Tag: altria

  • Report: E-Cig Market to Reach $23B by 2029

    Report: E-Cig Market to Reach $23B by 2029

    The E-cigarette market is projected to grow from its current $18.98 billion to $23.15 billion by 2029, an increase of 3.4%, that according to the “E-Cigarette Market Research Report 2020-2029” that was released today.

    The global e-cigarette market is highly competitive, characterized by the presence of key players such as Altria Group, British American Tobacco (BAT), Imperial Brands, and Japan Tobacco International (JTI). With the declining sale of traditional cigarettes due to increasing health awareness and regulatory pressures, such companies have aggressively entered the e-cigarette market, pushing innovation and technology.

    The global e-cigarette market continues to see user-friendly products introduced that are popular with beginners, as well as open systems including mods that offer greater customization options for experienced vapers. Advancements in battery technology and improvements in e-liquid formulation have likewise helped advance the vaping experience.

    Governments, non-profit organizations, and healthcare providers have for decades been pushing awareness against the health risks of smoking, which is positively impacting the e-cigarette market.

  • Strong Action Needed

    Strong Action Needed

    Billy Gifford | Photo: Altria Group

    Altria calls for a reset of the regulatory system in a way that supports the needs of adult smokers, enforces the rules for all and prevents underage use.

    By Stefanie Rossel

    With a new program, U.S. tobacco manufacturer Altria is seeking to enhance its transition toward a smoke-free future in its domestic market: During its third quarter results in late October, the company announced “Optimize and Accelerate,” a multi-phase initiative intended to centralize, streamline and standardize the organization’s processes with the use of artificial intelligence and automation.

    Anticipated to be substantially complete in 12 months to 18 months, the plan is expected to deliver at least $600 million in cumulative cost savings over the next five years in its initial phase, which the company intends to invest in its businesses in support of its vision to move beyond smoking and its 2028 enterprise goals. As part of the initiative, Altria plans to establish an accelerated business solutions organization within Altria Client Services, which will be responsible for driving efficiency and process improvement across Altria companies in partnership with external service providers.

    Enhancing operating efficiency is vital in a nicotine market where transformation appears to be in full swing. In August this year, cigarette smoking in the U.S. was at its lowest point in 80 years with only 11 percent of adults having smoked a cigarette in the past week, according to Gallup’s annual consumption habits poll. A year-on-year decline of 10.6 percent for Altria’s total cigarette shipment volume and 9.4 percent for its flagship brand Marlboro in the first nine months of 2024 reflected this development. Due to its strong pricing power, though, revenue in Altria’s smokeable products segment declined only by about 3 percent during that period. With net revenues of $15.94 billion during the first nine months of 2024, compared to $16.48 billion during the same period last year, smokeable products remain by far the largest category in Altria’s portfolio.

    Making Progress

    As combustible products lose popularity in the U.S., the market for reduced-risk products continues to grow. At the end of the third quarter, Altria estimated the e-vapor category to include about 19 million adult vapers, up 2.5 million versus a year ago. Altria is well positioned for the category: Through its subsidiary Njoy, the company was the first and is still the only manufacturer to have received marketing granted orders (MGOs) for menthol-flavored vape products. In June, the U.S. Food and Drug Administration authorized two menthol-flavored pods for Njoy’s Ace closed e-cigarette device, which was authorized in April 2022, and two disposable e-cigarettes, Njoy Daily Menthol 4.5 percent and Njoy Daily Extra Menthol 2.4 percent, through its premarket tobacco product application (PMTA) pathway.

    Consequently, Njoy consumables shipment volume grew more than 15 percent to 10.4 million units in the third quarter. Consumables shipment volume for the first nine months was approximately 34 million units. Njoy device shipment volume for the quarter nearly tripled versus the prior year to 1.1 million units and was 3.9 million units for the first nine months.

    “We remain excited about Njoy and its potential as a competitive alternative with both smokers and vapers,” commented Altria’s CEO, Billy Gifford, during the third-quarter earnings report. “This year, Njoy has focused on enhancing trial generation, distribution, visibility at retail and connections with consumers. As a result of these efforts, we’ve seen encouraging repeat purchase data, growing customer loyalty and strong share momentum.

