Papastratos pioneers again: From cigarettes to new nicotine products
The Vice President of Papastratos, Iakovos Kargarotos, analyzes the company’s transformation and the transition to better nicotine products compared to cigarettes, highlighting its commitment to innovation and improving public health. With continuous investments in technology and increasing export activities, Papastratos plays a leading role in modernizing the industry, while strengthening the Greek economy and creating new opportunities for its employees.
HuffPost: We observe around us every day that there are fewer and fewer ashtrays - and more and more devices for heated tobacco products that smokers choose. Does this translate into better financial results for Papastratos? And to be honest, we would like to know if it also translates into increased revenue for the Greek economy and the State, so that some of your profits are returned to society.
The financial results of recent years confirm the assessment you make. Smoke-free products, i.e. alternative tobacco and nicotine products, account for more than 70% in Papastratos’ net revenues , while we contribute to the state coffers taxes amounting to 1 billion euros annually, a figure that corresponds to almost 2% of the total tax revenue of the budget. Additionally, the continuous increase in our workforce also leads to an increase in employer contributions to the state.
As for investments in infrastructure and technological equipment, they have improved the company’s production capacity allowing Papastratos to maintain its competitiveness and export dynamics. In the category of alternative smoke-free products, there is increasing competition, which confirms our strategic choice to invest from the very beginning in research for innovative solutions and alternatives, with emphasis on quality and scientific substantiation, to respond to the evolving needs of consumers.
85% of our production is exported to more than 40 countries worldwide, with Japan being the main destination market. Heated tobacco sticks for IQOS are the No.1 Greek export product to the land of the rising sun and represent 80% of Greece's total exports to Japan.Vice President of Papastratos, Iakovos KargarotosHuffPost: Are all Papastratos sales made here in Greece, or do you also export your products from the Papastratos production lines operating in Aspropyrgos?
Papastratos is in the 8th year of an investment plan totaling 700 million euros, with upgrading of existing facilities, purchasing of new machinery, and creation of new, well-paid jobs. We have chosen to consistently strengthen our export footprint to cover not only domestic consumption but also the demand recorded in international markets.
85% of our production is exported to more than 40 countries worldwide, with Japan being the main destination market. Heated tobacco sticks for IQOS are the No.1 Greek export product to the land of the rising sun and represent 80% of Greece’s total exports to Japan. Overall, our annual export value in 2023 exceeded 400 million euros. Our factory in Aspropyrgos plays a central role. It is one of Philip Morris International’s (PMI) three production centers in Europe for the exclusive production of heated tobacco sticks for IQOS, which allows us to significantly enhance our country’s overall export activity.
HuffPost: Your focus on investing in human capital is well known.How is this reflected in practice for the company’s employees in Greece? Are there substantial opportunities for Greek executives to take on roles and grow within the wider network of Philip Morris International?
I’m not the first to speak about Greek ingenuity and the talent of our executives. International experience offers us numerous examples of Greeks behind significant innovations that improve our lives. At Papastratos, we consciously and consistently invest in cultivating and utilizing the skills of workers and scientists at the Papastratos factory. Quantitatively and qualitatively, the leading presence of the Greek element in positions of pivotal importance for our company internationally proves the systematic work being done to evolve the talent and skills of our executives, and their subsequent utilization in more important roles and positions of responsibility within our parent company.
Nicotine pouches resemble snus, with the difference that they do not contain tobacco, and seem to maintain the advantages of snus. So, I would not describe them as a new trend, but as an evolutionVice President of Papastratos, Iakovos KargarotosFrom PMI’s latest financial results at the group level, there is an impressive increase for nicotine products for oral use. The so-called nicotine pouches. Is this a new trend in the world that you also see in Greece?
Nicotine pouches are a nicotine product - similar to snus, a product that contains tobacco and is taken orally, which has been used for decades in Scandinavian countries, mainly in Sweden. There, the extensive use of snus by men has led to very low prevalence of conventional smoking, and consequently to the lowest rates of lung cancer for Swedes compared to the corresponding average in Europe.
Nicotine pouches resemble snus, with the difference that they do not contain tobacco, and seem to maintain the advantages of snus. So, I would not describe them as a new trend, but as an evolution.
The nature of nicotine pouches, which remain in the mouth without the user exhaling smoke or aerosol, is such that it would not make sense for them to fall under the provisions of any anti-smoking legislation. They do not cause passive smokingVice President of Papastratos, Iakovos KargarotosHuffPost: We can easily understand that nicotine pouches are exempt from legislation related to smoking in enclosed spaces, etc. How much difference do they actually make if a smoker chooses them and quits cigarettes?
