Altria Refocuses Innovative Product Efforts
December 07 2018 - 7:45AM
Business Wire
Altria Group, Inc. (Altria) (NYSE:MO) today announces the
discontinuation of production and distribution of all MarkTen and
Green Smoke e-vapor products and VERVE oral nicotine containing
products. This decision is based upon the current and expected
financial performance of these products, coupled with regulatory
restrictions that burden Altria’s ability to quickly improve these
products. The company will refocus its resources on more compelling
reduced-risk tobacco product opportunities.
“We remain committed to being the leader in providing adult
smokers innovative alternative products that reduce risk, including
e-vapor,” said Howard Willard, Chairman and CEO, Altria Group, Inc.
“We do not see a path to leadership with these particular products
and believe that now is the time to refocus our resources. We
recognize the impact this decision has on our employees and
business partners, which we do not take lightly.”
Altria’s subsidiaries will begin working with their retailers,
wholesalers, contract manufacturers and suppliers to ensure an
orderly process. MarkTen cig-a-likes are currently in distribution
at retail and through e-commerce. Green Smoke is primarily
available on e-commerce with limited retail presence. VERVE is in
limited distribution at retail and e-commerce.
Altria expects to record one-time pre-tax charges of
approximately $200 million, the majority of which would be non-cash
asset impairment charges, in the fourth quarter of 2018 as a result
of this decision. These charges will be excluded from Altria’s
adjusted results.
Altria's Profile
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®, VERVE®, 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 or follow us on Twitter, Facebook and
LinkedIn.
Forward-Looking and Cautionary Statements
This release contains projections of future results and other
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 press 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 September 30,
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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