RICHMOND, Va. -- Altria Group Inc. on Wednesday reiterated to shareholders its interest in growing its business in other tobacco product (OTP) categories as U.S. cigarette sales continue to decline because of concerns about health, smoking bans and priceincreases, reported the Associated Press. CEO Michael Szymanczyk told shareholders that while Altria will still be able to build market share in the declining cigarette business, success depends on finding alternative products that are satisfying to consumers and reduce healthrisks.
"As the company looks to the future, it has clear recognition [image-nocss] of the fact that conventional cigarettes are harmful in society, and we'd like to make some progress on improving that situation," Szymanczyk said during the question-and-answer portion of the first shareholder meeting since the March spinoff of its international segment, Philip Morris InternationalInc.
Szymanczyk said its domestic tobacco unit, Philip Morris USA—the nation's No. 1 cigarette manufacturer—will deal with fewer cigarette sales by capitalizing on its Marlboro brand and selling more smokeless products. It has projected that cigarette sales volume will fall between 2.5% to 3% in the U.S. over the next fewyears.
Last year, Philip Morris began testing of its Marlboro-branded moist smokeless tobacco product—cut tobacco placed in the mouth—in Atlanta and recently expanded to counties in the surrounding metropolitan area. It also began testing its spitless product, which is a moist powdered tobacco, called Marlboro Snus in Dallas last year, and also has expanded toIndianapolis.
Szymanczyk said the company already has made a number of modifications to those products based on input from consumers in the testmarkets. "We're making remarkable progress," he said. "We've learned a lot that will allow us to efficiently develop our productsfurther."
Altria now consists mainly of PM USA, cigar manufacturer John Middleton Inc., Philip Morris Capital Corp. and a 29% stake in London-based SABMiller PLC, brewer of Millerbeer.
Its first-quarter profit fell 11%, in part because of costs related to the spinoff its international segment and relocating its corporate headquarters from New York to Richmond. The maker of top-selling Marlboro cigarettes reported earnings of $2.45 billion or $1.16 per share for the quarter ended March 31, down from $2.75 billion or $1.30 per share in the year-agoquarter.Sales for the period were $4.41 billion, up nearly 3% from $4.3 billion in the same quarter in 2007.
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