Tag: Altria Group

Altria Well-Placed for 2024: Zacks

Image: Photo: Casimiro
Despite changing consumer preferences and macroeconomic uncertainties, Altria Group is well positioned to navigate the market’s complexities in 2024, according to Zacks Investment Research.
According to the financial firm, Altria Group owes its resilience in part to its strong pricing power, which allows the tobacco manufacturer to offset lower shipment volumes with higher earnings per pack.
Altria Group’s investments in reduced-risk products, such as e-cigarettes and nicotine pouches, meanwhile, are enabling the company to capitalize on new market trends.
What’s more, the acquisition of Njoy has given Altria Group access to some of the few vapor products that have been authorized for sale on the U.S. market by the Food and Drug Administration.
Altria Group expects U.S. smoke-free volumes to grow by at least 35 percent through 2028 from the 2022 level of 800 million units.
January 5, 2024
Taming the Cowboys
Image: JEANNE
Altria has declared war on the illicit disposable devices that are impacting its bottom line.
By Timothy S. Donahue
The illicit e-cigarette market is soaring. Illicit products are estimated to account for more than 60 percent of the $8.3 billion U.S. vaping industry. Statista expects the U.S. electronic nicotine-delivery system (ENDS) market to grow at a compound annual growth rate of 3.93 percent from 2023 to 2028. If the illicit market continues to go unchecked, however, companies that market legal vaping products fear many consumers will simply switch back to combustible products.
“It is very much worth noting that this rapid apparent substitution is happening in an environment where half the vapor market is illicit; the FDA [U.S Food and Drug Administration] has hugely hampered vaping products making it onto the legal market, and consumers are hugely misled on relative risks,” said David Sweanor, an adjunct law professor at the University of Ottawa and a longtime tobacco harm reduction advocate. “As with other markets seeing similarly historic drops in cigarette use as alternative sales soar, it raises the question of just how rapidly cigarette sales could fall if policies were aimed at facilitating that rather than doing things to stymie it.”
Altria, parent to Njoy, a leading brand of legal vaping products in the U.S., according to Nielsen, told investors during a recent conference call that the current state of the market is “intolerable” for both legitimate manufacturers and consumers. Altria CEO Billy Gifford said the regulated market is being overrun by illegal flavored disposable products manufactured and distributed by companies violating the rules and guidance laid out by the FDA. He said that regulation not enforced is indistinguishable from no regulation at all.
“Illegal e-vapor products circumvent the actions of regulators, responsible manufacturers and retailers by evading scientific review, quality manufacturing controls, marketing oversight and legal aids or purchase restrictions. Despite recent actions by the FDA, enforcement has been inadequate and ineffective,” explained Gifford. “We believe the FDA has good tools necessary to bring order to the market. For our part, we are actively engaged with regulators, state and federal lawmakers, and trade partners and other stakeholders to build awareness of these serious issues and drive marketplace enforcement.”
According to Gifford, the lack of enforcement has forced Altria to take a “targeted but necessary action.” The company filed a lawsuit in the District Court for the Central District of California against 34 organizations. Njoy alleges that the defendants are manufacturing, marketing, distributing, selling and/or marketing their flavored disposable ENDS unlawfully for three primary reasons:
They are not authorized pursuant to FDA marketing granted orders as part of the premarket tobacco product application process.
California bans the retail sale of flavored ENDS.
The defendants do not comply with the Prevent All Cigarette Trafficking Act’s delivery sale age verification, registration and filing, record keeping, tax payment and labeling requirements.
Altria is asking for the court to provide appropriate restitution for harm suffered by Njoy due to the defendants’ unfair competition.
“We want to protect harm reduction and the opportunity for the 30 million smokers in the U.S.,” said Gifford. “We really need to have enforcement where the smokers can make informed choices as they are moving across categories. I think that there’s an underlying positive is that we see adult smokers moving over, so they’re ready to have potentially reduced harm products. We just need them to be regulated and based on science to be in the marketplace.”
Sal Mancuso, Altria’s chief financial officer, said that traditional cigarette volumes continued to decline in the third quarter of 2023. He said that the decline is impacted by the number of illegal products on the market; however, because illicit products are largely distributed through nontraditional untracked channels, the company has had to refine its ability to estimate the illicit product impacts on the legal vaping industry.
