Hartford Business Journal

12 HARTFORDBUSINESS.COM | JUNE 24, 2024 Stacey Kennedy became president of the PMI Americas region and CEO of PMI U.S. in January 2023. CONTRIBUTED PHOTO In new Stamford HQ, U.S. CEO Kennedy helps lead Philip Morris' efforts toward a 'cigarette-free' future Recently, she moved to Connecticut with her husband, a German citizen, and 15-year-old twins. Kennedy recently talked with the HBJ about the company's relocation and her leadership priorities and personal journey. Here's what else she had to say. The Q&A was edited for length and clarity. Q. Why did PMI relocate to Connecticut? A. The primary reason was we want to be in a state that we consider to be like-minded. This is a state that's really focused on economic develop- ment, on prosperity for consumers, employees, customers and a commu- nity that would bring all of those things together. We found a state where the leader- ship, particularly under Gov. Lamont and Lt. Gov. Bysiewicz, was really open to companies investing, and particu- larly the company's mission of bringing scientifically substantiated better products than cigarette smoking. (The state) is really focused on science, technology. It has a variety of talent, particularly for a headquarters that's looking at more senior-level roles and higher-salary jobs. So, that was very attractive to us about Connecticut. Q. What is your fastest-growing product in the U.S.? A. Zyn is a product that was launched by Swedish Match North America here in the United States about a decade ago. In 2014, it started in the West Coast, and they started small and then slowly expanded over that decade. We've really seen the enormous potential for Zyn to help nicotine users who are adults age 21-plus who previously used cigarettes — the most harmful form of nicotine — those who roll tobacco, maybe dip, or moist smokeless tobacco users, to be able to change from those prod- ucts to Zyn, which is combustion-free, smoke-free, tobacco-free. It's nicotine within a pouch, and it's really made an enormous differ- ence in the lives of smokers and traditional tobacco product users, and it's growing incredibly. We saw in Q1 2024 about an 80% growth rate of Zyn versus the prior year, and the demand is really high. And the amount of people who are able to reduce their amount of ciga- rette or oral tobacco use, and after time, to be able to stop completely using cigarettes or oral tobacco, is really tremendous. Q. What other products do you sell in the U.S.? A. IQOS is our other flagship product. This is a product that is commercial- ized in more than 84 markets around the world. IQOS is a product developed by PMI at its Switzerland research and development center about more than a decade ago. It was launched for the first time in 2014 in Japan. IQOS is a smoke-free product that resembles the experience of smoking By Andrew Larson alarson@hartfordbusiness.com A s Philip Morris International pivots away from cigarettes, it's digging into its new Connecticut home. In the summer of 2022, the tobacco giant moved its worldwide headquar- ters from Manhattan to the former UBS international banking head- quarters at 677 Washington Blvd., in Stamford. It also established its U.S. base there. PMI does not sell cigarettes in the United States. Philip Morris USA, which owns the Marlboro brand, is owned by Altria Group Inc. Altria previously owned PMI, but spun it off as a separate company in 2008. PMI steers U.S. customers away from cigarettes, which Stacey Kennedy, head of the company's Americas and U.S. businesses, calls "the most harmful form of nicotine." The company says it's working toward a cigarette-free future; however, cigarettes still represent the majority of its worldwide sales. It sold 612.9 billion cigarettes and generated $22.3 billion in revenue from combus- tible tobacco products globally in 2023, according to its annual report. Until cigarettes no longer exist, Kennedy, 51, says the company's focus is on harm reduction. In the U.S., PMI's products are geared toward customers who would otherwise smoke cigarettes, but are looking for a better alternative. In November 2022, PMI acquired in a $16 billion deal Swedish Match, which sells tobacco-free Zyn pouches that deliver nicotine orally. Kennedy said PMI is focused on growing its business with Zyn. PMI is also deploying its flagship heated tobacco product, IQOS, across the United States (it sold 125.3 billion units last year). "It has been successful in switching smokers away from combusted cigarettes to a far better, scientif- ically substantiated alternative," Kennedy said. The company, which is publicly traded, sold 421.1 million nicotine pouches and 799.3 million oral prod- ucts overall in 2023, a year in which PMI reported $35.2 billion in net reve- nues and $11.6 billion in operating income, down 5.6% from 2022. About $12.8 billion of that revenue, or 36.5%, came from smoke-free products, according to the annual report. The company grew its smoke- free product net revenue by 26% last year. "And that is up from 0% of smoke- free products a little bit more than a decade ago," Kennedy said. "So, in 10 years, the company went from zero to 37% of our global net revenue coming from smoke-free products. And that's not because there's been a dramatic difference in the base of the business. It's because we've been able to replace cigarettes with smoke-free products, which I think is one of the most tremen- dous transformations of a company in a decade that you can see." The Lamont administration has been supportive of the company's move, but PMI, which is one of 14 Fortune 500 companies headquar- tered in Connecticut, did not receive any state incentives for the relocation. Kennedy said the company employs about 225 people in Stam- ford, which is more than the target it set when it announced the move. Their goal is to increase the employee headcount to 300. It has about 2,300 employees in its U.S. business. Kennedy serves on the board of AdvanceCT, a nonprofit that works to retain and recruit businesses to Connecticut. She said the company has been engaged in the commu- nity. PMI recently made a $5 million commitment over five years to the Women's Business Development Council, which supports women entrepreneurs in the state. Kennedy became the leader of PMI's U.S. and Americas businesses in January 2023. Before that, she served as PMI's managing director for Germany, Austria, Croatia and Slovenia from 2015 until she was appointed president of the south and Southeast Asia region in 2018. On The Record | Q&A STACEY KENNEDY President, Americas region; CEO of U.S. business Philip Morris International Education: Bachelor's degree in sociology and cultural anthropology, Randolph College (Virginia); Executive MBA, IMD (Switzerland) Age: 51

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