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  • Altria Down 5.7% in First Quarter

    Altria Down 5.7% in First Quarter

    Today (April 29), Altria Group, Inc. reported its 2025 first-quarter business results and reaffirmed its guidance for 2025 full-year adjusted diluted earnings per share (EPS).

    “Our highly profitable traditional tobacco businesses performed well in a challenging environment in the first quarter,” said Billy Gifford, Altria’s Chief Executive Officer. “The smokeable products segment delivered solid adjusted operating companies income growth behind the strength of Marlboro. In the oral tobacco products segment, on! maintained momentum in a competitive marketplace as Helix invested strategically behind the brand. And shareholders continued to benefit from strong cash returns through dividends and share repurchases, while we invested in pursuit of our Vision.”

    “We continue to expect to deliver a full-year 2025 adjusted diluted EPS growth rate of 2% to 5% versus 2024. This growth rate represents full-year adjusted diluted EPS in a range of $5.30 to $5.45 from a base of $5.19 in 2024. Our guidance excludes amortization expense associated with definite-lived intangible assets, which was previously included in our adjusted results.”

    Highlights from the report included:

    • Q1 revenue decreased 5.7% to $5.3 billion
    • NJOY U.S. retail share increased 2.4 points to 6.6%
    • Shipments of NJOY ACE were discontinued March 24, per ITC orders
    • Paid $1.7 billion in first-quarter dividends
    • Smokeable domestic shipments decreased 13.7%
    • Net revenues for oral tobacco products increased by 0.5%

    See the full report here.

  • Tobacco Prices Climb in Spain 

    Tobacco Prices Climb in Spain 

    Several popular cigarette brands in Spain went up in price this weekend following a resolution published in the Boletín Oficial del Estado (BOE), Spain’s official state bulletin.

    The updated price list affects shops across mainland Spain and the Balearic Islands. Brands like Marlboro, Chesterfield, Ducal, and Austin are all included, with prices per pack now starting at €4.60 and going up to over €9, depending on the format and brand.

    The rise comes just weeks after other well-known names such as Fortuna, Nobel, L&M and Winston were hit by similar price hikes. It’s part of an ongoing adjustment that’s slowly nudging Spain’s tobacco prices closer to the European average — although for now, they still remain among the lowest on the continent.

    The pricing update also includes cigars and pipe tobacco, with brands like Zino Nicaragua and specialty pipe blends from Musth, Musthave and Tangiers climbing as well. Some pipe tobacco tins are now priced at nearly €22 for 125 grams, while others like Tangiers can hit €35 for a 250 g pouch.

  • Smokeless Coup

    Smokeless Coup

    Marlboro remains the world’s most valuable tobacco brand, but cigarette alternatives are gaining ground.

    Contributed

    The total value of the world’s top 10 most valuable tobacco brands has decreased by 6 percent, with eight out of 10 brands experiencing a decline in brand value this year, according to the latest ranking by Brand Finance, a leading brand valuation consultancy. The ranking reveals a significant shift in the industry toward smokeless alternatives, driven by changing consumer preferences and increasing regulatory pressures. Despite these changes, traditional combustible tobacco brands remain the most valuable, supported by loyal customer bases and effective pricing strategies.

    IQOS (brand value up 8 percent to $3.5 billion) is the fastest-growing tobacco brand, driven by rising revenue from smoke-free products. Philip Morris International reported smoke-free products reached nearly 40 percent of total net revenues in the fourth quarter of 2023. This was driven by the continued growth of IQOS, which has now surpassed Marlboro in net revenues, solidifying its position as the leading premium nicotine brand less than 10 years after its launch.

    Despite a 6 percent drop in brand value to $32.6 billion, Marlboro retains its position as the world’s most valuable tobacco brand for the 10th consecutive year. It leads the sector by a significant margin, with a brand value more than five times that of L&M, which holds the second spot.

    Altria Group, which owns Marlboro in the United States, and PMI, which owns the brand elsewhere, have both faced declining revenue from combustible products. Altria has struggled with lower shipment volumes and increased promotional investments, including a recent $0.17 per pack price increase on Marlboro and other brands in the U.S. Similarly, PMI has reported a drop in revenue from combustible tobacco. Nevertheless, Marlboro retains its top position due to its loyal customer base and strong promotional strategies.