    In the third quarter, Njoy pulled back on certain retail promotional offers to better understand consumer retention and underlying demand. Initial retention results were promising. In the retail accounts where Njoy conducted tests, the promotion drove increased volume by approximately 85 percent compared to the pre-promotion period, and Njoy retained more than half of that volume growth following the promotional period. We believe these results reflect consumer interest in Njoy and their satisfaction after trying the brand, and Njoy plans to continue testing trial-focused investments with a view toward long-term profitability.”

    According to the company, Njoy’s third-quarter retail share of consumables was 6.2 share points, up 2.8 share points versus the year’s period and 0.8 share points sequentially.

    Despite these promising figures, competing in the U.S. vape market remains a challenge for authorized brands. The country has a massive and growing illegal vape market, which reportedly accounts for 60 percent of total sales. “While Njoy’s results are encouraging in the context of the broader e-vapor category, category growth continues to be driven by the proliferation of illicit disposable products,” Gifford specified. “Over the last year, the number of vapers using illicit product grew by approximately 45 percent to 12.4 million vapers while pod vapers declined by more than 20 percent to 2.7 million. While we believe the growth in e-vapor is a proof of concept for tobacco harm reduction, there are too few FDA-authorized products in the market, and FDA enforcement is inadequate.”

    Fighting Illegal Products

    The FDA’s market authorization process is notoriously slow—of the 26.6 million applications the agency received between October 2019 and March 2024, the agency agreed to review roughly 1.2 million, of which it granted MGOs for 30 products, which corresponds to 0.001 percent of new product applications. Until last year, the FDA’s primary enforcement tool was a warning letter to manufacturers, importers, distributors and retailers. Recently, there has been more activity: In June, the Department of Justice announced the creation of a federal multiagency task force with the FDA and other agencies to combat the illicit distribution and sale of e-cigarettes.

    Gifford sees some recent positive developments. “This summer, the FDA, jointly with U.S. Customs and Border Protection, seized more than 50,000 unauthorized vapor products from China at the Chicago port of entry. In August, the FDA issued a proposed rule requiring all imported vapor products to include a PMTA submission tracking number; closing this loophole is something for which we have long advocated. We’ve provided our comments in support of this rule and encouraged additional actions, such as extending it to cover nicotine pouch products.”

    In October, the federal task force announced a joint seizure of unauthorized e-vapor products valued at $76 million. “A strong course correction is needed to protect the harm reduction opportunity for the 30 million adult smokers in the U.S., and moving forward, we hope to see more meaningful enforcement action.”

    In addition, 12 U.S. states have enacted vape product registry bills to compensate for meek federal enforcement, with Louisiana being one of the first. “We support legislation in the states to require manufacturers to certify that they are in compliance with federal law to be allowed to sell in that state,” an Altria spokesperson commented to Tobacco Reporter. “While still early, we believe Louisiana’s enforcement efforts illustrate the effectiveness of a state directory in reducing illicit e-vapor products in the marketplace.” For example, in Louisiana, manufacturers supply documents, such as the cover page of a PMTA with evidence of support.

    At its 2024 CAGNY conference, the company presented data showing that the shipment volume for illegal disposable products in the state declined to almost zero within six months of implementation of the registry bill. It should be noted, though, that in Louisiana, the registry bill tracks wholesale and retail but not vape stores, e-commerce or smaller independent “bodegas,” the channels where most illicit trade is suspected to take place.

    Increase in Illicit Pouches

    With the FDA’s slow progress in authorizing novel tobacco products, Altria is worried that the modern oral nicotine products category in the U.S., in which its brand On! held an 8.9 percent market share in the third quarter of 2024, could suffer the same fate as the vape segment.

    In the company’s view, the illicit market for nicotine pouches is echoing the beginning of the illicit e-vapor market several years ago. “Unfortunately, and similar to e-vapor, we’ve identified more than 1,000 illicit nicotine pouch SKUs at retail and online,” Gifford said during the most recent earnings report. “Many of these are synthetic nicotine pouch products, which are an emerging issue. According to federal law, it is illegal to sell or distribute a synthetic nicotine product in the United States that has not received a market granted order from the FDA by July 2022. To date, the FDA has not authorized any synthetic nicotine pouch products. Despite the clarity of the statute, the FDA’s refusal to enforce the law is causing confusion among legitimate manufacturers, and we call on the agency to clarify its enforcement posture on synthetic products.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Altria Loses Juul Appeal in British Columbia

    Altria Loses Juul Appeal in British Columbia

    Image: StandbildCA

    Altria Group has lost an appeal to challenge the territorial jurisdiction of the British Columbia courts in a Juul class action lawsuit, reports Victoria Now.

