Altria Group, Inc., today (Feb. 19) participated in the Consumer Analyst Group of New York (CAGNY) conference in Orlando, Florida. Billy Gifford, Altria’s Chief Executive Officer, and Sal Mancuso, Altria’s Executive Vice President and Chief Financial Officer, presented and discussed, among many topics, how the company’s traditional tobacco business supports future strategies, long-term growth aspirations, and the general state of the industry.
Gifford offered the following thoughts:
On the evolution of the U.S. nicotine market:
“The potential for tobacco harm reduction in the U.S. is significant, and we believe the opportunity remains in its early stages. Of the nearly 55 million nicotine consumers in the U.S., we estimate that only a third exclusively use a smoke-free format today. However, consumers are transitioning to smoke-free alternatives at a faster pace than ever before.”
“Nicotine consumer preferences are rapidly changing. Today’s nicotine consumers want smoke-free products that offer the potential of reduced harm and social friction, and are available in a variety of flavors. In fact, with more products in the market, coming closer to meeting those needs, nicotine volumes increased for the second consecutive year in 2024. And grew by a compounded annual growth rate of about 2% over the past 5 years.”
“Smoke-free volume growth is now more than offsetting cigarette industry volume decline, demonstrating that consumers are seeking alternatives to cigarettes rather than leaving the nicotine space entirely. The growing adoption of smoke-free products is encouraging and directly aligned with our vision and the growth aspirations of our smoke-free businesses.”
“Research supports that no single product format or flavor will satisfy all nicotine consumers. To advance harm reduction our strategy is to deliver a portfolio of products across today’s most promising innovative smoke-free platforms: oral nicotine pouches, heated tobacco, and e-vapor.”
The oral nicotine market:
“The oral tobacco category continues to grow, led by nicotine pouches. We estimate that industry volume grew 8.5% last year and included nearly 8 million consumers. In the last 3 years, nicotine pouch consumers have more than tripled and now comprise 3.5 million of those 8 million consumers.”
“Since 2019, the oral tobacco products segment saw an increase of 2.4% CAGR.”
Altria’s oral nicotine pouch, On!
“We’re encouraged by On!’s ability to retain loyal purchasers and expand the consumer base at a higher retail price. Consumer loyalty for On! continues to build. At the end of last year, 800,000 consumers regularly purchased On!, an increase of more than 40% versus the prior year.”
Smokers switching from combustibles:
“We believe the science is compelling. Evidence from a large consumer-use study among adult smokers not planning to quit showed that nearly 75% of those who used Ploom had meaningful reductions in cigarette consumption, with nearly one-third completely switching from cigarettes.
“We observed that menthol-flavored sticks had a higher switch rate relative to tobacco-flavored sticks. Consumers who switched from combustible to Ploom significantly reduced their exposure to harmful chemicals. Given the low risk of underage use and the strong benefits of switching for adults, we believe Ploom presents a compelling case for authorization by the FDA and we remain optimistic about its potential in the U.S.”
E-vapor:
“Our data show consumers transition from cigarettes to e-vapor at over three times the rate of transition from other smoke-free categories. This is an encouraging sign and consistent with our belief that most smokers are looking for satisfying, inhalable alternatives to cigarettes.”
“Today’s vapors are seeking products that are flavored, come in a convenient form, and offer high-value for a reasonable price.”
The illicit market:
“In the absence of FDA authorization of flavored product choices, consumers have turned to the illicit flavors disposable market. We estimate that the e-vapor category grew by about 30% in 2024, driven entirely by illicit products that now represent more than 50% of the category. As we’ve said repeatedly, illicit product growth is concerning. It’s the primary source of underage usage, and with no control of how products are marketed or sold, it is attracting unintended audiences to the nicotine category. In fact, 40% of new entrants to the category in 2024 we not prior smokers. At the same time, the category’s growth is proof that a smoke-free future is possible. Most consumers and society expect a marketplace consisting of an array of FDA-authorized products led by responsible players throughout the value chain. We need a regulatory system that fosters innovation, not one that stifles and slows innovation to the advantage of the illicit market.”
Altria’s Vision program:
Achieving our Vision requires four critical elements:
- Underage tobacco use continues to decline or remain low
- Consumers require accurate information about nicotine
- The entire industry operating within a fully enforced, science-based regulatory environment
- A variety of satisfying, FDA-authorized products available for adult consumers
FDA regulation and reported staffing cuts:
“We need more authorization. The adult cigarette consumer, about half are ready to move to smoke-free if they can find a product that they enjoy and find satisfying. Only 2% of the products have authorization.”
“We have a good working relationship with the FDA, but as you know they’ve been slow. We hope with a reduction in headcount they will look at their process and make them more efficient. As you see in e-vapor, the consumer is looking for products. They want to go to smoke-free alternatives and we think that’s important for harm reduction to succeed in the U.S. We need more authorizations and at the same time, we need enforcement.”
“It may slow it down temporarily but at the same time, we would hope the increased efficiency and processes would improve.”
Click here to view the entire presentation.
For more than 50 years, CAGNY has been connecting investors, management teams, and the media dedicated to the consumer industry. It asserts to be “the largest not-for-profit of its kind” and hosts various events throughout the year, highlighted by the CAGNY conference in Boca Raton, Florida.