    L&M (brand value $6.2 billion) has climbed to second in the ranking, despite recording a 2 percent decline in brand value. It has overtaken Pall Mall, which now sits in third following a 9 percent loss in brand value to $5.9 billion. L&M’s brand value has taken a hit as shipment volumes have declined. L&M is the sector’s strongest brand with a Brand Strength Index score of 77 out of 100.

    “While Marlboro continues to lead as the most valuable tobacco brand for the 10th consecutive year, the industry is undergoing significant transformation,” said Richard Haigh, global managing director at Brand Finance.

    “The rise of smokeless alternatives like IQOS highlights shifting consumer preferences and changing market dynamics. Earlier this year, BAT’s announcement of a $31.5 billion impairment on the value of some of its U.S. cigarette brands marked the first significant write-down in a major market.

    “Acknowledging the reality that the market for traditional cigarettes is shrinking and taking action should be seen both as a bold and an important step in addressing an existential problem for the company. With eight out of the top 10 brands experiencing declines in value, tobacco giants must be brave in admitting market shifts and strategically planning their next moves to sustain global dominance and relevance.”

    Chesterfield (brand value $3.1 billion) has maintained its brand value year-on-year and advanced one position to seventh place. The brand has seen a rise in shipment volume, with an 8 percent increase in the fourth quarter of 2022 and a 14 percent increase for the full year, which has contributed to its stable brand value this year.

    The latest rankings highlight the dominance of U.S. tobacco brands, which make up a remarkable 92 percent of the total brand value in the ranking, totaling $61 billion. Only two brands in the ranking are from outside the U.S., the U.K.’s Rothmans (brand value down 8 percent to $2.9 billion) and Indonesia’s Sampoerna (brand value down 12 percent to $2.7 billion).

  • The Invisible Advantage

    The Invisible Advantage

    IQOS joined the Tobacco 10 ranking in 2023, achieving a brand value of $3.25 billion—higher than combustible brands such as Chesterfield or Rothmans. Photo: elenavah

    Intangible assets remain a major contributor to the real value generated by the tobacco industry.

    By Stefanie Rossel

    Brand value is a nonphysical asset but one of the most important issues for every brand owner. Brand valuations are used for several purposes such as tax calculation, finance and marketing. They function as interpreters between the language of marketers and finance teams and provide structure for both to work together to maximize returns. Measuring such intangible assets is complex—the most common metrics on which brand performance and thus brand equity can be judged include market penetration, frequency of purchase, repeat purchase, customer loyalty and the ability of a brand to command a price premium versus other brands in its sector.

    In 2023, the global value of intangible assets owned by the world’s largest companies stood at $61.9 trillion in 2023, up from $57.3 trillion one year previously, according to the Global Intangible Finance Tracker (GIFT) report, which is published annually by Brand Finance, an independent, U.K.-based brand valuation and strategy consultancy.

    While tech giants like Apple (with intangible assets of $2.7 trillion) and Microsoft ($2.3 trillion) continued to lead the pack in the 2023 analysis, last year’s most intangible sector in relative terms, with 91 percent of total enterprise value, was tobacco and e-cigarettes, as companies invested heavily in proprietary technology and patented intellectual property around vaping devices to drive growth, according to Brand Finance.

    In the company’s Tobacco 10 ranking, Marlboro remained the undisputed leader with a brand value of $34.74 billion followed by Pall Mall ($6.54 billion) and L&M ($6.35 billion). The list is dominated by combustible brands, but there are two noteworthy exceptions—smokeless tobacco brand Copenhagen and heated-tobacco product (HTP) IQOS.

    Despite being the most intangible sector, tobacco products across all categories experienced significant brand value losses. “The performance decline witnessed in combustibles across extensive tobacco portfolios during the years 2022 and 2023 directly contributed to the decrease in brand value within our rankings,” explains Brand Finance’s global managing director, Richard Haigh. “Specifically, the decline in the volume sold of traditional oral cigarettes has been a consistent trend over the years. This can be attributed to reduced consumption and an accelerated shift in consumer preferences, leading to category switching. As we delve into the intricacies of this development, it becomes apparent that the challenges faced by combustible brands played a pivotal role in shaping the dynamics of brand value within the Tobacco 10 for 2023.”

