Araneta Marcos.
In his speech, Philip Morris International Chief Executive Officer (CEO) Jacek Olczak said the opening of the facility “marks another significant milestone in our commitment to a smoke-free Philippines,” noting that the expansion of PMI in the country is “a testament to our confidence in the Philippine economy and the local tobacco farming industry.”
The new 12,360 square meter (sqm)-plant, located within the First Philippine Industrial Park in Tanauan City, will produce heated tobacco sticks called “BLENDS,” which are the sticks used with the devices for its product line BONDS by IQOS.
BONDS was launched in November 2022 as a more affordable variation of PMFTC’s flagship smoke-free product IQOS. The heated sticks for their IQOS product lines will remain to be imported.
BONDS heats rather than burns tobacco, emitting 95 percent lower levels of harmful chemicals compared to traditional cigarettes while mimicking the authentic tobacco experience.
“This factory will produce heated tobacco sticks for our smoke-free products - that is both a milestone in our journey and a pledge to prioritize the wellbeing of our local communities,” said PMFTC President Denis Gorkun.
In an interview with reporters at the event, Olczak noted that the PMFTC is purchasing Philippine tobacco worth more than $120 million and is eyeing more, with portions used for its products in over 100 markets worldwide.
“The quality of tobacco in the Philippines is getting better and better. We're also thinking of starting to use Philippine tobacco in the smoke-free products. They require even better quality and consistency. I believe the tobacco growers in the Philippines can deliver on the quality,” he said.
For the local production of BLENDS, he said that, currently, the tobaccos used are mixed from local and imported sources, but they are planning on using the Philippine tobaccos for the Batangas plant and for exports.
Olczak said they are still commissioning some of the equipment at present, but will start operations within the year. Once completely installed and prepped, the factory will be able to entirely supply BLENDS to the BONDS devices in the Philippine market.
The plant is capable of producing “billions of BLENDS.” With this, the plant can provide the needed heated sticks to be exported to the Asian market, he added.
Since 2008, PMI has invested $12.5 billion in developing smoke-free products. Through strategic investments, smoke-free products make up 36.4 percent of the company's net revenues, with 33 million smoke-free product users in 2023.
“When we embrace smoke-free alternatives, we take a proactive step towards expanding the potential of the local tobacco crop, ensuring a sustainable future for generations of local farmers and individuals who rely on the tobacco industry,” Gorkun said.
Aside from BONDS and IQOS lines, PMFTC also developed ZYN nicotine pouches, introduced last year, in its smoke-free product roster.
In 2009, PMI and Fortune Tobacco Corporation (FTC) signed a business combination agreement to unite their business activities, forming PMFTC, Inc.
The partnership enabled PMI to enter and expand their operations in the Philippines.