Altria Recaps E-Cigarette, Cannabis Road Map
By Angel Abcede on Feb. 25, 2019BOCA RATON, Fla.— Executives with Altria Group Inc. recapped the company’s road map during a meeting at the Consumer Analyst Group of New York (CAGNY) conference, held Feb. 18-22, offering further insight into its billion-dollar investments in e-cigarette maker Juul Labs and cannabis producer Cronos Group.
In a presentation from Murray Garnick, executive vice president and general counsel for Richmond, Va.-based Altria, and Billy Gifford, vice chairman and chief financial officer of the tobacco maker, said the company’s combined revenue in 2018 was up 1.8% with combined margins up 13.3 percentage points.
Ultimately, the company said it was facing a 4%-5% annual decline in combustible cigarettes over the next five years and elaborated on its $12.8 billion investment for a 35% stake in San Francisco-based Juul late last year, as well as a $1.8 billion buy-in for a 45% stake in Toronto-based Cronos Group.
Here are some of their insights …
Global opportunity for e-cigarettes
Describing the sales potential of e-vapor and heat-not-burn products, the executives said it was a $6 billion business in the United States in 2018 and $17 billion abroad, for a $23 billion global opportunity. They said Juul is already the No. 1 e-vaping product in the Sainsbury grocery chain in the United Kingdom and skyrocketed to 62% dollar share in e-vapor in Canada from September through December 2018.
iQOS update
Despite its enthusiasm about Juul, the Altria executives said they are still committed to the U.S. marketing and sale of the Philip Morris International (PMI) heat-not-burn product iQOS. Altria has an agreement with New York-based PMI to market iQOS nationally when the U.S. Food and Drug Administration (FDA) completes its review of the device’s new-product application.
Altria executives said they see room for multiple types of innovative products within the U.S. consumer base, specifically Juul and iQOS, and have multiple cities targeted for brick-and-mortar stores to promote and introduce the heat-not-burn technology to American audiences.
Modified-risk claims for Copenhagen
Altria said it had support from an FDA Tobacco Products Scientific Advisory Committee to allow for a claim of modified risk with its Copenhagen snuff product. In a slide, the Altria executives showed an ad that read: “If you smoke, consider this: Switching completely to this product from cigarettes reduces risk of lung cancer.”
Cronos
Altria’s $1.8 billion investment in 45% of Cronos includes an option for an additional 10% stake and allows the cannabis producer the opportunity to expand globally. Its focus will be “cannabinoid innovations and differentiated products,” the executives said.
Marlboro rewards
The executives also mentioned the company’s Marlboro mobile coupons and loyalty program, which to date has 1 million adult smokers enrolled and about 5 million pack codes entered for discounted items.