Our value chain transformation
We strive to become a company that has a net positive impact on society.
This ambition starts with researching, developing, and commercializing less harmful alternatives to cigarettes for those adults who otherwise would continue to smoke, ultimately allowing us to phase out cigarettes and become an entirely smoke-free business. With an eye on the longer term, we are also laying down the foundation for a strong wellness and healthcare business.
We realize that business transformation is a very company-specific journey, which sustainability reporting standards and frameworks do not adequately capture. To make our progress both measurable and verifiable, we developed our Business Transformation Metrics, a bespoke set of financial and nonfinancial key performance indicators (KPIs). These metrics showcase how we are allocating resources away from our legacy business as we advance toward a future in which we no longer make or sell cigarettes.
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SOURCING
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Transitioning from a mainly agricultural supply chain to an increasingly diversified one, including electronics sourcing
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OPERATIONS
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Reallocating R&D expenditure toward smoke-free product innovation and scientific capabilities, while reorienting manufacturing toward smoke-free products
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COMMERCIALIZATION
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Moving from B2B to a B2C consumer-centric model to commercialize smoke-free products
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CONSUMERS & REVENUES
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Shifting revenue source from majority cigarettes to majority smoke-free products while addressing post-consumer waste
Notes: Unless otherwise stated, all applicable business transformation metrics include Swedish Match related data as of November 11, 2022 (acquisition date), as well as Vectura Fertin Pharma.
For definitions of the KPIs please refer to PMI’s Sustainability KPI Protocol 2023.
The aspirations for metrics marked with a cross (†) include Swedish Match operations in the Sustainability Index 2023-25.
1 Direct spend focuses on materials used in the manufacture of our products; it includes tobacco leaf, direct materials, and electronic devices and accessories. Data excludes Swedish Match.
2 Data reflects the number of factories operated and owned by PMI at the end of the respective year.
3 These indicators are calculated based on millions of units. For definition of smoke-free products, Heated Tobacco units, and combustible tobacco products, see Glossary on pages 208-212 of PMI's Integrated Report 2023. Smoke-free products shipment volume includes volume of smoke-free products that can be converted into cigarette equivalent units, such as heat-not-burn, e-vapor, and oral nicotine. Total shipment volume includes the listed smoke-free products as well as combustible tobacco products: cigarettes and other tobacco products expressed in cigarette equivalent units. Data does not include wellness and healthcare products.
4 For definition of available for sale, see Glossary on pages 208-212 of PMI's Integrated Report 2023.
5 Excluding PMI Duty Free. World Bank report issued in 2023 is used on a comparative basis for income level classification. For definition of low- and middle-income markets, see Glossary on pages 208-212 of PMI's Integrated Report 2023.
6 For definition of net revenues related to smoke-free products, see Glossary on pages 208-212 of PMI's Integrated Report 2023. Data excludes the impact related to termination of distribution arrangement in the Middle East in 2023.
This online content about our Integrated Report should be read in conjunction with PMI’s Integrated Report 2023. This report includes metrics that are subject to measurement uncertainties due to inherent limitations in the nature and methods for data collection and measurement. The precision of different collection and measurement techniques may also vary. This report includes data or information obtained from external sources or third parties. Unless otherwise indicated, the data contained herein cover our operations worldwide for the full calendar year 2023 or reflect the status as of December 31, 2023. Where not specified, data comes from PMI financials, nonfinancials, or estimates. Unless explicitly stated, the data, information, and aspirations referenced in online content do not incorporate PMI’s wellness and healthcare business, Vectura Fertin Pharma. Regarding the Swedish Match acquisition, completed late 2022, unless otherwise indicated, online content does not include information pertaining to their sustainability performance. Please also refer to "This report at a glance" on page 2 of PMI's Integrated Report 2023 for more information. Aspirational targets and goals do not constitute financial projections, and achievement of future results is subject to risks, uncertainties and inaccurate assumptions, as outlined in our forward-looking and cautionary statements on page 214. In PMI's Integrated Report 2023 and in related communications, the terms “materiality,” “material,” and similar terms are defined in the referenced sustainability standards and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by the U.S. Securities and Exchange Commission.