“With the information we have today, we believe that there is more cross-category movement than previously assumed. And we now estimate that growth of illegal flavor[ed] disposable e-vapor products contributed to industry, cigarette industry declines in the range of 1.5 percent to 2.5 percent and over the last 12 months,” said Mancuso. “We will continue to monitor this dynamic trend and are actively pursuing better data sources to enhance our estimates in this space.”
“We believe the FDA has good tools necessary to bring order to the market.”
Billy Gifford, CEO, Altria Group
Amplifying Actions
Altria Group completed its acquisition of Njoy Holdings in May. In 2022, Njoy Holdings received marketing orders for its Njoy Ace device along with several tobacco-flavored pods. At the time of writing, Njoy Holdings had received six of the 23 marketing orders granted by the FDA for the entire vaping product category, including pods, disposables and open systems. The regulatory agency is still reviewing Njoy’s premarket tobacco product applications for several Njoy menthol-flavored e-vapor products.
Gifford said that the company executed Njoy’s business plans with “speed and focus,” adding that the goal is to grow the Njoy brand responsibly and sustainably. To set the foundation for success, Altria first strengthened Njoy’s supply chain. He said the company successfully solidified the entire Njoy supply chain from sourcing direct materials through the shipment to retail.
“As a result, we do not anticipate capacity constraints as we execute our initial expansion plan. Next, during the third quarter, our teams prioritized closing inventory gaps at retail and expanding distribution of ACE,” said Gifford. “Prior to the acquisition, Njoy had a small-scale sales force, which resulted in inventory volatility and significant distribution gaps at retail …. Upon completion of the Njoy transaction, we immediately unleashed our sales force to focus on closing the inventory gaps in stores that already had distribution. We improved inventory conditions in stores and are actively working to close remaining gaps at retail.”
Pamala Kaufman, a financial analyst with Morgan Stanley, asked Gifford if he believed Njoy could be successful and grow in a marketplace dominated by illegal products. Gifford said that the FDA still needs to get through its authorization process, and the agency’s actions will translate to the marketplace.
Since its acquisition by Altria, distribution grew to approximately 42,000 stores during the third quarter of 2023 for the Njoy Ace, the company’s flagship device. The product is now distributed in all the top 25 U.S. convenience store chains by vaping product volume, according to Gifford. The company has also started to amplify visibility with new point-of-sale and fixture signage at retail.
“During the fourth quarter, we continue to expect ACE expansion to reach a total of 70,000 stores by year end, representing approximately 70 percent of e-vapor volume and 55 percent of cigarette volume sold in the U.S. multi-outlet and convenience scanner,” said Gifford. “As we continue to expand distribution and close inventory gaps, we expect to further enhance visibility and product fixture space at retail.”
Last month, Njoy unveiled its first retail trade program. The program allows retail partners to sign up for the program at various levels with merchandising options designed to position Njoy “strategically and responsibly” to current combustible tobacco consumers while boosting the awareness of the Njoy brand. Gifford said the company is beginning to test various promotional plans and anticipates more disruptive execution at retail in the fourth quarter. Moving into 2024.
“We will continue to refine our promotional plans, implement Njoy’s retail trade program, further expand distribution and evolve our consumer engagement strategy. Our strategies will focus on informing adult vapors and smokers of the attributes of ACE, such as battery capacity and pod size, relative to other leading brands, generating trial and growing brand loyalty,” said Gifford. “In addition, plans for a new brand equity campaign are well underway. We expect the equity campaign to further amplify the brand’s presence at retail and drive consumer engagement.”
Jacob de Klerk, an analyst for Redburn Atlantic, asked Gifford what the impact would be on Njoy’s projected market growth if the FDA doesn’t approve any flavors other than tobacco. Would only allowing tobacco flavors create enough demand for Njoy to remain profitable? Gifford said he believes there is room, and he wouldn’t rule out the potential for an authorized menthol product.
“I wouldn’t rule out menthol. We feel good about the application—the current application in front of the FDA from a menthol standpoint. I think if you look at some of the recent marketing denial orders, it was related to ‘new following,’” he replied. “When we made the Njoy transaction, there was virtually no new following. As far as additional flavors are concerned, we’re excited and currently looking forward to being able to file [marketing applications] in the near future. We believe that [flavor] allows for adult consumers to have it as an offramp but not an on-ramp for underage users. So, we still see the potential for flavors.”
Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
December 1, 2023
Altria Urges Action Against Illegal Vapes