    BAT’s $31.5 billion impairment on the value of some of its U.S. cigarette brands last December resonates with Haigh’s observations. “The decision to write down the value of some of its brands was a bold step for BAT because despite the short-term pain, the reality is that the market for cigarettes is shrinking, and pretending otherwise would be irresponsible on the part of management,” he says.

    Nevertheless, it is difficult to predict at this point who will need to follow BAT’s example. “The decision by BAT to impair its U.S. cigarette brands may not necessarily set a direct precedent for other companies. Each tobacco company’s considerations and actions are likely to be influenced by their unique brand portfolios, acquisition histories and strategic priorities within the evolving tobacco industry landscape.”

    Marlboro remained the undisputed leader in Brand Finance’s tobacco ranking, with a brand value of $34.74 billion. Photo: jetcityimage

    A Win-Win Move

    In the GIFT ranking, BAT retained its position as the most intangible entity within the sector, boasting a total intangible value of $135.2 billion despite several acquisitions by its competitors. According to Brand Finance, China National Tobacco Corp. (CNTC) stood out in the 2023 GIFT study for accumulating substantial disclosed intangibles and goodwill. Its position was bolstered by its $63.4 million acquisition of China Tobacco International Brazil in late December 2021. Similarly, Philip Morris International’s acquisition of Swedish Match added approximately $18 million in goodwill and intangible assets to its financial statements.

    “The acquisition of Swedish Match by Philip Morris International has proven to be mutually beneficial for both companies,” says Haigh. “PMI gains access to significant smoke-free brands, enriching its portfolio, while Swedish Match benefits from the resources and expertise offered by a larger organization. An intriguing aspect of this acquisition is the creation of an impressive, combined portfolio of smoke-free brands.”

    He adds that the Tobacco 10 2023 ranking, which closely followed the November 2022 acquisition, did not show immediate noticeable impacts on the brand values of Swedish Match. “It was considered too early to discern any substantial changes. The anticipation now shifts to the upcoming 2024 tobacco ranking, where the performance of Swedish Match within this context will be pivotal in assessing the positive impact on both the financial and brand value performance for both Swedish Match and PMI. This evaluation will shed light on the effectiveness and synergies generated by the acquisition, providing valuable insights into the long-term implications for the brands involved.”

    “The decision by BAT to impair its U.S. cigarette brands may not necessarily set a direct precedent for other companies.”

    Richard Haigh, global managing director, Brand Finance

    On the Way Up

    Even before its takeover of Swedish Match, PMI succeeded in building a valuable reduced-risk brand. In 2023, its HTP IQOS joined the Tobacco 10 ranking for the first time, achieving a brand value of $3.25 billion—higher than combustible brands such as Chesterfield or Rothmans. In the 2024 ranking, IQOS has climbed three spots following an 8 percent brand value increase, Haigh points out. “The brand is currently valued at $3.5 billion. This notable increase is attributed to robust performance in the recent financial year. The brand has demonstrated improvement in revenues, expanded market share and witnessed a significant influx of customers switching to IQOS. These factors collectively contribute to the upward trajectory of IQOS in terms of brand value since its initial tracking in 2020.”

    There is, however, still a substantial gap in terms of brand value between IQOS and Marlboro, which is valued at $32.5 billion in this year’s ranking. Since 2015, Marlboro has maintained its position as the world’s most valuable tobacco brand, and its resilience is evident, as the company celebrated its 50th anniversary in 2022, he says. “Despite recent challenges, such as disposable income pressures in various markets and the impact of cannibalization from IQOS, Marlboro has demonstrated enduring strength.”

    The considerable difference in brand value between the two products is attributed to Marlboro’s extensive market presence, reflected in higher shipment volumes and revenue generation within the Philip Morris portfolio, Haigh explains. “Although IQOS exhibits consistent growth, surpassing Marlboro in brand value necessitates a substantial increase in its revenue contribution within the PMI portfolio. As IQOS continues to expand its market share and revenue, the potential for it to catch up with or overtake Marlboro in brand value remains contingent on its sustained growth and further integration within PMI’s overall portfolio. The journey to equivalence or overtaking Marlboro is a dynamic process, influenced by various factors that will shape the evolving landscape of PMI’s brand portfolio in the coming years.”