    “The plaintiffs allege the e-cigarette devices are hazardous products but were falsely marketed as a desirable, safe and healthier alternative to smoking,” the civil claim states. “The plaintiffs additionally allege that the defendants conspired together to addict a new generation to nicotine or, alternatively, conspired to maintain and expand the market for Juul products using unlawful means knowing that addiction and other injuries were likely to result.”

    Altria was brought into the litigation with Juul Labs Canada and Juul Labs USA in September 2020, a year after the original civil claim was filed, following Altria acquiring a 35 percent stake in Juul in 2018 for $12.8 billion.

    According to the litigation, Juul and Altria allegedly “conspired” to “employ strategies perfected in the cigarette industry” to advertise and market Juul products to youth.

    “It is alleged that the defendants exploited regulatory loopholes and relied on social media and other viral advertising methods to hook young people on Juul, despite the defendants’ knowledge of the dangers associated with vaping. Altria is alleged to have provided strategies, analyses and services to the defendants in furtherance of the conspiracy,” a judgment reads.

    Altria’s claim that the British Columbia courts did not have jurisdiction over the action was dismissed in 2022. Altria then appealed the decision, claiming the judge “failed to address evidence that was materially relevant.”

    Altria argued that the judge ignored or misconceived evidence that Altria did not ship Juul products to Canada or send Juul marketing materials to Canadian addresses, among other things.

    The appeal decision found that there is not a real and substantial connection because class members may have “hopped the border and been influenced by Altria’s activities in the United States.”

    “Rather,” the appeal decision reads, “the judge found that the respondents established a good arguable case that Altria was a party to a conspiracy to advertise and market Juul e-cigarettes to young people in a manner that was misleading about the health risks, including the risk of addiction.”

  • Federal Judge OKs Altria, Juul Class Action

    Federal Judge OKs Altria, Juul Class Action

    Image: H_Ko

    A federal judge approved the final part of a class action settlement with the e-cigarette company Juul Labs and its parent company Altria, bringing the settlement total to just over $300 million.

    In 2018, the plaintiffs charged Juul Labs with misleading the public about the addictiveness of Juul and the risk of the e-cigarettes and its nicotine cartridges.

    The plaintiffs also said Juul had targeted teenagers with candy-flavored Juul pods and “multimillion-dollar ad campaigns and social media blitzes using alluring imagery.”

    The case survived a number of hurdles: The judge denied multiple motions to dismiss the suit and agreed to certify four different classes of plaintiffs (a nationwide class, a nationwide youth class, a California class and a California youth class).

    In January, the judge gave preliminary approval to a $255 million settlement between Juul Labs and the plaintiffs, according to Courthouse news. Friday’s ruling grants approval to Altria’s payment of $45,531,250. The sides have yet to reach an agreement on attorneys fees.

    “Court finds that this monetary recovery is fair, reasonable, and adequate given the risks of proceeding to trial and the maximum recovery potentially available to Settlement Class Members if the Class Representatives had prevailed at trial,” wrote U.S. District Judge William Orrick in his order.

    Last year, Juul agreed to pay six states $462 million to settle claims that it had marketed its vaping products to teenagers. The year before that, it agreed to pay $438.5 million to 33 different states and Puerto Rico.

    Altria Group exchanged its entire investment in Juul Labs in 2023 for a non-exclusive, irrevocable global license to certain of Juul’s heated tobacco intellectual property.

  • Altria to Use Bluetooth to Prevent Youth Use

    Altria to Use Bluetooth to Prevent Youth Use

    Image: sdx15

    Altria is finalizing submissions to the U.S. Food and Drug Administration for Njoy products in blueberry and watermelon flavors, according to Billy Gifford, Altria CEO, reports BNN Bloomberg. The company is currently waiting for a decision from the FDA on a menthol version.

    The fruit-flavored products would use Bluetooth technology to prevent underage use, though the company has not detailed how it will do so.

    “We’ve demonstrated the age-gating restrictions are effective at preventing underage access in virtually all cases,” said Gifford at the Consumer Analyst Group of New York conference yesterday.

