Speech by Ian Ferguson Managing Director, Philip Morris Mexico

Thank you for giving me this opportunity to speak to you about the way we at Philip Morris International integrate social responsibility in our tobacco business worldwide.

Already, you are probably asking yourselves this question: How is it possible to be in the tobacco business and at the same time be a responsible corporate citizen? After all, let's face it, we manufacture and sell an addictive product that causes diseases in smokers. That's why we are under more public scrutiny and are often the target of greater skepticism than many other companies.

Despite that, we're convinced that it is possible to be a tobacco company and a responsible corporate citizen at the same time. Today, I would like to tell you about what we do to achieve this in Mexico and other parts of the world.

Our credibility very much depends understanding and responding to the following questions: How does society define a responsible tobacco company? And what actions does society expect a responsible tobacco company to take?

In summary, society have told us that they want us to provide information about our products and the impact of smoking on their health; they expect us to take actions to help prevent youth smoking; and they want us to develop a product that is potentially less harmful.

We cannot earn society's respect without meeting these expectations. This is why we continue to broaden our communications about our products, while supporting a consistent public health message about the health effects of smoking.

We believe that all governments should demand the placement of health warnings on all packages of tobacco products, and that it should be public health officials who determine the contents of such messages.

In order to give more detailed health information to consumers, we have recently started to place a small leaflet in 25% of all cigarette packs sold in Mexico. The Philip Morris International website also talks openly about the risks of cigarette smoking, and provides links to a variety of sites about quitting.

Secondly, people expect us to be leaders in taking initiatives to help keep cigarettes away from minors. Our position on this is, and has been, very clear: we do not want minors to smoke, we do not want their business, and if our efforts to prevent youth smoking result in less sales for us, then so be it. Our worldwide business success does not depend on encouraging minors to smoke. Our strategy is to compete for the 80% of adult smokers in the world who do not currently smoke our brands.

Philip Morris International and its affiliates are committed to minimize youth smoking and we support over one hundred educational and preventive programs in ninety countries. We promote laws which set a minimum age for the purchase of cigarettes, and we voluntarily place signs in shops saying "Sale to Minors is Prohibited". In Mexico, we were successful in incorporating this requirement into law.

Experts agree that youth smoking is a multifaceted social problem. We recognize that we can not solve the problem alone. That is why our preventive efforts are diversified and involve retailer associations, NGOs, governments, educators and public health authorities.

Thirdly, society wants tobacco companies to develop products that potentially reduce the harmful effects of smoking. At present, there is no such thing as a safe cigarette. While the development of reduced harm products is a top priority for Philip Morris International, the process must be scientifically flawless and must be validated by the public health authorities.

Fourth, society believes that the tobacco industry should be regulated. While we agree with the need for reasonable regulation, we also stress the importance of effective enforcement in order to achieve public health goals. We believe that regulations should nevertheless preserve the right of adult consumers to continue making informed decisions about a legal product through direct communication with the manufacturer.

In 2002, the Mexican tobacco industry formalized a Self-Regulation Agreement on Cigarette Marketing and Commercializing, which - among other provisions - prohibited radio and television advertising, as well as placing additional restrictions on billboard and print media advertising. All of these measures were later incorporated into the General Health Law of January 2004.

Finally, I would like to discuss another key subject for a responsible corporate citizen: supporting and making a positive difference in the communities where we live and work.

Worldwide, our company contributes to organizations that fight hunger, help victims of natural disasters, help prevent domestic violence and promote education and the arts. In line with this philosophy, in 2001 we created the Philip Morris - Cigatam Fund, Nutrivida, which supports sustainable nutrition projects in the impoverished communities of Mexico. Nutrivida was honored last year through an award from the Mexican Philanthropy Center, CEMEFI, for the Best Corporate Responsibility Practice in the category of Community Involvement.

What I have said today reflects our commitment to listen, learn from and respond to society. I hope that I clearly described how we understand Corporate Social Responsibility from the standpoint of a tobacco company.

Above all, rather than talk about what we do - as I have done today, we want our actions to speak for themselves.

Thank you very much.