Jacek Olczak. chief executive of Philip Morris International. Photo / Darrin Vanselow, FT
The chief executive of the world’s largest tobacco group Philip Morris International is not short of anecdotes in which he implored people to quit smoking.
Over a cigarette at a US embassy party in Warsaw in the mid-2000s, Jacek Olczak recited the health warning on a pack to the then-Polish health minister. A few years later, the minister, Zbigniew Religa, died of lung cancer.
More recently, Olczak gave his eldest daughter’s boyfriend a stark choice: quit smoking or switch to IQOS, PMI’s flagship smoke-free alternative, “or you will never date my daughter”. A year later, he switched.
Olczak was himself a smoker for two decades until he tried the IQOS heated tobacco device. In a tale so on-brand that PMI’s marketing department could not have dreamt it up, he remembers experimenting with the product’s prototype after multiple failed attempts to quit.
“[First] week, second, third, fourth and then I try a cigarette and I say...I don’t like it anymore,” he recalls.
If PMI’s “unsmoke the world” pledge is to be believed, Olczak wants all of the 1.3 billion smokers globally to quit.
One day, “people will have to be reminded that this is a company that used to sell cigarettes”, promises the chief executive, speaking in his office at PMI’s Lausanne headquarters.
Olczak’s push away from cigarettes towards cleaner alternatives is not primarily driven by any sort of ethical mission, however. It is a business decision. “This can be big because you have an underlying consumer base who unfortunately cannot solve the problem [of smoking] themselves,” he says.
“You can help on an individual and societal level and it’s good for business. [Smoke-free products are] much more sustainable.”
But for now the Marlboro maker remains firmly hooked on cigarettes, which are the leading cause of preventable death globally. Despite moving faster than competitors, 64 per cent of PMI’s revenues and 79 per cent of its profits still came from cigarettes last year.
PMI has said its smoke-free alternatives, led by the popular IQOS, which was developed in-house, and Zyn pouches, made by recently acquired Swedish Match, will account for 50 per cent of revenues by 2025, although analysts predict it will probably fall short of that target. Throughout the interview, Olczak twiddles a cobalt blue IQOS between his fingers and even empties its cartridge on one occasion, but does not take a puff.
As PMI outlines plans to halt cigarette sales in developed countries, such as the UK, within the next decade, sales continue to boom in developing nations across the Middle East, Africa, south-east Asia and the Americas.
Public health experts and anti-tobacco campaigners are inevitably still hostile to the company that brought the world the rugged, chain-smoking Marlboro Man, and spent most of the 1990s fighting lawsuits from 46 US states alleging it covered up the dangers associated with smoking.
Philip Morris was part of a joint $206b (NZ$331b) settlement with three other tobacco companies. PMI was spun out of Altria, the rebranded version of Philip Morris, in 2008.
“There are some people still today who are saying, ‘Who would trust Philip Morris...because my enemy from the past continues to be my enemy tomorrow’,” says Olczak. “But sometimes the change comes from within the industry...Will you not use renewable energy because it’s coming from BP?”
In his early years at Philip Morris, from 1993, Olczak says the company was still in a “stage of denial” about the ills of cigarettes. “Because you don’t have a solution to the problem, you will try to deny that the problem exists...But the fact is...if you acknowledge that there is a problem, you start unleashing all the energy of how to solve the problem.”
Olczak says he borrowed the name for PMI’s “beyond nicotine” strategy from BP’s “beyond petroleum” tagline following a dinner with former BP chief executive John Browne. But the effort to wean PMI off cigarettes has not always been easy: the company issued two profit warnings in 2018 after costly IQOS product launches and overestimating its popularity.
Olczak, 58, grew up in communist-era Poland in the city of Łódź. He graduated from his hometown university with a degree in economics.
He spent the first few years of his career at London-based accountancy firm BDO Binder Hamlyn and only agreed to an interview with Philip Morris as a “favour” to a friend in recruitment.
When Olczak was offered a job in the finance department three decades ago, he remembers thinking the role was “agnostic” to the huge harms to health and society caused by smoking.
Only later, as he climbed the ranks of the cigarette maker, which also owns the Chesterfield and L&M brands, did he begin to realise that “society — presumably quite rightly — doesn’t like what you’re doing”. He has served as chief executive since 2021, having previously been chief financial officer and chief operating officer.