  • Nicotine Market Shares Flat in December

    Nicotine Market Shares Flat in December

    Tobacco Reporter Archive

    Consumer demand for nicotine products has fluctuated due to inflation and rising cigarette prices over the past 13-19 months. However, the Neilsen report covering the four-week period ending Dec. 30 shows that market shares are holding steady for both next-generation and traditional tobacco brands.

    The market share of R.J. Reynolds’ top-selling Vuse e-cigarette remained flat at 42 percent in December at convenience stores, according to the report. While Vuse’s market share was unchanged, No. 2 Juul dropped from 24.3 percent to 24.2 percent for the report covering the four-week period ending Dec. 30.

    As recently as May 2019, Juul held a 74.6 percent share in the U.S. electronic cigarette market. That’s when a series of regulatory actions led to product-reduction concessions, according to media reports.

    Meanwhile, Altria Group’s ownership of No. 3 NJoy hasn’t resulted in a meaningful market-share increase so far. Nielsen cited a research error by why it did not include an update for NJoy in the latest report. It was at 2.6 percent in the previous report.

    Fontem Ventures’ blu eCigs, an affiliate of Imperial Brands Plc, was unchanged at 1.2 percent.

    The overall e-cigarette category was down 9.9 percent.

    In traditional cigarettes, Philip Morris’ top market share was at 50.6 percent in the latest Nielsen report with top-selling Marlboro representing 45.6 percent of overall market share.

    Meanwhile, Reynolds was at 33.2 percent with Newport at 12.9 percent and followed by Camel (7.8 percent), Natural American Tobacco (3.7 percent) and Pall Mall (3.7 percent).

    ITG was at 8.5 percent overall, although ITG has said its market share is closer to 10 percent. Its No. 7 Winston brand remained at 2 percent, while Kool and Maverick remained tied for No. 8 at 1.8 percent.

    Goldman Sachs analyst Bonnie Herzog said that “in terms of specific company trends, total nicotine sales declines improved across the board for Altria, BAT, Imperial and Juul, while decelerating for all other manufacturers broadly in the latest period.”

    The decline in cigarette sales continues at a strong pace, said David Sweanor, an adjunct law professor at the University of Ottawa and the author of several e-cigarette and health studies.

    “Yet, as Altria results showed and Barclays recently highlighted, much of this is due to cross-category migration,” Sweanor said.

    “People are switching to far lower-risk options. But disposable vaping products appear to currently be the greatest factor in this migration.”

    TD Cowen analyst Vivian Azer said consumers’ cigarette “downtrading to discount and deep discount continues to benefit Imperial’s share trends.”

  • Altria’s ‘Juul Trial’ Begins

    Altria’s ‘Juul Trial’ Begins

    Image: Tobacco Reporter archive

    The trial of San Francisco’s public school system against Altria Group began on Monday, with Thomas Cartmell, a lawyer for the San Francisco Unified School District, stating to jurors, “This case is about Altria, the largest cigarette company in our country, who helped hook a whole new generation of our young people on nicotine, causing a vaping crisis, a youth epidemic,” reports Reuters.

    Beth Wilkinson, a lawyer for Altria, told the jury in her opening statement that the company had aimed to boost sales among cigarette smokers seeking a less harmful option, not among teens. “You can’t forget about those smokers,” she said. “If you can get smokers away from cigarettes, it’s a worthy cause.”

    The school district also sued Juul, which settled that lawsuit last year. Cartmell told jurors that Altria, which was Juul’s largest investor from 2018 until earlier this year, when it exchanged its stake for a license to certain Juul intellectual properties, was “at the heart” of Juul’s strategy to grow its business by appealing to teenagers with sweet flavors and flashy advertising.

    According to Cartmell, Altria made its large investment in Juul after being unsuccessful with its own e-cigarette, and the company knew Juul’s success was driven by youth usage, according to Bloomberg. Juul’s device was “marketed to appeal to the young, cool, popular crowd” and was “packed with nicotine,” Cartmell said.

    Wilkinson argued that evidence would not support this. Juul sales fell after Altria’s investment, and Altria’s investment occurred after Juul pulled most of its flavored products off the market, according to Wilkinson, reports Law.com.

    The San Francisco schools’ lawsuit was chosen to go to trial as a test case.

  • Altria in Talks to Buy Njoy

    Altria in Talks to Buy Njoy

    Image: Tobacco Reporter archive

    Altria Group is in advanced talks to buy e-cigarette startup Njoy Holdings for at least $2.75 billion, the Wall Street Journal reported, citing people familiar with the matter, according to Reuters.

