When John Freda arrived in the country in January this year to assume the leadership of Japan Tobacco International Philippines, he was literally given an “explosive welcome” as Taal volcano had just erupted. He was on the last plane that landed at the airport before it was closed due to severe ashfall from the eruption.
That was Freda’s first ‘baptism by fire’ upon setting foot in the country.
Then in mid-March, another unforeseen event happened. He was in Cebu meeting with his local team when he was told by colleagues to quickly pack so they could return to Manila before the country went into lockdown because of the coronavirus pandemic.
“We were fortunate to return to Manila in time, and obviously begin managing what had been a normal turned swiftly to very abnormal situation as we looked to navigate through a pandemic in an organization of great scale,” said Freda, who held several top-management roles in JTI before coming to the country.
A seasoned campaigner who is no neophyte in managing business challenges, Freda said the unforeseen incidents did not deter him from focusing on his new role as general manager of JTIP—a leading international tobacco company that continues to grow locally after it successfully acquired the tobacco-related assets of Mighty Corp. three years ago.
“I had to learn the local operations first-hand under unprecedented conditions of a pandemic and obviously it changes a lot of things that you do. I am very fortunate that I have such a strong team that helped me plot our path,” Freda said.
Freda brings to the local JTIP operations a wealth of experience in various JTI markets in Europe, having served as general manager in Ireland, Hungary/Slovenia, and occupying other senior sales and marketing positions in the JTI organization.
The Philippine market is not a new entity for Freda. In his preceding role as regional vice president for marketing and sales, he maintained a close relationship with the local operation, allowing him to understand the business challenges ahead.
“I see it more of a continuation of that relationship. The Philippine market is different in many ways, yet there are many similarities with the European markets that I previously managed. I believe your success ultimately boils down on how well you satisfy your consumers and how efficiently you bring your products to the market,” Freda said.
He continued: “JTIP is an organization that has grown following the acquisition of Mighty Corp., and it’s time to turn the page and let the next chapter of growth begin.”
Freda credits the local team for doing excellent work in bringing the company to where it is right now.
“Our opportunity now is to build on this foundation. The good thing of having been around the block a few times is that I bring the experience of these different markets to bare. We are clearly the challenger in the Philippines, which is a position I’m very comfortable with, would even say enjoy. The scale is different, but the principles of success is the same; put the consumer at the forefront of everything we do, deliver them the very best quality money can buy and be the greatest company to work for!” he said.
Job opportunities
With the country reeling from COVID-19’s economic impact and the unemployment rate at a record high, JTIP is helping mitigate the problem through employment opportunities created by its setting up of a global business service center in Taguig City.
The GBS is expected to increase the operational efficiency of all JTI markets in the Asia-Pacific region by streamlining activities, harmonizing business processes and sharing best-practices not only in the region but across all 130 countries where the company operates. It will employ up to 350 people within the next three years, bringing the total number of JTI employees in the Philippines to more than 5,000, including those in its Batangas factory.
“The establishment of the Manila GBS center is proof of the company’s confidence in the Philippine market and commitment to create jobs in support of national development. We are pleased to add the GBS center to our employment offerings in the Philippines,” Freda said.
Campaign vs illicit tobacco
Freda believes the problem of illegal trade in tobacco is a growing one and requires more attention. While he recognizes that the government is striving hard to stamp out the illicit trade, the situation still requires absolute vigilance.
“Illegal tobacco makers are directly stealing from the state. As legitimate businesses, we are a very effective tax collector and clearly, we can’t do that if there is an illicit problem. Illegal trade cheats everyone: governments, consumers and legitimate businesses,” Freda said.
He understands that for a country with so many islands like the Philippines, it is a huge challenge to control the problem but believes the deterrents need to be stronger. “Stiffer sanctions are required – we need to see people being caught and brought to justice in a way that deters others from being part of this criminal endeavor,” Freda said.
He said: “The illegal tobacco trade is a feast for criminals who make huge profits with very low risk of being caught and insignificant penalties. A lucrative business indeed for anyone who has the logistics in place and can copy our products and import without paying the taxes, which is unacceptable.”
Aside from the lost tax revenue, counterfeit and contraband cigarettes are not subject to any quality controls, according to Freda.
“With JTI products, quality is assured throughout all stages of sourcing, manufacturing, storage and distribution in full compliance with regulatory and legal requirements. Our factory in Batangas, for example, ensures all products pass rigid quality checks before they are released in the market. If you see the factories these illicit makers are using, you will be horrified by the poor condition they produce these illicit products and where they store them. We have tested these illicit products and found them to contain animal feces, plastic materials, dirt and high levels of lead,” Freda said.
On implementing tax increases on tobacco products, Freda said the objective might be to reduce consumption but these measures will not work if there is a growing illicit trade and only serve to undermine public health objectives. With tax increases alone, the reward is higher for the syndicates as it drives smokers towards cheaper illicit products.
JTI helps governments, regulators, police and customs crack down on illegal trade by imparting information, developing specific programs and sharing experiences with other countries on how illicit trade laws are implemented. “JTI invests millions each year to fight illegal trade. We do this to protect our business and our brands,” Freda said.
Sustained optimism
While facing enormous business challenges and incidents beyond his control, Freda is still optimistic of taking the company forward, helping it grow and be a major key player in the market.
“We’ve seen significant changes in the global markets, including the advent of alternative products, which we have also developed and are now part of our portfolio; we are going to compete in all viable categories in the country and continue to meet consumer demand and grow our market share,” Freda said.