    CNTC stood out in 2023 for accumulating substantial intangibles and goodwill.

    There’s Value in Alternatives

    So far, no vape product brand has made it onto Brand Finance’s Tobacco 10, which, according to Haigh, has been dominated by combustibles, traditional oral and smoke-free brands since 2015. The market for reduced-risk products (RRPs), in particular e-cigarettes, is highly fragmented. Since their first introduction to the market 20 years ago, a myriad of smaller brands has emerged, manufactured by smaller players, among them, only very few iconic ones.

    However, there has been a gradual but steady entry of smaller RRPs into the rankings, says Haigh. “While the Tobacco 10 ranking primarily features established names, it is noteworthy that smaller players in the reduced-risk product category are gaining visibility in our rankings,” says Haigh. “Notable examples include IQOS, Glo (brand value $2.3 billion in 2023), Vuse ($1.4 billion) and Velo ($580 million). These brands, although not reaching the high values necessary to secure a spot in the top 10 globally, have made a significant impact on the market and our ranking. Over the past three years, all these brands have exhibited double-digit growth, reflecting their increasing presence in markets and contributing to their upward trajectory in our ranking. While their individual brand values may not place them among the top 10, the consistent growth signifies a notable trend in the industry. This gradual ascent of reduced-risk products and the sustained growth of these brands underscore their evolving significance in the market and their potential to further reshape the dynamics of the tobacco industry in the coming years.”

    Establishing an iconic e-cigarette brand necessitates a dual focus, Haigh stresses, judging from his experience of evaluating the prominence of e-cigarette brands within leading tobacco companies. “It requires technological advancement, involving continuous product development and research and development. Simultaneously, building a robust online presence across multiple channels emerges as a crucial strategy to drive sales and effectively capitalize on the growing market demand for these products.”

    With combustible cigarettes experiencing declining volumes, smoke-free products have been consistently ascending in rankings over the last three years.

    Remaining Agile

    The report underscores that despite increasing regulations on traditional tobacco products in developed markets, e-cigarettes remain in a nascent stage and are currently generating high intangible value. “This is primarily due to the lack of marketing regulations governing these products,” says Haigh. “The absence of stringent rules allows e-cigarette manufacturers to continuously iterate on device design, flavors and other product attributes, enhancing appeal and driving sales growth.” Of course, this sector’s outlook may be dampened by anti-tobacco harm reduction sentiments, especially in the wake of the recent Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control.

    “As e-cigarettes are currently enjoying high intangible value partly due to a lack of marketing regulation, any future regulations may influence the competitive landscape and strategies of tobacco companies, potentially affecting the brand value of RRPs,” says Haigh. “The ability of companies to adapt their marketing approaches and navigate evolving regulatory environments will likely play a crucial role in determining the impact on brand value in the realm of RRPs.”

    In the near term, Haigh expects the development of nicotine brands’ value to undergo several significant shifts as global cigarette sales volumes continue to decline. “With combustible cigarettes experiencing declining volumes, smoke-free products have been consistently ascending in rankings over the last three years,” says Haigh. “This ascent is driven by their increased market share and revenue generation, signaling a notable trend in consumer preferences toward reduced-risk alternatives.”

    Business model transformations will become another important factor. In response to the risk posed by declining shipments and revenue in the traditional cigarette market, companies are actively initiating transformations in their business models. “This involves a strategic shift toward becoming truly multi-category consumer products businesses,” says Haigh. “By diversifying their product portfolios to include smoke-free alternatives, companies aim to adapt to changing consumer demands and mitigate the impact of declining cigarette sales.”

    Finally, tobacco companies will likely place greater emphasis on sustainability. “Consumers are prioritizing sustainable practices, and major tobacco companies are responding accordingly,” says Haigh. “Initiatives such as sustainable farming and waste reduction are being embraced, exemplified by [BAT’s] hiring of its first chief sustainable officer in late 2022. Similarly, Philip Morris International has introduced a bespoke sustainability index, demonstrating a commitment to measuring its ESG performance.”

    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 and JT to Sell Heated Products in U.S.