Photo: Malcolm Griffiths
A booming illegal disposable flavored vape market is hurting sales of Altria Group’s authorized products, according to Altria Chief Financial Officer Sal Mancuso.
Speaking during a call with media and financial analyst, Mancuso noted that traditional cigarette sales had dropped even more than usual in the third quarter of 2023. The decline, he said, was caused by inflation and economic issues influencing customers as well as the heightened usage of illegal flavored disposable e-cigarettes.
Mancuso also observed that there appeared to be more switching between different categories than initially assumed and that e-cigarettes alone were causing a 1.5 percent to 2.5 percent reduction in traditional cigarette industry volumes.
R.J. Reynolds Vapor Co. leads the U.S. vapor market with a 41.8 percent share, per the latest Nielsen convenience store report released Oct. 7.
Njoy, which Altria purchased for $2.75 billion in June, has struggled to increase its No. 3 market share.
“The current state of the (vaping) market is intolerable for both legitimate manufacturers and consumers,” Altria CEO Billy Gifford said during the call. “The regulated market is being overrun by illegal flavored disposable e-vapor products made and distributed by companies violating virtually every rule and guidance FDA has issued since 2016. A lot of these products are imported. They’re imported illegally and then they’re sold illegally.”
Saying a “strong course correction is needed,” Gifford noted that Altria has filed federal lawsuits in California against 34 organizations that include manufacturers, distributors and online retailers.
October 30, 2023
Altria Revenues Down 4.1 Percent

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Altria Group reported net revenues of $6.28 billion in the third quarter of 2023, down 4.1 percent from the comparable 2022 quarter. The decrease was driven primarily by lower net revenues in the company’s smokeable products segment.
Altria’s domestic cigarette shipment volume decreased 11.6 percent from quarter to quarter, driven by the industry’s overall decline rate, retail share losses, calendar differences and trade inventory movements, among other factors.
Following the completion of its Njoy Holdings acquisition on June 1, 2023, Altria has been strengthening Njoy’s global supply chain to support the anticipated volume increase associated with its expansion plans for the Njoy Ace brand.
The company shipped 7.5 million Ace pods during the quarter. The retail share of Ace pods in U.S. muti-outlet and convenience stores was essentially unchanged since the completion of the Njoy transaction.
The U.S. cigarette retail share of Altria’s Marlboro brand dropped 0.3 points, to 42.3 percent versus the prior-year quarter, primary due to increased macroeconomic pressures on disposable income and increased competitive activity.
Net revenues in the oral tobacco products segment increased 2.2 percent, driven by higher pricing and lower promotional investments.
“Our highly profitable traditional tobacco businesses were resilient in a dynamic operating environment during the third quarter and first nine months, providing fuel for our business transformation and significant cash returns to our shareholders,” said Altria CEO Billy Gifford in a statement.
“I believe we have the appropriate strategies and people in place to execute our growth plans. I continue to believe that we can achieve our vision and create long-term value for our shareholders.”
October 26, 2023
Nabil Sakkab To Retire From Altria Board

