Altria Group, Inc. (Altria) (NYSE: MO) today announced a new
structure to maximize its core tobacco businesses while realizing
its aspiration to be the U.S. leader in authorized,
non-combustible, reduced-risk products.
Key components of this new structure include:
- Establishment of two divisions – core
tobacco and innovative tobacco products;
- Creation of a Chief Growth Officer
function to accelerate speed to market for innovative products and
technologies; and
- Aligning product development efforts
more directly to the core and innovative tobacco product
businesses.
“This is a dynamic time in the tobacco industry, and just as we
lead in traditional tobacco products, we intend to lead in offering
adult smokers more choices in innovative, non-combustible,
reduced-risk products,” said Howard Willard, Altria’s Chairman and
CEO. “We expect this new structure to accelerate our innovation
pipeline, maximize our core tobacco businesses and allow us to
continue to reward shareholders.”
Core and Innovative Tobacco
Products
Altria will adapt its structure from a Chief Operating Officer
who oversees all operating companies to a structure aligned with
the company’s dual strategies – maximizing income from core tobacco
businesses and growing new income with innovative tobacco
products.
PM USA, USSTC, Middleton, and Nat Sherman will form Altria’s
core tobacco division.
Jody Begley, as Senior Vice President, Tobacco Products, Altria,
will oversee the core tobacco businesses, as well as their product
development and engineering support. He will report to Billy
Gifford, Vice Chairman and CFO. Leading those businesses will
be:
- Heather Newman, President and CEO, PM
USA
- Shannon Leistra, President and CEO,
USSTC
- Ryan Bauersachs, Managing Director and
General Manager, Middleton
- Dominik Meier, Managing Director and
General Manager, Nat Sherman
Jody has been President and General Manager of Nu Mark since
2015. He brings to this role 23 years of experience in sales,
marketing and strategy from PM USA, USSTC and Nu Mark, as well as
leadership positions in Altria Group Distribution Company and
Strategy & Business Development.
Nu Mark, Altria’s innovation company, will focus on developing a
compelling portfolio of non-combustible products that adult smokers
enjoy and have the potential to drive adult smoker conversion. This
portfolio includes oral nicotine-containing products, e-vapor and
innovative inhalable products.
Brian Quigley, as President and CEO, Nu Mark, will oversee the
innovative products business, reporting to Howard Willard. Brian
has been President and CEO, USSTC since 2012. He joined PM USA in
2003 and has served in brand management leadership roles in PM USA
and USSTC.
Chief Growth Officer
Altria has established a Chief Growth Officer function which
will identify and pursue Altria’s strategic and innovative growth
priorities across the tobacco landscape. This function will
identify marketplace and adult tobacco consumer insights and
translate them into strategies for product development, consumer
engagement, future of commerce and business development.
This group will also be responsible for innovative product
development and enhancing the company’s capabilities by building
and acquiring the competencies, technologies and talent to achieve
Altria’s aspiration of being the U.S. leader in authorized,
non-combustible, reduced-risk products.
K.C. Crosthwaite is appointed Senior Vice President and Chief
Growth Officer, Altria Client Services LLC (ALCS), reporting to
Howard Willard. K.C. has been President and CEO, PM USA for the
past year. Before that, he was VP, Strategy & Business
Development, ALCS, and VP & General Manager, Marlboro, PM USA.
K.C. joined PM USA in 1997 and brings to his new role many years of
experience leading and supporting major brands.
These changes will be effective June 1, 2018.
Altria Profile
Altria is a Fortune 200 company, headquartered in Richmond,
Virginia. Altria’s wholly-owned subsidiaries include Philip Morris
USA Inc. (PM USA), U.S. Smokeless Tobacco Company LLC (USSTC), John
Middleton Co. (Middleton), Sherman Group Holdings, LLC and its
subsidiaries (Nat Sherman), Nu Mark LLC (Nu Mark), Ste. Michelle
Wine Estates Ltd. (Ste. Michelle) and Philip Morris Capital
Corporation (PMCC). Altria holds an equity investment in
Anheuser-Busch InBev SA/NV (AB InBev).
