Altria, PMI Expand Strategic Framework for E-Vapor Products

Philip Morris International, Swedish Match dissolve joint venture

RICHMOND, Va. -- Altria Group Inc. said that it is expanding its strategic framework with Philip Morris International (PMI), first announced in December 2013, to include a joint research, development and technology-sharing agreement.

Altria Philip Morris International PMI

Altria and PMI will collaborate to develop e-vapor products for commercialization in the United States by Altria and in markets outside the United States by PMI.

The agreement also provides for exclusive technology cross licenses, technical information sharing and cooperation on scientific assessment, regulatory engagement and approval related to e-vapor products.

Meanwhile, PMI and Swedish Match have mutually agreed to dissolve their joint-venture agreement relating to the sale of smokeless tobacco products outside Scandinavia and the United States.

Swedish Match will continue to sell General snus in Canada, Russia and Malaysia. It said it sees “good opportunities” for its snus products internationally over the longer term.

The companies established SMPM International (owned on a 50/50 basis by Swedish Match and PMI) in 2009 to commercialize snus outside Scandinavia and the United States.

Within the scope of the joint venture, Swedish Match has developed and produced snus products that have then been sold through PMI. Both companies have licensed trademarks to the joint venture. The venture most recently has been selling snus in Canada, Russia, Israel and Malaysia. Costs for joint venture activities have been shared 50/50.

There is a small but growing demand for snus in current joint-venture markets, Swedish Match said. The development has, however, taken longer than the parties had initially anticipated. As a consequence, the parties agreed end the joint venture.

Swedish Match and PMI will now focus on independent strategies for the commercialization of snus, Swedish Match said

Trademark licenses will revert to the original owners, and separate transitional agreements have been signed whereby Swedish Match will supply snus products to PMI for certain markets, and PMI will perform distribution services on behalf of Swedish Match in Canada and in Russia.

“We have attained valuable insights, and are pleased to see that snus has been viewed by many outside of our core markets as a viable alternative. We look forward to continuing to build our knowledge and work toward further developing our snus business globally,” said Lars Dahlgren, president and CEO of Swedish Match.

Stockholm-based Swedish Match develops, manufactures and sells products with brands in snus and moist snuff; other tobacco products (OTP) such as cigars and chewing tobacco; and matches, lighters and complementary products. Some of its brands include General, Longhorn, White Owl, Red Man, Fiat Lux and Cricket.

New York City-based PMI is a leading international tobacco company with six of the world's top 15 international brands, sold in more than 180 markets.

Richmond, Va.-based Altria’s wholly owned subsidiaries include Philip Morris USA Inc. (PM USA), U.S. Smokeless Tobacco Co. LLC (USSTC), John Middleton Co., Nu Mark LLC, Ste. Michelle Wine Estates Ltd. (Ste. Michelle) and Philip Morris Capital Corp. Altria holds a continuing economic and voting interest in SABMiller plc (SABMiller).

The brand portfolios of Altria’s tobacco operating companies include Marlboro, Black & Mild, Copenhagen, Skoal, MarkTen and Green Smoke. Ste. Michelle produces and markets premium wines sold under various labels, including Chateau Ste. Michelle, Columbia Crest, 14 Hands and Stag’s Leap Wine Cellars, and it imports and markets Antinori, Champagne Nicolas Feuillatte, Torres and Villa Maria Estate products in the United States.

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