Philip Morris and its "economic footprint" within the European Union

Launched in Brussels in September 2025, the new report Philip Morris International (PMI) highlights the company's importance to the European Union economy. According to the estimates presented, its activities would have generated €289 billion between 2019 and 2023, including €65.8 billion in 2023 alone, by supporting employment, research and local communities. These figures, whose methodology appears questionable to say the least, completely obscure the negative externalities induced by the cigarette company's activity.

The main figures highlighted by Philip Morris

The Philip Morris International report emphasizes the supposed scale of its economic contribution. According to the estimates provided, its activities generated €289 billion between 2019 and 2023, including €65.8 billion in 2023 alone, equivalent to 0.38 billion of the European Union's GDP. The company also claims to support 21,488 direct jobs and nearly 700,000 jobs influenced throughout its value chain, from agricultural producers to distributors.

In terms of public finances, PMI claims to have contributed €181 billion in tax revenue over five years, including €38 billion in 2023, primarily through excise duties. The company also highlights its investments, particularly in research and development, with more than €300 million spent in Europe over the period 2019-2023, as well as in its supply chains, for a total of nearly €20 billion.

A commissioned assessment based on industry data

The report presented in Brussels is not the result of an independent expert appraisal. It was commissioned directly by Philip Morris International and entrusted to the firm EY-Parthenon, a long-time client of the tobacco company. From the very first pages, the authors state that the calculations and estimates are largely based on information provided by the company, and that this data has not been subject to any external audit or in-depth verification. The validity of the published results therefore depends essentially on the quality and completeness of the information provided by PMI itself. The tobacco company is accustomed to these remotely controlled reports aimed at serving its image and lobbying strategy. The KPMG reports thus constitute another illustration of this type of practice.

Methodologically, the study uses an "input-output" model to measure the direct, indirect, and induced effects of SMI activities on the European economy. This type of tool, commonly used in sectoral analyses, is based on simplifying and static assumptions. It does not take into account the real dynamics of economic exchanges or substitution effects: in other words, it assumes that expenditure allocated to tobacco would disappear in the absence of this consumption, without considering that it could be redirected towards other sectors that generate value and employment, and which are also much more favorable to sustainable development.

Furthermore, in several countries, calculations are based on aggregated statistical data covering the entire "food, beverages and tobacco" sector. This methodological choice contributes to artificially inflating the economic importance of tobacco, by assimilating it to growth and essential sectors such as food. EY indicates that it has applied adjustments where possible, but without these restatements being detailed in a transparent manner or reproducible by a third party.

Some of the data highlighted in the report also do not come from official sources, but from extrapolations made by the audit firm. This is the case, for example, of "retailer margins" or a portion of estimated tax revenues, which result from approximations rather than consolidated figures published by national administrations.

Highly questionable economic benefits

Philip Morris International estimates its economic contribution at €65.8 billion for 2023, or approximately 0.38 billion of the European Union's gross domestic product. Taken in isolation, this figure may appear to be wealth creation. However, this is not net value added to society, but essentially a monetary flow linked to the consumption of tobacco and nicotine products. The amounts spent by households on these products do not constitute new wealth, but rather represent budgetary choices made at the expense of other goods and services likely to generate more sustainable economic and social benefits.

This presentation obscures the considerable economic burden of tobacco-related damage. estimates available indicate that the annual burden of smoking for the European Union and the European Free Trade Association (EFTA) is around €97.7 billion. These costs are divided between approximately €50 billion in direct health expenditure – hospitalizations, drug treatments, long-term care related to tobacco-related diseases – and almost €48 billion in indirect losses, including reduced productivity, repeated absenteeism and premature deaths that shorten the working life of millions of European citizens.

A comparison between the figures put forward by PMI and the costs identified by independent research highlights a structural imbalance. The €65.8 billion claimed as a "contribution" by PMI does not offset the social and health costs of the entire tobacco industry, which amount to nearly €100 billion each year. The overall effect therefore remains particularly negative for public finances and for the European economy as a whole.

This dynamic is reinforced by a long-term trend: the aging of the population and the increase in chronic diseases automatically increase the share of health expenditure attributable to smoking. Thus, each euro spent on the purchase of tobacco generates higher collective costs in healthcare, productivity losses, and premature mortality. From this perspective, the presentation of tobacco as a factor of economic prosperity does not reflect the reality of the financial and social balances of the European Union.

The employment argument: a social decoy

One of the main focuses of the Philip Morris International report is the supposed importance of its role in maintaining employment in Europe. The company claims more than 21,000 direct jobs in the European Union and nearly 700,000 "influenced" jobs across its entire value chain, including agriculture, manufacturing, logistics, and distribution. These figures are intended to highlight a positive and sustainable contribution to the labor market.

These data are again particularly questionable from a methodological point of view and must be placed in a broader context. Jobs related to tobacco production and marketing rely on an activity whose consumption is in structural decline. European and national public policies have set clear targets for reducing smoking, in accordance with the international commitments enshrined in the WHO Framework Convention on Tobacco Control (WHO FCTC). In this context, jobs in the sector appear fragile in the long term, as they depend on a product whose demand is expected to decline continuously.

