Tobacco Giant Altria Reassesses Smoke-Free Goals Amidst Rising Competition
The tobacco industry is undergoing a significant transformation, with consumers increasingly opting for alternative products. Altria, the manufacturer of Marlboro cigarettes, has announced that it is reevaluating its 2028 targets for selling smoke-free products in the US market. This decision comes as the company faces stiff competition from disposable vapes, which have become increasingly popular despite lacking regulatory approvals.
Rise of Illicit Disposable Vapes
The US e-cigarette market has experienced remarkable growth, with a 30% increase in 2024. However, this growth is largely driven by illicit disposable products, which account for over 60% of the category. These products operate outside the regulatory framework, posing a significant challenge to Altria’s ability to achieve its smoke-free volume and revenue goals.
Impact on Altria’s Smoke-Free Ambitions
Altria had set ambitious targets to grow its US volumes from smoke-free products by 35% from its 2022 level of 800 million units by 2028. Additionally, the company aimed to double its net revenues from these products to $5 billion over the same period. However, with the current market dynamics, Altria is reassessing these goals. The company’s volumes stood at 821 million units in 2024, while revenues were $2.8 billion.
Challenges Facing NJOY and on! Brands
The widespread trade in unauthorized disposable vapes also threatens Altria’s targets related to its vape brand NJOY and nicotine pouch brand on!. These brands are central to the company’s portfolio of non-tobacco products. Furthermore, a recent patent dispute with rival Juul Labs has resulted in a block on imports of some NJOY devices and cartridges, which is scheduled to take effect in 60 days. Altria is working on a product solution to address this patent issue.
Earnings Forecast and Future Outlook
Altria has forecast 2025 adjusted earnings per share of between $5.22 and $5.37, slightly below analyst expectations. As the company navigates the changing landscape of the tobacco industry, it remains committed to diversifying its product portfolio and adapting to shifting consumer preferences. With the e-cigarette market continuing to evolve, Altria will need to reassess its strategies to stay competitive and achieve its long-term goals.
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