Recently, I witnessed an exemplary constructive feedback in the Bostancı-Kadıköy minibus. I was sitting next to the driver in the minibus, and as it was approaching the final stop, a passenger who was about to get off approached the captain in a low voice and said, "Butts and paper have been thrown in the back seats, have them cleaned at some appropriate time, okay?" he said and got off, wishing him a good day. It was a very good example of timely, constructive feedback.
About PMI
For those who are not familiar with the company, report
starts with general information about the company. Accordingly Philip Morris
International is a leading international tobacco company working to deliver a
smoke-free future and evolving its portfolio for the long-term to include
products outside of the tobacco and nicotine sector.
The company’s current product portfolio primarily consists
of cigarettes and smoke-free products, including heat-not-burn, vapor, and oral
nicotine products, which are sold in markets outside the U.S. Since 2008, PMI has
invested more than USD 9 billion to develop, scientifically substantiate, and
commercialize innovative smoke-free products for adults who would otherwise
continue to smoke, with the goal of completely ending the sale of cigarettes.
CEO’s Message
As a finance professional, I am focused on seeing numbers and
PMI’s CEO Jacek Olczak clearly states the numbers while sharing the company’s
objectives:
"Our ambition is that by 2025, at least USD 1 billion of our
net revenues will derive from these adjacent avenues of growth, marking an
initial milestone for a business with potential to grow much further over the
longer term. In 2021, we kept our relentless focus on that ambition, dedicating
99 percent of our research and development and 73 percent of our commercial
expenditure to smoke-free products. Moreover, smoke-free products represented
over 29 percent of our adjusted net revenues and, by year-end, we estimate that
more than 15 million adults in total had switched to IQOS and stopped smoking.
The strong position of our smoke-free business has allowed us to accelerate our
timeline; early in 2021, we announced our ambition that by 2025 our smoke-free
products would be sold in 100 markets and at least 50 percent of our net
revenues would derive from smoke-free products."
CFO’s Message
What I notice in PMI is that our CFO Emmanuel Babeau shows
an ownership on sustainability. The level of importance he gives is also clear
from the message he shares within the report:
"Strategy, Finance, and Sustainability—the three teams I
lead—play a critical role within today’s PMI and have the capacity to establish
a roadmap for success that not only responds to short-term needs but also
accounts for medium- and long-term impacts. To achieve our ambitions, it has
been of paramount importance for our entire organization to recognize that
sustainability and financial performance are mutually reinforcing and part of
the same strategy. That is why integrated reporting is a top priority: It
allows all our employees, including management, as well as the company’s Board,
our shareholders, and other stakeholders to understand how our financial and
nonfinancial performance are interrelated."
Our CSO Jennifer Motles highlights that PMI dedicated much
of 2021 to strengthening its governance and better integrating sustainability
into its corporate strategy.
Jennifer also states that "PMI’s Sustainability Index
consists of 19 KPIs, which measure progress toward the 11 goals in our 2025
Roadmap. We aim to continuously improve our performance and drive material and
measurable progress—all communicated through open and clear reporting and
disclosure."
Transforming for Good
Transforming the company is not only about substituting one
product with a new one. It is described in a holistic way:
Sustainability stands at the core of PMI’s transformation
and helps address some of the challenges resulting from the transition, while
spurring innovation and better positioning the company for success over the
long haul. The complexity of our strategy comes from simultaneously managing
the impacts of two value chains—the one we are aiming to move away from (our
cigarette portfolio) and the one we are moving towards (our smoke-free
portfolio)— while also managing the impacts of the transition itself.
For PMI, sustainability is more than just a means to
minimize negative externalities and mitigate risks while maximizing operational
efficiency and resource optimization. It is stated in bold:
"We can only achieve our purpose by embedding sustainability
in all we do."
The biggest and most pressing negative externality PMI’s
strategy aims to address is the health impacts of cigarette smoking. This is
the most important contribution we can make to public health and is the
cornerstone of PMI’s purpose and business strategy. Addressing this critical
issue requires a three-part approach:
1. Develop better alternatives to smoking
Research, develop,
and commercialize scientifically substantiated nicotine-containing products
that are less harmful than cigarettes
2. Accelerate smoking decline
Provide broad access to adult
smokers, who otherwise would not quit smoking, to ensure these products
accelerate the decline of smoking prevalence
3. Make cigarettes obsolete
Purposefully work to ensure
these products ultimately replace cigarettes, driving their obsolescence
Despite its critical importance, achieving a smoke-free
future is not PMI’s final horizon. PMI is simultaneously exploring adjacent
opportunities for growth in wellness and healthcare, leveraging the
capabilities we have accrued and developed while transforming our business. It
is through these avenues of growth that we will achieve our ultimate goal:
becoming a business that has a net positive impact on society and the
environment.