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Nabil Y. Sakkab will retire as a member of Altria Group’s board of directors following the completion of his current term. Consequently, Sakkab will not stand for re-election to the board of directors at Altria’s 2024 annual meeting of shareholders, which Altria anticipates holding on May 16, 2024.
“Nabil’s contributions have significantly benefited Altria over the past 15 years,” said Kathryn McQuade, Altria’s independent chair of the board, in a statement. “We thank him for his long and distinguished service and wish him the very best upon his retirement.”
Sakkab chairs Altria’s innovation committee and is a member of the company’s executive, finance and nominating, corporate governance and social responsibility committees. He held a variety of positions at The Procter & Gamble Co. beginning in 1974. He retired in November 2007 as senior vice president, corporate research and development. He is a director of several privately held companies. He served as a director of Deinove from 2010 to April 2016, Givaudan from 2008 to March 2015 and Pharnext from 2012 to July 2020.
October 25, 2023
NJOY Sues Disposable Vapes Manufacturers

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NJOY has filed litigation against 34 manufacturers, distributors and online retailers of illicit disposable e-vapor products that are unlawfully marketed and sold in California and other U.S. states. The suit alleges that these companies manufacture, distribute, market and sell products that violate California’s flavor ban law, are unlawful under federal law and subject to action by the U.S. Food and Drug Administration, and illegally compete against companies that comply with state and federal laws.
The suit seeks a nation-wide injunction against the import, marketing and sale of these illicit products and significant compensatory and punitive damages.
“These companies knowingly violate federal and state laws and need to be held accountable,” said Murray Garnick, executive vice president and general counsel of NJOY’s parent company, Altria Group, in a statement. “Today there are two markets—one for those who play by the rules and one for those who flagrantly ignore them. We are taking this action because the current state of the illicit e-vapor market is intolerable, and we must see more action from FDA and others.”
Filed in the United States District Court for the Central District of California, the litigation is brought under four claims: unfair competition, false advertising, false advertising in violation of the Lanham Act and violation of the Prevent All Cigarette Trafficking Act of 2009.
Named defendants in the suit manufacture and distribute illicit disposable e-vapor products which include brands such as Breeze, Elf Bar, EB, EB Create, Esco Bar, Flum, Juice Box, Lava Plus, Loon, Lost Mary, Mr. Fog and Puff Bar. U.S. defendants include companies doing business in Arizona, California, Delaware, Florida, Michigan, Minnesota, New Jersey, New York and Texas. Foreign Defendants are all based in China.
None of the Defendants has received premarket authorization from the FDA, according to NJOY.
Despite a ban on the sale of flavored tobacco products that went into effect in December 2022, flavored vapor products make up more than 97 percent of the California market according to a recent study commissioned by Altria.
NJOY’s action against disposable vapor product manufacturers follows a complaint to the International Trade Commission by R.J. Reynolds Tobacco Co. charging multiple manufacturers, distributors and retailers of disposable vaping devices with unfair importation.
October 19, 2023
Njoy Seeks U.S. Sales Ban of Juul Products

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Njoy has asked the U.S. International Trade Commission (ITC) to ban the importation and sale of certain Juul products, including its currently marketed Juul device and Juul pods, citing patent infringements.
“Protecting our intellectual property is critical to achieving our vision,” said Murray Garnick, executive vice president and general counsel of Njoy parent company Altria Group, in a statement. “Juul has infringed upon our patents through the sale of its imported products, and we ask the ITC to impose appropriate remedies in response to these trade violations.”
Njoy has also filed a complaint against Juul in the U.S. District Court for the District of Delaware based on the same patent infringement. Njoy Ace is currently the only pod-based e-vapor product to have received marketing authorization from the U.S. Food and Drug Administration, which deemed the marketing of the Ace device and three Ace tobacco-flavored pods as “appropriate for the protection of public health.”
Njoy’s ITC complaint against Juul alleges trade violations associated with the sale of imported products that, according to Njoy, infringe U.S. Patent No. 11,497,864 and U.S. Patent No. 10,334,881. Njoy acquired the Asserted Patents from Fuma International, concurrently with the settlement of a patent infringement lawsuit filed against the company by Fuma.
Njoy’s complaint is the latest development in a broader intellectual property dispute.
In July, Juul Labs asked the ITC to block sales and imports of Njoy Ace, claiming that the product infringes several Juul patents. It has also filed a complaint against Njoy with the U.S. District Court for the District of Arizona.
Juul Labs complain also targets Altria Group, which agreed to acquire the Njoy in March after exchanging its minority investment in Juul for a heated tobacco product intellectual property license.
August 22, 2023
Altria Reports Quarterly Results

