The American tobacco concern Philip Morris International (owner of the brands Marlboro, L&M, Chesterfield, Parliament, IQOS) plans to leave the Russian market towards the end of 2022. This term was called by the executive director Jacek Olczak in an interview with Bloomberg.
“I assume that by the end of the year we will agree on a withdrawal with Russia,” Olchak said. According to him, after leaving Russia, the tobacco manufacturer plans to reorient itself to the Asian and European markets. He also expressed hope that Philip Morris products will be able to appear in the US market, where they are not currently represented.
The WSJ found out that Philip Morris has been unable to sell Russian assets for three months.
Tobacco company Philip Morris (owner of the brands Marlboro, L&M, Chesterfield, Parliament, IQOS) faced great difficulties in selling its Russian business, The Wall Street Journal found out. The manufacturer has been unable to find a buyer for Russian assets for three months and calls leaving the country “the most difficult transaction” in its history.
“It’s so damn hard. This deal is really crazy,” said Jacek Olczak, COO of the company, in a conversation with reporters. The newspaper cites several reasons why it is difficult for foreign companies to curtail Russia’s activities – the difficulty in valuing a business in an isolated market, finding buyers in the face of sanctions, relations with the authorities and the risk of nationalization of assets. The resolution of these issues can be delayed for several months, so many brands that have announced their withdrawal from the country have not actually sold the business yet.
For example, the Anheuser-Busch InBev brewing concern is in a situation similar to that of Philip Morris. The company is trying to negotiate the sale of its stake in a joint venture in Russia to a partner, Turkey’s Anadolu Efes, but negotiations have so far failed.
According to the WSJ, international corporations have already lost more than $59 billion from problems with work in Russia. For Philip Morris in particular, the country is a large market, accounting for a tenth of global shipments and 6 percent of total revenue. At the start of 2022, the company had nearly 3,200 employees in Russia, with Russian business assets estimated at $1.4 billion at the end of March. Philip Morris began searching for possible options for exiting the market at the end of March.