Risk Management
PMI’s Global Head of Risk & Controls, Marie-Pauline
Lauret mentions that they have various risk evaluation mechanisms in place to
support the development of tailored strategies and responses for their priority
ESG issues along our value chain. Focused on environmental and social issues,
some of these assessments include human rights risks saliency mapping, periodic
climate risk and opportunities assessments, product life cycle assessments, and
deforestation and water risk assessments.
Product Impact
PMI’s CEO Jacek Olczak clearly states that:
“We can make an important contribution to accelerating the
end of smoking. To achieve this objective, we are dedicating the vast majority
of our resources to commercializing our smoke-free products. Everyone within
our organization—regardless of business function—plays a crucial role in
delivering on this purpose. We recognize that PMI alone cannot achieve a
smoke-free future. Such systemic change requires a collaborative
multistakeholder approach. In particular, we actively advocate for others in
the industry to follow our lead by transforming their businesses, phasing out
cigarettes, and reporting transparently on progress.”
What about the goal? Intentionally work toward phasing out
cigarettes by ensuring that smoke-free products represent at least 30 percent
of its shipment volumes and more than half of its net revenues by 2025 while
continuing to reduce its combustible shipment volume.
In short, a future where PMI’s success is no longer based on
cigarettes is targeted.
Appropriate Regulation and Taxation to Drive Cigarette Obsolescence
To speed up the process, regulators and public health
authorities can ensure that adult smokers have access to accurate information
about smoke-free products. They can introduce product standards to ensure that
only scientifically substantiated smoke-free products are commercialized. And,
through riskproportionate regulation and taxation, they can provide the right
incentives to encourage adults who smoke to switch from cigarettes to less
harmful, scientifically substantiated alternatives and incentivize
manufacturers to direct their investments and R&D toward these better
products. The acceptability of smoke-free products for adult smokers must
always be balanced against the objective of minimizing use by unintended
audiences such as never smokers, former smokers, and youth.
What about Countries that do not Permit Smoke-Free
Products Sale?
There is a position state for those countries which do not
permit smoke-free products sale:
Currently, some countries do not permit the sale of
smoke-free products. We nevertheless continue to engage with stakeholders in
these markets to advocate for regulatory frameworks that support tobacco harm
reduction. We do not believe that banning smoke-free products is a rational
policy, especially considering that these countries permit the sale of the most
harmful forms of tobacco and nicotine consumption: cigarettes and other
combustible tobacco products. Banning smoke-free alternatives runs counter to
the aim of ending cigarette use.
Informing the World about the Smoke-free Category
Smoke-free alternatives are a new product category and are
still relatively unfamiliar to most people. In 2019, PMI launched “Unsmoke”—a
global corporate campaign deployed across various online and offline
communications channels to address widespread misconceptions about the
smokefree category and the concepts that underpin it.
The campaign’s core message is simple:
“If you don’t smoke, don’t start. If you smoke, quit. If you
don’t quit, change.”
Currently, the campaign encompasses two distinct strands:
• Unsmoke Your World (UYW): Calls for positive change by
reinforcing that quitting tobacco and nicotine altogether is the best choice
and informing the adult general public that better, smokefree alternatives
exist for those adult smokers who would otherwise continue smoking. It also
encourages the public to get involved and calls for regulation that would allow
adult smokers access to—and information about—better alternatives.
• Unsmoke Your Mind (UYM): Speaks to the regulatory and
scientific community and other stakeholders with an interest in tobacco harm
reduction policy. UYM challenges misconceptions around the smoke-free category
and calls for an open and transparent conversation to support
risk-proportionate regulation that differentiates smoke-free products from
cigarettes. It also urges policymakers to put science and evidence at the
center of decision-making
PMI’s vision of a smoke-free future helps to attract and
retain talent. The opportunity to contribute to achieving the company’s purpose
is compelling to many, as is the chance to make a positive societal impact.
For more about PMI and its integrated report 2021, please
visit:
In PMI Duty Free, there is an initiative which has been developed by the Finding Balance, Building Connections Project Team to address the need of providing more opportunities to Duty Free organization to interact with the Operations Team members with smaller groups and at the individual level and get to know them as a person and as a leader more closely. During these sessions, we have the time and the opportunity to interact 1:1, ask questions and share views.
Before the meeting, I just had the chance to google “Martin Jobin”
and saw that Volvo still publishes his comments on their official site. Martin
stated that “We are becoming a centre of excellence in interactive marketing”
for Volvo. This is truly a transformation in automotive sector. After reading
this statement, I decided to ask Martin the question below:
“How do you transfer the knowledge you gained from automotive
industry to our smoke-free future vision? When you turn back to your career in
PMI, which project or success story makes you most proud of?