The brand portfolios of Altria’s tobacco operating companies
include Marlboro®, Black & Mild®, Copenhagen®, Skoal®, MarkTen®
and Green Smoke®. Ste. Michelle produces and markets premium wines
sold under various labels, including Chateau Ste. Michelle®,
Columbia Crest®, 14 Hands® and Stag’s Leap Wine Cellars™, and it
imports and markets Antinori®, Champagne Nicolas Feuillatte™,
Torres® and Villa Maria Estate™ products in the United States.
Trademarks and service marks related to Altria referenced in this
release are the property of Altria or its subsidiaries or are used
with permission. More information about Altria is available at
altria.com and on the Altria Investor app.
Forward-Looking and Cautionary
Statements
This release contains forward-looking statements that involve a
number of risks and uncertainties and are made pursuant to the Safe
Harbor Provisions of the Private Securities Litigation Reform Act
of 1995.
Important factors that may cause actual results and outcomes to
differ materially from those contained in the projections and
forward-looking statements included in this release are described
in Altria’s publicly filed reports, including its Annual Report on
Form 10-K for the year ended December 31, 2017 and its Quarterly
Report on Form 10-Q for the period ended March 31, 2018.
These factors include the following: significant competition;
changes in adult consumer preferences and demand for Altria’s
operating companies’ products; fluctuations in raw material
availability, quality and price; reliance on key facilities and
suppliers; reliance on critical information systems, many of which
are managed by third-party service providers; fluctuations in
levels of customer inventories; the effects of global, national and
local economic and market conditions; changes to income tax laws;
federal, state and local legislative activity, including actual and
potential federal and state excise tax increases; increasing
marketing and regulatory restrictions; the effects of price
increases related to excise tax increases and concluded tobacco
litigation settlements, consumption rates and consumer preferences
within price segments; health concerns relating to the use of
tobacco products and exposure to environmental tobacco smoke;
privately imposed smoking restrictions; and, from time to time,
governmental investigations.
Furthermore, the results of Altria’s tobacco businesses are
dependent upon their continued ability to promote brand equity
successfully; to anticipate and respond to evolving adult consumer
preferences; to develop, manufacture, market and distribute
products that appeal to adult tobacco consumers (including, where
appropriate, through arrangements with, and investments in, third
parties); to improve productivity; and to protect or enhance
margins through cost savings and price increases.
Altria and its tobacco businesses are also subject to federal,
state and local government regulation, including by the U.S. Food
and Drug Administration. Altria and its subsidiaries continue to be
subject to litigation, including risks associated with adverse jury
and judicial determinations, courts reaching conclusions at
variance with the companies’ understanding of applicable law,
bonding requirements in the limited number of jurisdictions that do
not limit the dollar amount of appeal bonds and certain challenges
to bond cap statutes.
In addition, the factors related to Altria’s investment in AB
InBev include the following: the risk that Altria’s equity
securities in AB InBev are subject to restrictions on transfer
until October 10, 2021; the risk that Altria’s reported earnings
from and carrying value of its equity investment in AB InBev and
the dividends paid by AB InBev on shares owned by Altria may be
adversely affected by unfavorable foreign currency exchange rates
and other factors, including the risks encountered by AB InBev in
its business; the risk that the tax treatment of Altria’s
transaction consideration from the AB InBev/SABMiller business
combination and the accounting treatment of its equity investment
are not guaranteed; and the risk that the tax treatment of Altria’s
investment in AB InBev may not be as favorable as Altria
anticipates.
Altria cautions that the foregoing list of important factors is
not complete and does not undertake to update any forward-looking
statements that it may make except as required by applicable law.
All subsequent written and oral forward-looking statements
attributable to Altria or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
referenced above.
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