    Altria and JT to Sell Heated Products in U.S.

    Photo: ASDF

    The JT Group and Altria Group, through their Japan Tobacco International and Philip Morris USA subsidiaries, have established a joint venture to market and commercialize heated-tobacco sticks (HTS) products in the U.S. with Ploom-branded devices and Marlboro-branded consumables.

    The two groups also signed a long-term, nonbinding global memorandum of understanding (MOU) to explore commercial opportunities for a wide range of potentially reduced-risk products (RRP).

    “As part of our strategic focus on HTS, we’re very enthusiastic to launch our Ploom brand in the U.S., the world’s largest RRP market in value, through our partnership with the market leader, Altria,” said  Masamichi Terabatake, president and CEO of the JT Group’s tobacco business, in a statement.  

    “We also look forward to entering into a long-term strategic collaboration with Altria to further explore global commercial opportunities in the RRP category. I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”

    “We are excited to begin a new partnership with JT Group, a leading international tobacco company,” said Altria CEO Billy Gifford in a statement. “We believe this relationship can accelerate harm reduction for adult smokers across the globe.”

    “We believe moving beyond smoking in the U.S. requires multiple FDA-authorized products within each smoke-free category to appeal to a diverse range of adult smokers. We believe that our joint venture and pipeline of heated-tobacco products position us well to increase adoption of smoke-free products.”

    The joint venture establishes a new company, Horizon Innovations, for the U.S. commercialization of current and future HTS products owned and developed by either party. Horizon will commercialize HTS products in the U.S. under the Ploom and Marlboro trademarks.

    JTI will have a 25 percent economic interest in Horizon to reflect its HTS product contribution. PM USA will have a 75 percent economic interest, reflecting the company’s strong distribution network and infrastructure, as well as its initial capital contribution of $150 million to Horizon.

    Subsequent capital contributions made to Horizon will be split according to the parties’ respective economic interest. JTI and PM USA will both maintain independent ownership of their respective intellectual properties, including any IP acquired after the formation of the joint venture that supports the development of future HTS products.

    “I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”

    Masamichi Terabatake, president and CEO, JT Group’s tobacco business

    As part of the joint venture, JTI and PM USA will combine their scientific and regulatory expertise to jointly prepare U.S. Food and Drug Administration filings, including a premarket tobacco product application (PMTA) for the latest version of Ploom HTS products. The parties currently expect to submit the PMTA for these products in the first half of 2025. Upon PMTA authorization, JTI will supply HTS devices and PM USA will manufacture HTS consumables for Horizon. In addition, JTI and PM USA have agreed to commercialization milestones for Horizon, which include distribution requirements and minimum levels of cumulative marketing investments.

    “By forming this JV [joint venture], we are bringing together the marketing, innovation, R&D and science capabilities that JTI has developed over the years with Altria’s science, U.S. regulatory experience and vast infrastructure to create a very strong proposition for the U.S. adult smoker,” said JTI CEO Eddy Pirard.

    Separate to the JV, the JT Group and Altria also announced the mutual signing of a nonbinding MOU. Under this MOU, the parties aim to structure a strategic partnership over time to market and commercialize a wide range of potentially reduced-risk products and strengthen their shared development capabilities and geographic reach. The companies believe this collaboration will accelerate global tobacco harm reduction solutions and bring significant value to their respective businesses.

    Altria’s pipeline of heated-tobacco products includes tobacco-heating product formats and new-to-market technologies. “We believe HTC products can appeal to U.S. adult smokers who are open to novel smoke-free products but have not yet found a satisfying alternative to cigarettes,” the company wrote. “This audience includes the millions of U.S. adult smokers who tried, but ultimately rejected, e-vapor products.”

    Altria expects to finalize the design of its HTC platform 1 technology (HTC1) by the end of this year and then begin regulatory preparations for a PMTA submission by the end of 2024.

    The company also expects to partner with JT to launch the HTC1 technology in an international test market in late 2024 or early 2025 using JT’s sales and distribution network.

    Prior to the recent agreement with the JT Group, Altria terminated its noncompete agreement with Juul Labs and sold its exclusive U.S. commercialization rights for the IQOS tobacco-heating system to Philip Morris International for about $2.9 billion.