RICHMOND, Va. — Altria gave an update on Juul, On nicotine pouches and its tobacco business overall during a July 28 call on its second-quarter 2022 and first half of the year financial results.
“Our tobacco businesses performed well in a challenging macroeconomic environment for the first half of the year,” said Billy Gifford, Altria’s CEO. “The smokeable products segment delivered solid operating companies income growth behind the resilience of Marlboro, and our moist smokeless tobacco brands continued to drive profitability. We also continued to make progress toward our vision through the investments we laid out in January, which included supporting the expansion of On.”
Net revenues for the Richmond, Va.-based company decreased 5.7% to $6.5 billion for the second quarter and decreased 4.1% to $12.4 billion for the first half of the year, primarily driven by the sale of Altria’s wine business in October 2021 and lower net revenues in the oral tobacco products segment, the company said.
Net revenues for Altria’s oral tobacco products decreased 4% in the second quarter. This was due to lower shipment volume, higher promotional investments in On and a higher percentage of On shipment volume relative to moist smokeless tobacco compared to the prior year, partially offset by higher pricing, Altria said. While Copenhagen and Skoal saw declines from second-quarter 2022 to second-quarter 2021, On saw a 57.4% increase between the two periods.
“We are encouraged by On retail momentum and significant share growth since achieving unconstrained capacity last summer,” Gifford said.
Juul, the electronic cigarette brand that Altria has a stake in, has struggled since the U.S. Food and Drug Administration (FDA) issued a marketing denial order (MDO) on the company’s premarket tobacco product application (PMTA), temporarily banning it from U.S. sales. Shortly after it issued the MDO, however, the FDA stayed the order, allowing products to return to the market while it further reviews Juul’s PMTA.
“We believe this is a pivotal point in the U.S. tobacco industry. The FDA has the opportunity to create a mature, regulated marketplace of smoke-free products that can successfully realize tobacco harm reduction and improve the lives of millions of adult smokers,” Gifford said. “We share the FDA’s goal to transition adult smokers away from cigarettes, but we continue to believe that harm reduction, not prohibition, is the best path forward.”
In second-quarter 2022, Altria said it recorded a non-cash pre-tax unrealized loss of $1.2 billion because of a decrease in the estimated fair value of its investment in Juul. Under the terms of Altria’s relationship with Juul, Altria has the option to be released from its non-compete obligations if Juul is prohibited by federal law from selling e-vapor products in the United States for a continuous period of at least 12 months, among other reasons.
“At this time, we continue to believe that these investment rights are beneficial to us; therefore, we have not opted to be released from our non-compete obligations at this time, but we retain the option to do so in the future in accordance with our relationship agreement with Juul,” Altria said.
The company said it continues to believe that e-vapor products, including Juul, can play an important role in tobacco harm reduction.
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