By Timothy S. Donahue
Top Takeaways:
- New Investment: PMI is committing approximately ₱4.5 billion to expand smoke-free manufacturing in Batangas.
- Regional Expansion: The additional capacity will support Philippine demand and exports through 2027.
- Market Opportunity: PMI estimates that 200,000 Philippine adults use its smoke-free products, compared with 14 million adult smokers.
Philip Morris International is investing another US$71 million in its smoke-free ambitions in the Philippines.
The company plans to invest about ₱4.5 billion to expand manufacturing at its existing facility in Tanauan, Batangas, through 2027, increasing production capacity for domestic and export markets.
The investment builds on PMI’s efforts to position the Philippines as a regional manufacturing and supply-chain hub for smoke-free products, a strategy the company has been developing for several years.
PMI opened a smoke-free manufacturing facility in Batangas in April 2024 to produce heated tobacco consumables. The latest investment is an expansion, not a new factory.
Vassilis Gkatzelis, PMI’s president for East and Southeast Asia, the Pacific, and Global Travel Retail, discussed the company’s manufacturing strategy at the Technovation Manila summit on November 10. “We always take a long-term view on how we plan our supply chain and this includes having the right levels of stocks around the world,” Gkatzelis told reporters.
He said the company has incorporated lessons from the pandemic and geopolitical disruptions into its supply-chain planning, including efforts to anticipate risks to manufacturing and distribution.
PMI has invested more than $2 billion in the Philippines since 2010, including spending on manufacturing, smoke-free products and digital capabilities. Its local affiliate, PMFTC Inc., employs more than 5,000 people, according to the company.
The Philippines is also an expanding market for PMI’s IQOS heated tobacco devices and for ZYN nicotine pouches. PMI estimates that about 200,000 Philippine adults use its smoke-free products, compared with an estimated 14 million adults who smoke cigarettes.
Tommaso di Giovanni, PMI’s vice president of communications and engagement, said the company is seeing growing interest in both product categories but believes adoption could accelerate with better consumer information and broader availability.
“There’s certainly traction in the Philippines with IQOS, but also with ZYN at the moment. So, we see momentum, absolutely. But I think there’s a lot more that can be done,” di Giovanni said during the summit.
He emphasized the importance of explaining the differences among combustible cigarettes, heated tobacco products, and oral nicotine alternatives.
“One of the keys to that, to free these people from cigarettes, these 14 million Filipinos who still smoke, is to actually continue to explain proactively to them the difference between the categories so that they can make an informed choice,” he said.
Gkatzelis also highlighted the role of regulation and product availability in encouraging adult smokers to switch to other products. “When you have the combination of access, information, right regulation, and proper enforcement, we see that cigarette smoking declines faster,” he said.
In 2022, the Philippines introduced a regulatory framework for vaporized nicotine and novel tobacco products under Republic Act 11900. The legislation sets requirements for product registration, manufacturing, distribution, advertising, and age restrictions.
PMI introduced IQOS to the Philippines in 2020 and ZYN nicotine pouches in 2023.