Despite Olczak’s embrace of reduced risk products, critics point out that PMI continues to fight for market share in its cigarette growth markets. In Indonesia, the company’s biggest cigarette market by volume sales, it has in recent years taken advantage of lax advertising rules to run TV campaigns encouraging viewers to “be strong, be daring, be brave...be Marlboro”.
PMI says the campaign was discontinued and its Indonesian subsidiary Sampoerna has “stricter” advertising controls than local laws.
Egypt, Thailand and Turkey also rank among PMI’s biggest growth markets for cigarette sales, according to Euromonitor.
Olczak refuses to simply cut loose from countries such as Indonesia, where IQOS launched recently but an affordable version is not yet available. “People are telling me that it’s so easy to stop selling cigarettes,” he says. “If you want to orchestrate the complete phase out of cigarettes in a coordinated manner, I’m the first one who will sit with you at the table and do it...the fact that I stop selling cigarettes means nothing.”
Does Olczak give health authorities and regulators credit for pushing PMI to change its business model? “No, regulators didn’t push us,” he insists. Instead it was a “few individuals who believed in the whole thing”, particularly André Calantzopoulos, PMI’s former chief executive, who now serves as chair.
Olczak credits coming of age during the dying days of Poland’s communist regime for teaching him to “stop counting on others and count on yourself” as “the past system stopped existing and the new system was not created”.
Public health bodies including the World Health Organization have been vocal on the dangers of vaping but Olczak says he is a strong believer in e-cigarettes’ “power to help smokers stop smoking”. However, he stresses that “smoking is for adults, solutions to smoking also have to be mature and appropriate for adults”.
PMI also angered health charities, public health experts and doctors over its £1.1bn (NZ$2.13b) takeover of UK-based asthma inhaler maker Vectura, one of a series of acquisitions to speed up PMI’s move away from cigarettes.
Olczak recalls receiving what he jokingly calls “love letters” from aggrieved UK ministers. “People were thinking that I’m trying to go into the pharma business [as] window dressing for my tobacco business,” he says.
He is accustomed to receiving a frosty reception from scientists. Over the past 15 years, PMI has poured $10.5b (NZ$16.9b) into science and research into reduced-risk nicotine products, but in the early days he remembers struggling to even hire any staff.
Scientists had “moral, ethical reservations”, he recalls. But the first few that did join the company learnt that the drive to develop reduced-risk tobacco products that help people quit smoking could save more lives than many pharmaceutical products.
Now, about 1,000 scientists, engineers and technicians at PMI’s vast R&D facility in Neuchâtel in Switzerland work solely on development of reduced-risk products.
Some onlookers have advised the chief executive to shed the Philip Morris name to detoxify the brand but he refuses. “I will not change the name because I will demonstrate that this company can go from one point to another point and I don’t have to hide behind another name.”
Instead, PMI plans to own its past. The Marlboro maker will become an expert in “products where we will bring the healthy solutions to unhealthy behaviour,” Olczak predicts.
Three questions for Jacek Olczak
Who is your leadership hero?
I don’t have one. You cannot live the life of somebody else. There are a few people from whom I have learnt over the course of my career, however, including Colin Powell (former US Secretary of State), who said you need to make a decision when you have 40 to 70 per cent of the information. Wait for 100 per cent and you are too late.
And Hubert Wagner, a Polish volleyball coach, who emphasised that the strength of the team is more important than having an extraordinary athlete who is not a team player.
What was the first leadership lesson you learnt?
That not making a decision is a decision. The faster you acknowledge the problem, the faster you will find a solution.
What would you be if you were not CEO of PMI?
Either a guitarist or football player. In my youth, I was in a band. At that time, [Poland] was behind the Iron Curtain and you didn’t have access to anything. I can remember the first time after that hearing LPs of Led Zeppelin and Jimi Hendrix, trying to replicate the way they played. Frankly speaking, if it wasn’t for all these changes and my job, I could have continued practising. Who knows, I could have been Eric Clapton? But thanks to Philip Morris, my career went in a different direction.
Written by: Oliver Barnes
© Financial Times
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