Philip Morris To Fight Illicit Tobacco Trade, Fund Projects

Tobacco major Philip Morris International Inc. (NYSE:PM) has come up with a new initiative – PMI IMPACT – to combat illicit trade practices. PM IMPACT is headed by a seven member council of external independent experts. These members have extensive experience in the field of law, anti-corruption and law enforcement.

The council will oversee the grants to put a check on smuggling and related crimes. Philip Morris has pledged to expend as much as $100 million for the initiative. PM IMPACT will also raise funds from public or non-governmental organizations.

Illicit trade of cigarettes has been on the rise over the past few years, resulting from higher excise taxes imposed. This in turn gives rise to smuggling of counterfeit cigarettes at lower prices. Moreover, the fake cigarettes are far more injurious to health than their counterparts, which mar the reputation of tobacco majors like Reynolds American Inc. (NYSE:RAI) , Philip Morris, Vector Group Limited (NYSE:VGR) and Altria Group Inc. (NYSE:MO) .

Philip Morris, which currently carries a Zacks Rank #3 (Hold), has been striving to fight tobacco smuggling for a long time. In 2004, the European Commission, together with 10 Member States and Philip Morris, announced a 12-year agreement to counter cigarette smuggling and counterfeiting. The agreement is scheduled to end in Jul 2016. The European Union is considering an extension of the agreement.

Apart from Philip Morris, Reynolds is trying to confront tobacco trafficking. It set up a website – www.thenewtobaccoroad.com – in 2014 showing how cigarettes are smuggled from lower-tax states to higher-tax ones in the Northeast via I-95. The initiative was part of its effort to raise awareness about cigarette smuggling in the east coast along Interstate 95 – the New Tobacco Road – which has turned into a key transit route for illegal activities.