Interview with Pasquale Frega, Managing Director, Philip Morris Manufacturing Italy

14 Jul Interview with Pasquale Frega, Managing Director, Philip Morris Manufacturing Italy

Italy is a central part of Philip Morris International’s transformation toward smoke-free products. What have been the key milestones in this shift and how has your leadership influenced this journey?

In 2008, Philip Morris chose to break with its history and invest in smoke-free technologies, recognizing that most harm from smoking comes from combustion rather than nicotine. In 2014, we launched our first smoke-free product in Milan and Nagoya. Since then, we have invested over $14 billion in R&D and conducted more than 500 studies to demonstrate the reduced impact of these products compared to traditional cigarettes. Much of this transformation has happened here in Italy.

In 2014, we began a major investment in Bologna, now the world’s largest Philip Morris manufacturing site dedicated entirely to smoke-free products. It exports to over 50 countries and supports a value chain of about 8,000 Italian companies, most of them based in Emilia-Romagna. This local ecosystem is a success story for the region and for Italy as a whole. Globally, almost 40 million smokers have switched to our smoke-free products, over two million of them here in Italy, making Philip Morris the global leader in this field.

The company aims for these products to generate over two-thirds of revenue by 2030. How will you achieve this and what role will innovation and digitalization play?

As of Q1 2025, 43% of our global revenue comes from smoke-free products. Innovation, technology and digitalization are at the core of everything we do. Our manufacturing sites in Bologna and Emilia-Romagna were built around artificial intelligence and advanced digital processes — work that was recently recognized with a global award from Microsoft. Technology is embedded not only in production but also in our devices, which deliver nicotine without combustion.

Digital tools also help us inform and connect with consumers as they switch to smoke-free alternatives. Even our sustainability efforts rely on technology: we support growers in reducing water use and improving labor practices, minimizing environmental impact from leaf cultivation to production. This entire transformation is driven by innovation, AI and digitalization.

How can strategic partnerships with US companies and investors help you achieve your ESG goals in the region?

We are ahead of our ESG targets, setting goals that are even more ambitious than international standards. For example, our Bologna site runs on 100% certified green energy, and we have already cut CO₂ emissions from our plant in Emilia-Romagna by 25%. Our factory also obtained the Alliance for Water Stewardship (AWS) certification, which is an international standard for sustainable water management. Between 2018 and 2023 there was a reduction in direct water consumption and, consequently, a 52% decrease in water intensity per unit of product.

We continually seek new technologies and welcome partnerships that add value and help us accelerate our sustainability journey.

How does the company engage the community and how many jobs do you create? How important is your role in the region?

Our impact rests on three pillars. First, we directly employ around 2,500 people to run our manufacturing operations. Second, we have relocated about 500 specialists from Switzerland to Emilia-Romagna to lead our global Center of Excellence for manufacturing, focusing on making our processes more efficient and technologically advanced. Third, as a leading company, we aim to shape the local ecosystem.

In 2022, we launched the Institute for Manufacturing Competencies to collaborate with universities, educational institutions and startups. Through innovation calls, training and knowledge-sharing, we help promote best practices in manufacturing not just in Emilia-Romagna but across Italy, supporting the country’s status as a global manufacturing leader.

Emilia Romagna has the Leonardo supercomputer. How do you collaborate with it on data? Do you share resources or benefit from each other’s work?

At this stage, we don’t have partnerships with the major technology giants based there, but we do collaborate with companies from the Motor Valley, including our long-standing relationship with Ferrari, and with many firms producing advanced machinery for our operations. Our investment in Bologna was driven not only by the Motor Valley, but also by the region’s Packaging Valley and Food Valley — Emilia-Romagna’s world-class clusters for manufacturing and packaging technologies. Another key factor is the region’s strong institutional support. Local policymakers understand industry needs and work actively to help businesses grow. Emilia-Romagna is Italy’s top region for exports, thanks in part to this collaborative environment.

Doing business in Emilia-Romagna is generally easier than the Italian average. Italy has around 380,000 small and medium-sized companies compared to Germany’s 150,000, showing how SMEs thrive here. Large corporations can find it more complex, but Philip Morris is an example of how big companies can succeed by partnering with 8,000 SMEs. This collaboration alone generates about 0.5% of Italy’s GDP. It’s hard to compare exactly how much easier or harder it is than in other countries, but Emilia-Romagna offers a supportive environment.

Emilia-Romagna is remarkable for its skilled workforce and strong collaboration with local universities. The region has a vibrant startup scene that actively drives innovation and partnerships, making it an excellent place to access talent. Our experience here has been very positive as we work to end smoking in Italy and worldwide.

Do you have any additional comments?

Smoke-free products are not just another category for us — they are central to our mission of delivering a smoke-free future. As our CEO says, we want cigarettes to belong in a museum. The company is fully committed to this goal. While there is still work to do, we are making progress by giving smokers better alternatives and using technology to help improve their lives.