Thanks to Martin, he answered my question frankly and shared some
key digitalization projects in PMI. He told that all success is a team effort.
He also highlighted that Scandinavians were so good at digitalization in early
2000s. He made us remember Nokia and Flash, and stated that Volvo was a cutting
edge in automotive industry in those years.
· Don’t
overestimate the other industry. In every industry, we need to adapt so many
things. Don’t think that things do not change, they do.
·
When you are
new to an organization, first understand the organization. Learn who does what.
·
Make sure you
always work on interesting projects. Ask yourself these questions:
o
What do you
want your CV to show in 20 years from now?
o
What is my
elevator speech?
·
Be mobile,
reach different experiences, be curious about business needs. Make sure you
understand the business roles and think about what is required to make it
happen.
·
Continue
learning not to fall behind. Always grow yourself.
·
Don’t stop
planning for the future.
·
Empower your
team. Make sure you have an exit to relax, spend time with friends and spare
time for sport.
Although the COVID-19 pandemic devastated the travel and tourism industry, causing losses of almost USD 4.5 trillion, increasing vaccination levels and easing government restrictions are prompting the expectation of a strong return for the industry. ETF Managers Group recently published the travel trends for 2022. According to the report, the travel industry still has ample expansion opportunities.
Increasing vaccination levels are beginning to ease travelers’ concerns, and as the travel industry recovers from the pandemic-related blow, travel technology companies are naturally poised to reap the benefits.
The flexibility by the “Work from Wherever” Movement presents a unique opportunity for workers to pack up their laptops and mix leisure travel with remote work. With more companies allowing flexible remote work opportunities, we expect to see the travel industry continue to capture this growth as a result of the “Work from Wherever” trend.
In order to promote passenger and driver trust around safety and sanitation, ridesharing companies like Uber and Lyft have implemented safety measures aimed at easing the concerns of both riders and drivers. Ridesharing companies have implemented safety protocols to alleviate this concern, introducing physical partitions between drivers and riders, and requiring masks to be worn throughout the duration of the ride. Second, the increasing cost in private vehicle ownership due to rising fuel costs, maintenance, and insurance has led car ownership levels among individuals aged 18-35 to decline over the past several years. Millennials ‘and Gen Xers’ preference for ridesharing over outright car ownership has been linked to the perceived time and cost benefits of shared mobility, as well as their desire towards technology and on-demand services.
2022 may also see a surge in luxury travel as pent-up international travel demand is unleashed amid the stabilizing health situation and loosening border restrictions.
So, now, make sure your passport hasn’t expired!
Travel Trends of 2022
By Devin Ryder, CFA
The Travel & Tourism sector was ravaged by
COVID-19 concerns, mandated lockdowns, and international mobility restrictions.
In 2020, the global Travel & Tourism industry lost USD 4.5 trillion. Hit
particularly hard, the sector’s overall contribution to GDP declined by 49.1%
from 10.4% in 2019 to 5.5% in 2020, compared to a global GDP decline of 3.7%.
International visitor spending plummeted by 69.4%, while domestic visitor
spending dropped by 45%.
2021 has given us a glimpse into the growth
potential that reduced restrictions and greater consumer confidence could
provide. The US DOT reported that the volume of flights operated in 2021 was
approximately 6.2 million. While this is certainly greater than 2020 levels, this
value represents only 78% of the volume of flights operated pre-pandemic in
2019 (7.9 million). Thus, the industry still has ample expansion opportunities.
Increasing vaccination
levels are beginning to ease travelers’ concerns, and as the travel industry
recovers from the pandemic-related blow, travel technology companies are
naturally poised to reap the benefits. Consumers increasingly rely on online
travel agencies (OTAs) and ridesharing technologies to access travel-related
services in a far more convenient and cost-effective fashion compared to
traditional offline services. The online travel booking platform market alone
is projected to grow at a CAGR of 4.91% over the period 2022-2026 to reach $
204.81 billion. As for the global ridesharing market, it is expected to reach
USD 61.24 billion by 2026, increasing at a CAGR of 17.32% from 2021 to 2026.
The COVID-19 pandemic
brought rise to the work from home (WFH) era, a trend that is predicted to
continue into the foreseeable future. Among 127 company leaders surveyed by
Gartner, Inc., 82% plan to allow at least some remote work, and nearly half
(47%) said they intend to allow employees to work remotely full time going
forward. This flexibility presents a unique opportunity for workers to pack up
their laptops and mix leisure travel with remote work; we are already seeing
these employees take advantage.