    The Njoy deal could be announced as soon as this week, though the talks could still fall through, according to the report.

    The proposed deal includes an additional $500 million earnout if regulatory milestones are met.

    The potential deal follows Altria’s decision last year to be released from its noncompete deal with Juul Labs almost four years after buying a 35 percent stake in the company. Altria was planning to divest its stake in Juul. As of Dec. 31, Altria valued the stake at $250 million.

    It was reported in July that Njoy had hired bankers for a possible sale of the company. The privately held firm is likely to be valued at up to $5 billion.

    Njoy has a roughly 2 percent of the U.S. vape market by volume, according to Jefferies, Juul, by contrast, accounts for around a quarter of American vapor product sales.

    Unlike Juul, however, Njoy is one of the few vape brands that have permission from the U.S. Food and Drug Administration to continue to sell its products. Juul is waiting to hear whether the FDA will allow its e-cigarettes to remain on the market.

    In June 2022, the agency ordered Juul to remove its products from the market after finding that premarket tobacco product application failed to prove they would “appropriate for the protection of public health.

    The FDA agreed to take another look at Juul’s application after the company appealed the marketing denial order in court. The company can continue selling its products at least until the agency makes a final decision.

    Altria is keen to supplement its income from combustible products with earnings from smoking alternatives, such as e-cigarettes.

    Its cigarette sales volumes fell 9.5 percent last year as high gasoline prices and general inflation pinched smokers’ disposable income.

  • Altria Seeks Juul Settlement Details

    Altria Seeks Juul Settlement Details

    Image: Tobacco Reporter archive

    Altria Group has requested that a federal judge order Juul Labs to turn over details of its settlement with about 10,000 plaintiffs seeking to hold Juul Labs responsible for a youth vaping “epidemic,” reports Reuters.

    Altria stated that the settlement was “shrouded in secrecy” and that Juul refused to share the information with Altria, which in 2018 took a 35 percent stake in the company.

    Altria was not part of the settlement and remains a defendant in mass tort litigation consolidated before U.S. District Judge William Orrick. Plaintiffs allege Altria took part in shaping Juul’s strategy to market e-cigarettes to minors.

    Altria stated that it needs to see the details of the settlement and the negotiations leading up to it in order to evaluate its potential remaining liability and explore potential claims against third parties. Juul’s refusal to share the information “goes far beyond the protections needed to address those concerns, lack[s] any legal basis and would severely prejudice” Altria.

    In a separate motion, Altria requested that Orrick put a hold on a class action suit seeking refunds on behalf of all Juul purchasers nationwide while Altria appeals the order certifying the class. The company said that it would be heavily burdened by continued discovery related to the suit.

  • Tobacco Firms Settle Messaging Dispute

    Tobacco Firms Settle Messaging Dispute

    Several tobacco companies have reached an agreement in long-running litigation brought by the U.S. Department of Justice (DOJ) and certain public health organizations regarding the communication of tobacco-related messaging at retail locations.

    The agreement will require Altria, Philip Morris USA, R.J. Reynolds Tobacco and ITG Brands to supply their contracted stores with court-ordered signs that must be posted for 21 months.

    The agreement covers the last remaining dispute from the lawsuit DOJ filed against Altria, Philip Morris USA and R..J Reynolds in the 1990s, according to the National Association of Convenience Stores (NACS).

    “This litigation has always put the retailers in a uniquely bad position,” said Doug Kantor, NACS general counsel. “Retailers were not parties to the lawsuit and should not be burdened with a court-ordered remedy, but this negotiated outcome avoids even worse results that DOJ and public health groups were advocating.”

    The agreement provides that each store under contract with one of the manufacturers will have to post at least one sign carrying one of 17 different, pre-approved health messages that will be distributed at random to retailers around the country.

    Each store will be required to rotate to a new message halfway through the time period required in the agreement. The manufacturers will be required to hire auditors to check whether the signs are properly posted. A summary of the agreement explaining the requirements on retailers as well as answers to frequently asked questions about it can be found here.

    A hearing on the proposed agreement will be held in the U.S. District Court for the District of Columbia on July 28 and 29. The court will then decide whether to accept the agreement and enter an order to implement it.

    The timing of the requirements for signs to be posted will depend on when the court decides whether to accept the agreement.