Philip Morris International, the Big Tobacco icon struggling to reinvent itself as a purveyor of e-cigarettes, is moving its headquarters to Connecticut from its home adjacent to Grand Central Terminal in New York.
The publicly traded company announced the move Tuesday before trading opened on the New York Stock Exchange, where its stock price inched above $100 on Monday. The news was highlighted at a panel discussion attended by Gov. Ned Lamont in Stamford.
Corporate relocations from another state normally are cause for unvarnished celebration, but Lamont is welcoming a company whose legacy products have made the brand a public health pariah, responsible for the largest source of preventable death in the world.
“We don’t sell cigarettes as you know them on the U.S. territory in any state,” said Jacek Olczak, the executive recently promoted from chief operating officer to the company’s chief executive.
“PMI and Connecticut, we’re both sort of reinventing ourselves,” said Lamont, who has been trying to rebrand Connecticut as a business-friendly state since taking office in 2019.
Connecticut is offering no incentives for the move, expected to bring more than 200 headquarters employees to the state, said Max Reiss, a spokesman for Lamont. But the governor played a direct role in attracting the company, referring to conversations that began in 2019, apparently with Olczak’s predecessor, André Calantzopoulos.
“It started out with a relationship. We just had a mutual associate, a friend, got us introduced,” Lamont said. “Most states do this by having the governor go on TV or do a direct call. We just did this on a personal basis.”
Later, at the state Capitol, Lamont described a more active role in the courtship of PMI executives.
“They got together informally at a dinner in my house with a number of business leaders who do business in the state of Connecticut,” Lamont said.
Philip Morris is looking for a location in lower Fairfield County, Olczak said.
“This is a different type of relationship,” Lamont said. “You’re used to relationships where we pay people and incentives based upon a certain number of jobs. And there’s none of that in this relationship at all. … We shook hands, and they’re gonna come into the state, create a brand new product that makes a big difference. And we did that on the basis of trust.”
Philip Morris International is based in the United States, with operational headquarters in Switzerland, but it ceased cigarette sales in America after it was spun off in 2008 from Altria, which markets Marlboro and other cigarette brands in the U.S. through Philip Morris USA.
“Despite the fact that, yes, we are a Big Tobacco company, we said that our objective is to get rid of cigarettes and replace them with the better alternatives for those people who otherwise would continue to smoke,” Olczak said, pointing to a company proxy statement.
Its rebranding has been met with skepticism as it still sells cigarettes elsewhere around the world, though the company pledges to generate half its revenue from smoke-free tobacco products by 2025.
Indra Nooyi, the former PepsiCo chief executive and chair who co-hosted the meeting, asked Lamont to address that skepticism and how welcoming the company to Connecticut reflects on its governor.
“Let’s tackle a tough question,” she said. “What does it say about you, your view of Big Tobacco and some of the criticism that, you know, leaders in the state have made about Big Tobacco, that the largest cigarette company in the world, who’s working on disrupting itself, is coming to Connecticut? What would you say to those critics?”
“I’d say, ‘Look at the new PMI,’” Lamont responded. “Listen to what Jacek said about how PMI will be defined over the next three to five years, what I said about innovation, what I said about being able to change, change with the times. And that’s what PMI is doing. I’m proud they’re here.”
Olczak said the company is used to facing skepticism, beginning with its pledge to go smoke-free.
“Nobody believed us. Nobody,” he said.
Olczak felt compelled to testify about the good character of his employees, an atypical aspect of a corporate relocation announcement.
“Philip Morris people are very good humans. They’re very good humans. They have a heart. they have a soul. They know how to belong to the community. They know how to work in a community, and in every place which we operate this is the culture of PMI,” he said. “There is a little bit of there’s a judgment legacy, if you like, going to PMI. At the moment you’ve met Philip Morris people, you will fall in love with them. This is what I’m going to bring you.”
The announcement was made at a live-streamed meeting hosted by Advance Connecticut, a state-affiliated non-profit that promotes economic development in Connecticut. The non-profit is co-chaired by two former corporate CEOS who are advisers to the governor: Jim Smith of Webster Bank and Nooyi.
Lamont thanked them and David Lehman, the former Goldman Sachs partner who is commissioner of the state Department of Economic and Community Development.
“These are the guys that follow up every day, these are the relationships that make a difference,” Lamont said. “This is how we, a little state like Connecticut, punching above its weight class, gets on the radar screen of a great company like PMI, and I really appreciate what you’re doing.”
By pledging to switch to smoke-free tobacco, Philip Morris will remain in the business of selling products that still deliver nicotine, a highly addictive and dangerous chemical. It sells IQOS, a product that heats tobacco but does not burn it. The company also is developing a vaping line.
Lamont, who tried and failed this year to ban flavored vaping products marketed to teens, saw no conflict in welcoming PMI, nor did it signal a retreat from his administration’s public health initiatives.
“I’m the guy that tried to get rid of flavored vapes here in this state.” he said. “I thought it was the right thing to do. We didn’t get it through the legislature, and we’re going to try it again as soon as I can.”
Lamont said the only flavor Phillip Morris will offer in its heated the tobacco product is menthol, a point he confirmed in talks with the company.