(Reuters) – Altria Group, a tobacco behemoth, revised its yearly profit projection on Thursday as cigarette users increasingly swapped its pricier brands for more affordable options or smoking alternatives.
Thank you for reading this post, don't forget to subscribe!The producer of Marlboro is implementing price hikes on its conventional products to offset a decrease in sales volume, as a growing number of health-conscious consumers explore alternatives like vapes or oral nicotine.
However, the price increases have caused Altria to cede ground to cheaper cigarette brands such as USA Gold, as cost-conscious customers attempt to save money.
According to the company, Marlboro’s share of the total cigarette category declined by 0.3 points compared to the previous year.
In the third quarter, net revenue from smokable products at Altria dropped by 5.3%, as higher prices only partially mitigated lower shipment volumes and increased promotional investments.
In the meantime, Altria’s foray into the e-cigarette industry has proven to be ill-fated. The company incurred billions of dollars in losses from its investment in Juul Labs in 2018, as the vape company faced numerous lawsuits and heightened regulatory scrutiny regarding its role in the surge of teen vaping.
In June, Altria made another bet by acquiring pod-based vape brand NJOY ACE, but NJOY lags significantly behind Juul in terms of market share. The company stated that the reported shipment volume for NJOY ACE in the third quarter was approximately 7.5 million pods.
Another rapidly growing smoking alternative in the United States is oral tobacco, particularly spit-free nicotine pouches.
Altria’s products, known as its oral portfolio, experienced a 36.7% growth in shipment volume during the quarter. However, the company’s dominance in traditional wet-cut tobacco, such as the Copenhagen brand, is being challenged as the popularity of nicotine pouches continues to rise.
Altria anticipates an adjusted profit of $4.91 to $4.98 per share for this year, compared to the previous estimate of $4.89 to $5.03 per share.
Excise revenue for the quarter declined by 2.5% to $5.28 billion. According to LSEG data, analysts had expected revenue of $5.43 billion.
(Reporting by Juveria Tabassum; Editing by Mila Nissi)
Source: ca.finance.yahoo.com