Photo: Altria Group
Altria Group reported net revenues of $6.51 billion for the second quarter of 2023, down 0.5 percent from the comparable 2022 period. Revenues net of excise taxes increased 1.2 percent to $5.43 billion.
In the first half of 2023, Altria Group reported revenues of $12.23 billion, 1.7 percent less than in the first six months of the prior year. Revenues net of excise taxes increased 0.1 percent to $10.2 billion during the first half of 2023.
“We had a solid first half of the year and we continue on our exciting journey towards Moving Beyond Smoking,” said Altria CEO Billy Gifford in a statement. “We completed our acquisition of NJOY and delivered strong business results, growing adjusted diluted EPS by 5 percent in the first half. And we returned $3.8 billion to shareholders while investing in pursuit of our Vision.”
“We look forward to executing our commercial plan for NJOY in the second half of the year, and we reaffirm our guidance to deliver 2023 full-year adjusted diluted EPS in a range of $4.89 to $5.03. This range represents an adjusted diluted EPS growth rate of 1 percent to 4 percent from a $4.84 base in 2022.”
August 1, 2023
FTC Drops Complaint After Altria’s Juul Exit

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The U.S. Federal Trade Commission (FTC) on July 3 dismissed a complaint against Altria Group and Juul Labs relating to the cigarette maker’s 2018 investment in Juul, reports Reuters.
In late 2018, Altria paid $12.8 billion for a 35 percent state in Juul. The FTC said in 2020 that Altria’s investment violated antitrust law because the company acquired the position rather than continuing to compete against Juul in the market for closed-system e-cigarettes.
After Altria exchanged its entire investment in Juul for a global license to Juul heated tobacco intellectual property, the tobacco giant asked the FTC to drop its challenge.
Altria terminated its Juul stake after the investment lost much of its value in the wake of regulatory scrutiny and litigation relating to Juul’s marketing practices. On June 23, 2022, the U.S. Food and Drug Administration ordered Juul Labs to pull its e-cigarettes from U.S. store shelves, saying the e-cigarette manufacturer had submitted insufficient evidence that they were “appropriate for the protection of the public health.” After Juul challenged the marketing denial order (MDO), the FDA agreed to take another look at the company’s pre-market tobacco product application.
The agency said it had determined that there are scientific issues unique to the Juul application that warrant additional review.
In early September 2022, Juul Labs agreed to pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products, which critics have blamed for sparking a surge in underage vaping.
On Sept. 30, 2022, Altria announced it was ending its noncompete agreement with Juul.
July 4, 2023
Juul Accuses NJOY of Patent Infringement

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Juul Labs has asked the U.S. International Trade Commission (ITC) to block sales and imports of the NJOY Ace vapor device, claiming that the product infringes several Juul patents. It has also filed a complaint against NJOY with the U.S. District Court for the District of Arizona.
“Our technology, designed internally and in the U.S. and protected by our robust patent portfolio, has been the most effective product development to transition adult smokers from combustible cigarettes—switching over 2 million adult smokers in this country. Innovation is critical in this space to advance tobacco harm reduction,” said Juul Labs Chief Legal Officer Tyler Mace in a statement.
“When others infringe on our technology, we have no choice but to protect our intellectual-property rights.”
This ITC complaint follows three prior successful actions from Juul Labs at the Commission, which all resulted in barring the importation and sale of infringing products, according to Juul Labs.
“Just like we have in three prior successful ITC actions that vindicated our company’s IP rights, we intend to reach the same result here,” said Mace.
Juul Labs complain also targets Altria Group, which agreed to acquire the NJOY in March after exchanging its minority investment in Juul for a heated tobacco product intellectual property license.
The NJOY Ace device received marketing authorization from the Food and Drug Administration in April 2022.

July 3, 2023