The anti-smoking law aims, among other things, to protect non-smokers from cigarette’s smoke. The nature of nicotine pouches, which remain in the mouth without the user exhaling smoke or aerosol, is such that it would not make sense for them to fall under the provisions of any anti-smoking legislation. They do not cause passive smoking. However, it should be noted that it is a nicotine product. And as such, it must be subject to strict, clear though, legislation, especially when it comes to packaging not easily accessed by minors and maximum nicotine content limits.
It is very important that the United States Food and Drug Administration, FDA, has authorized the nicotine pouches under the trade name ZYN from PMI, making ZYN the first and only authorized nicotine pouch in the US. This decision recognizes that ZYN pouches are a better alternative to cigarettes and other traditional tobacco products for adult smokers.
Personally, I consider alternative tobacco products as a better choice compared to conventional cigarettes for those who do not quit smoking and constitute an opportunity for public health, provided of course that appropriate regulation exist and are implemented.
HuffPost: On the other hand, how much harm can a non-tobacco product cause to the health of a young person who is not even a smoker but will choose them as a habit? Have you measured this?
Let me be crystal clear. All nicotine products concern exclusively adult smokers. Neither former smokers, or non-smokers, and, much more so, not minors. No tobacco and nicotine product concerns them. And here comes the aspect of corporate responsibility but also individual responsibility of each retailer, so that these products do not reach the hands of minors. And of course, there is also the responsibility of the State, regarding the correct, holistic, and coherent legislation of the rules and framework for the nicotine market as a whole. To return to the essence of your question, alternative tobacco and nicotine products are better alternatives compared to continuing smoking cigarettes, but they are addictive and not risk-free.
Society matures, evolves, and demands a world with reduced harm, regarding diseases, driving, nutrition, sex, alcohol, smoking. And here comes the industry, Philip Morris International and Papastratos, to invest more than 14 billion dollars for the development and scientific documentation of new and potentially less harmful productsVice President of Papastratos, Iakovos KargarotosHuffPost: We had heated tobacco products, which were your innovation, now we also have oral nicotine products. All this started because you accept the need to limit cigarettes. But cigarettes are still here. Until when?
The innovations you refer to emerged as a requirement of consumers, whose needs we are called to respond to. Society matures, evolves, and demands a world with reduced harm, regarding diseases, driving, nutrition, sex, alcohol, smoking. And here comes the industry, Philip Morris International and Papastratos, to invest more than 14 billion USD for the development and scientific substantiation of new and potentially less harmful products.
To talk about the definitive end of cigarettes, many factors must coexist, and the collaboration of many parties is required. In today’s Europe of deindustrialization, for example, there is still a strong footprint of the tobacco sector, at the level of industrial production and society. Investments, well-paid work, tax revenue of over 100 billion euros, significant export footprint. The competent regulatory authorities of the EU, to talk about our wider neighborhood, should push the tobacco industry towards massive investments in research, development, and circulation of better products. Without taboos, phobias, and extreme approaches.
HuffPost: With the shift to new products that you describe in our country as well, would you say that Greece is now harmonizing with international standards? Are there points where we are ahead or behind compared to the dominant trends in the US or Europe?
Greece recognized the problem of smoking early enough and tackled it with realism, away from dogmatism and anachronistic ideologies. That is why, at legislative level, we are today at the forefront of smoking control. The State acknowledged quickly the positive role that harm reduction policies can play to reduce the harm caused by smoking, utilizing thorough scientific assessment of new tobacco products, and presented the National Action Plan against smoking in 2019, and the relevant law a year later, in 2020.
In this context, the Ministry of Health, following a relevant positive recommendation of the competent Scientific Committee for assessing the degree of harmfulness of new tobacco products, recently authorized seven Terea, the consumables for IQOS, variants for consumer information which states that: “The concentration of chemical substances with known toxicity, except nicotine, produced when using IQOS ILUMA with the tobacco sticks “TEREA X” is lower compared to conventional smoking”. A reduction in the concentration of chemical substances with known toxicity does not mean a corresponding reduction in risk for health. The aerosol of this tobacco product contains nicotine and other hazardous chemicals, harms your health, and is addictive. The best choice is to quit tobacco and nicotine use altogether.”
This is a landmark decision, for Papastratos and PMI, as Greece becomes the first country in the world with an authorized claim for TEREA heated sticks. Thus, the lower toxicity of these products is well documented, and they are further differentiated from conventional cigarettes.
Smoking cessation is the ultimate goal as well as the big challenge. For the smokers who do not quit, however, shifting to other, scientifically substantiated, better alternatives of nicotine intake is very important. And of course, the access to accurate relevant information of smokers.
And on this front, Greece is at the forefront of actions at global level. It is not by coincidence that the latest Eurobarometer Report, records Greece with the second largest decrease in the smoking prevalence throughout Europe, by 6 percentage points, because of the realistic and advanced approach I already mentioned. I am optimistic about the future and believe that Greece, with the cooperation of the State, civil society, scientific community and industry, can make cigarettes a thing of the past in the coming years.
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