Despite their statements, tobacco multinationals continue their activities in Russia

PMI, JTI and BAT have continued to operate in Russia since the invasion of Ukraine, although in March these three multinationals had declared that they had ceased their investments and then their trading and production activities.

Following the invasion of Ukraine by the Russian Federation on February 24, 2022, Philip Morris International (PMI), British American Tobacco (BAT) and Japan Tobacco International (JTI) had initially declared, as early as March 2022, that they would cease their investments in Russia, which suggested that they would then continue their activities. Faced with the scale of the international indignation and the sanctions deployed, the three tobacco heavyweights finally declared that they were putting an end to their activities in this country, probably to reassure their investors.

Tobacco taxes fund Russian war effort

Eight months later, PMI and BAT have, in fact, continued their activities in Russia, contradicting their public statements from the beginning of the year[1]. For its part, JTI had announced on April 28, 2022 its intention to sell its Russian assets, but continued its sales and production activities. Only Imperial Tobacco is said to have withdrawn from Russian soil, as announced in early March 2022. The taxes collected by the Russian state during these eight months amount to 5.9 billion euros and would thus feed both the budget and the war effort, against the international sanctions put in place[2].

In its financial report of 3^th In the first quarter of 2022, PMI announced that profits in Russia and Ukraine were maintained – those from Russia being five times higher than those from Ukraine – and that the group intends to extend its activities in Russia for “supporting its employees” And "to continue to fulfil its legal obligations"[3]. PMI, however, renews its intention to leave Russia "in an orderly manner", while BAT invokes "a complex transfer process" of its activities. JTI, which represents 40 % from the Russian market tobacco, said “act in all its markets in full compliance with national taxation and legislation”.

The Russian market, strategic for the tobacco industry

Very present in Russia, tobacco multinationals now occupy 90,% of the market share. The fourth largest tobacco consumer in the world by volume, the Russian Federation represents a key market for cigarette manufacturers. Smoking prevalence (29 %) remains high in this country and tends not to decrease. Russia is also one of the strategic markets for heated tobacco, with PMI having achieved up to 20 % of its IQOS sales in this country. Of the two factories that PMI owns in the country, one is dedicated to IQOS products.

The distortion between the announcement speeches and the reality of the facts is a constant of these multinationals. This confirms that their statements must always be considered with the greatest caution and that they can hardly be considered as reliable interlocutors.

Keywords: Russia, PMI, JTI, BAT, Imperial

©Tobacco Free Generation

M.F.