Travelers intending to
work while away have a unique set of characteristics that are defining the new
wave of WFW. They have above-average spending power, saving an average of $
4,000 annually on spending, often associated with office work – commuting,
business attire, eating out, etc. Additionally, they have greater flexibility
around travel dates. To serve this preference, short-term rental companies like
Airbnb (ABNB) and Vrbo (EXPE) have added optionality for flexible dates.
Remote work may
exacerbate the rise of vacation rentals as a preferred means of accommodations.
A key characteristic of the working vacationer is the need for a work-friendly
space to stay. Their needs include a quiet and comfortable space to work, as
well as fast and reliable Wi-Fi. Short-term rental companies are poised to
serve this need and capitalize on the remote work trend, as they generally
provide more space for work than the typical hotel room. These companies have
been working to enhance their features to accommodate the needs of working
vacationers. For example, in 2021, Airbnb released a feature that allowed
travelers to check the Wi-Fi speed of the listing before they booked.
WFW travelers also
possess a greater ability to take extended trips. Not only did working
travelers plan twice as many trips as those who planned to fully disconnect,
but more than half of employee vacationers added 3 or more days to the duration
of their longest leisure trip. In February 2021, 11% of surveyed remote workers
said they had taken long trips because of remote work flexibility; by early
October 2021, the number has risen to 23%. With more companies allowing
flexible remote work opportunities, we expect to see the travel industry
continue to capture this growth as a result of the WFW trend.
In addition to those
mixing work with leisure, 2022 may see a surge in luxury travel as pent-up
international travel demand is unleashed amid the stabilizing health situation
and loosening border restrictions. For this reason, Expedia is calling 2022 the
year of the “GOAT” (Greatest of All Trips). In a poll of 12,000 travelers
across 12 countries, Expedia found that more than two-thirds of Americans (68%)
are planning to go big with their next trip, eyeing international destinations
like Rome, Bali, London, and Paris.10 Travelers worldwide are
eager to make up for lost time and go big on their next trip after a prolonged
period of canceled trips and postponed celebrations. According to a November
report compiled by the WTTC and Trip.com, 70% of leisure travelers across the
US, the UK, Canada, Japan, and Spain expect and plan to spend more money on
travel in 2022 than they have in the past five years. Looking ahead, the future
of the travel industry is looking bright as higher-income households have seen
their savings increase, coupled with surging travel demand.
The global ridesharing
industry saw a drop of ~ 17% in revenue generation in 2020 from 2019. Lockdowns
curtailed the need to travel too far from home, and consumers remained hesitant
to use ride-sharing services, even after lockdown mandates were lifted. In
order to promote passenger and driver trust around safety and sanitation,
ridesharing companies like Uber (UBER) and Lyft (LYFT) have implemented safety
measures aimed at easing the concerns of both riders and drivers. Things are
beginning to look up for the shared mobility market, with an expected CAGR of
16.7% over the period 2021-2030.
This is being driven by
several factors. First, many local travelers are still feeling discomforted by
overcrowded public transportation options, driving demand for more comfortable
intercity ride models. Ridesharing companies have implemented safety protocols
to alleviate this concern, introducing physical partitions between drivers and
riders, and requiring masks to be worn throughout the duration of the ride.
Second, the increasing cost in private vehicle ownership due to rising fuel
costs, maintenance, and insurance has led car ownership levels among
individuals aged 18-35 to decline over the past several years. Millennials ‘and
Gen Xers’ preference for ridesharing over outright car ownership has been
linked to the perceived time and cost benefits of shared mobility, as well as
their desire towards technology and on-demand services.
In their Q3 2021
financial results announcement, Uber reported that gross bookings reached an
all-time high of $ 23.1 billion, up 57% YoY, with revenue up 72% over the same
period. Lyft saw similar results, reporting Q3 2021 revenue growth of 73% YoY.
We believe we’ll continue to see similar growth over the coming years as
consumers become more comfortable with the state of public health.
Over the past decade,
travel technology has grown from a niche concept to a primary means of sourcing
and booking travel services. Although the COVID-19 pandemic devastated the
travel and tourism industry, causing losses of almost USD 4.5 trillion,
increasing vaccination levels and easing government restrictions are prompting
the expectation of a strong return for the industry. As we look to the future
of a post-COVID-19 world, we believe travel technology companies are poised to
not only capture the residual growth but help to propel the industry forward
with technological advancements aimed at addressing shifting consumer
preferences.
Capture the pent-up
demand for global travel and tourism with the ETFMG Travel Tech ETF (AWAY), the
first ETF to provide investors access to top technology companies at the
forefront of travel bookings, advice, price comparisons and ride sharing.