Furthermore, the emphasis on employment fails to take into account a key element: the productivity losses caused by smoking. According to available estimates, the economic cost of sick leave, work incapacity, and premature death linked to tobacco consumption significantly exceeds the economic benefits of maintaining jobs in this sector. Every year, millions of working days are lost in Europe due to tobacco-related illnesses, resulting in a negative impact on the economy far greater than the employment contribution claimed by the industry.

PMI's argument also highlights the company's role in supporting certain tobacco-producing regions, particularly in Italy, Greece, and Spain. This presentation tends to emphasize local economic dependence. However, this specialization weakens the regions concerned by keeping them in an agricultural sector with low added value and high social and health costs. Agricultural and industrial alternatives exist, but require diversification investments that are not promoted by the tobacco industry, whose interest is to preserve its production base.

Finally, it should be emphasized that the economic value attached to these jobs must be weighed against the health consequences of the product on which they are based. Unlike other sectors, the activity of the tobacco industry is intrinsically linked to a product responsible for the premature death of hundreds of thousands of people each year in the European Union and makes millions of Europeans ill each year, jeopardizing health systems. In this perspective, the valuation of employment in the sector for the production of a good that has no economic utility but is, on the other hand, the source of major externalized costs for economies, is well worth questioning.

R&D and the “smoke-free” transition: opportunistic communication

The PMI report places a significant emphasis on research and development, presented as evidence of a commitment to a "smoke-free" future. The company highlights approximately €301 million invested in R&D in Europe between 2019 and 2023, as well as more than $14 billion globally since 2008. Furthermore, it highlights that by 2023, more than 40% of its global revenue will come from so-called "smoke-free" products, such as heated tobacco, e-cigarettes, and nicotine pouches.

Taken in isolation, these figures paint a picture of an ongoing transformation. However, several factors further put this presentation into perspective. First, the announced investments must be compared to PMI's annual profits, which exceed $30 billion. On this scale, R&D spending remains limited and reflects more of a business diversification strategy than a massive reconversion effort. The amounts also remain modest compared to the economic and health costs of tobacco, estimated at nearly €100 billion per year in the European Union and EFTA.

Next, the "transition" being promoted is based on a double discourse. PMI claims to want to gradually abandon traditional cigarettes, but they still remain at the heart of its business and revenue. The majority of the group's revenue continues to come from the sale of combustible cigarettes, which are still actively promoted by the manufacturer, which does not hesitate to offer new brands of these products. Similarly, the cigarette company continues to systematically oppose and challenge all public policies proven to be effective in reducing the consumption of these "traditional" products. At the same time, the company opposes any regulation of its new products, whether heated tobacco or nicotine pouches. The image of a shift in favor of public health therefore appears to be at odds with the industry's lobbying practices.

The harm reduction argument is primarily a communication component of the tobacco company. So-called "smokeless" products are not without health risks and maintain a strong nicotine addiction. Independent scientific research has identified the presence of toxic substances in heated tobacco devices, while nicotine pouches, which are particularly addictive, raise questions about their long-term effects that are still widely debated. The notion of "harm reduction" is therefore instrumentalized in the report to legitimize new markets, without any guarantee of a substantial improvement in public health. The latest scientific studies, on the contrary, tend to establish the gateway effect of these new products to combustible tobacco products.

Finally, the company highlights its partnerships with academics and its training initiatives to strengthen its image as an innovative player. These approaches are not new and are part of the common tactics used by the tobacco company for decades to strengthen its image as a credible company. The goal is to normalize the tobacco industry's presence in scientific and institutional spaces, even though the FCTC calls for protecting health policies from industry interference. The promotion of these partnerships can thus be interpreted as an influence strategy aimed at giving credibility to the image of a "responsible" transformation.

Rhetoric that distracts from the true catastrophic record of the cigarette company

The publication of this report takes place in a crucial political context. The European Union is currently conducting several major revisions: the Tobacco Taxation Directive (TED), the Tobacco Products Directive (TPD), as well as texts relating to environmental policies and the fight against plastic pollution. Added to this is the ongoing reflection on the sustainable development taxonomy likely to direct investments. These reforms are likely to strengthen industry regulation and exclude it from ethical and responsible financing. Given the damage caused by its activities and products, increased taxation is on the agenda for the revision of these texts, which would explain the increase in communication initiatives from PMI.

In this context, the tobacco industry is deploying a multifaceted lobbying strategy: disseminating economic reports highlighting its supposed footprint, organizing institutional events to legitimize its economic role, sending open letters to European institutions, and using external relays—associations, consultancy firms, academics—to lend credibility to its discourse. The objective is to present the sector as a key economic player and to delay, or even weaken, the adoption of new, stricter regulations.

Thus, while the report emphasizes the economic contributions of PMI, it must be interpreted in light of this political context. It is not just an accounting exercise, but rather a communication tool intended to influence legislative revisions that will be decisive for the future of tobacco and nicotine in Europe and, as a corollary, for the health of Europeans.

©Generation Without Tobacco

AE