Altria is the new name, adopted in 2003, for what was previously the diversified conglomerate Philip Morris Companies. Its biggest business by far is Philip Morris USA, the home of Marlboro cigarettes and other brands. Although it retains a small collection of operating interests in lease finance and wine, most of Altria's other big subsidiaries were spun off in the 2000s. Its premium wine division Ste Michelle Estates - brands include Chateau Ste Michelle, Columbia Crest and 14 Hands - is also considered a prime contender for sale. Philip Morris Companies was previously not only the world's largest tobacco producer, but also the umbrella for food and beverage giant Kraft and for America's second-largest brewer, Miller. The reduction in tobacco-related litigation following a historic industrywide legal settlement at the end of the 1990s prompted the group to begin separating out its various component businesses. The brewery business was spun off in 2002 into what became SABMiller and was itself later acquired by AB InBev, in which Altria still holds a 10% investment stake. Kraft was established as an independent entity in 2007, and was later acquired by Heinz to become The Kraft Heinz Company. In 2008, all of the group's international tobacco operations were also spun off as Philip Morris International. In the mean time, the group has also broadened its portfolio, acquiring what is now a 44% stake in Canadian cannabis grower Cronos and 35% of US-based e-cigarette business Juul Labs. However, the latter deal in particular has proved disastrous, at least in the short-term. Altria paid a lavish $12.8bn in cash for its holding. In 2019, following a series of illnesses and even fatalities in the US linked to vaping, several major cities restricted or altogether banned the sale of vaping products. Juul is now facing multiple lawsuits. As a result, during the course of 2019, Altria wrote down the value of its investment by more than two-thirds. It also wrote off another $1.4bn against Cronos. The group has also expanded its presence in oral nicotine pouches through majority-owned Helix Innovations, acquired in 2019. Net revenues excluding excise tax for 2020 were $20.8bn, with net income of $4.5bn. All but around $510m of revenue was derived from tobacco or related products. William Gifford is CEO, with Jody Begley as COO.
Capsule checked 31st March 2021
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Adbrands Daily Update 25th Sep 2019: Talks between Altria and Philip Morris International to re-unite the two companies' tobacco businesses ended without agreement. According to reports, PMI withdrew from negotiations as a result of the sharp backlash in the US against vaping products in general, and especially the Juul business in which Altria has a large minority stake. PMI investors had already expressed unhappiness over getting dragged back into the highly litigious US market. Those fears were confirmed by the scale of the crackdown on vaping products over recent weeks following several deaths and hundreds of hospitalisations that have been linked to e-cigarettes. Several US cities or states have now banned flavoured e-cigs, while Massachusetts today announced a temporary ban on all vaping devices. The two companies will continue to work together on the US roll-out of PMI's IQOS system - which uses a different form of technology from other vaping devices.
Adbrands Daily Update 29th Aug 2019: Philip Morris International confirmed it is in advanced talks with former parent Altria to reunite the two separate Philip Morris tobacco businesses. These were split in 2008 to insulate the company's international operations against potential litigation in the US. A decade later, though, the risks of litigation have reduced and both companies are separately struggling to deal with the continuing decline in traditional tobacco consumption, while also aggressively marketing their own smoke-free "reduced risk" alternatives. PMI markets the iQOS heated tobacco system in international markets. Altria/Philip Morris USA owns the MarkTen vaping brand, acquired a large holding in high-profile e-cig brand Juul last year, and also recently gained FDA approval to begin marketing PMI's IQOS in the US under license. Any re-merger is likely to be an all-stock affair, with shareholders in PMI - the larger of the two by market value - gaining around 59% of the combined business. In all other respects, though, this would be presented as a merger of equals. Even so, neither company's investors welcomed the announcement of a possible merger, prompting a sharp sell-off of both sets of shares.
Adbrands Daily Update 20th Dec 2018: Hot on the heels of its stake in cannabis producer Cronos, Altria made an even bigger - but slightly more orthodox - investment in vaping company Juul, which has successfully cornered the US market, especially for younger consumers. In 2017, it had a leading 29% share of the US e-cig market. Altria has acquired a 35% stake in Juul for $12.8bn in cash, its biggest ever purchase. As part of the deal, Altria will market Juul alongside its traditional combustible cigarettes. Altria is prohibited from increasing its stake above 35%, and is barred from selling any shares until at least 2025.
Adbrands Daily Update 10th Dec 2018: Marlboro Marijuana anyone? The rolling legalisation of cannabis across North America is prompting a high-value feeding frenzy for some big companies. Constellation Brands is already leading the pack in beverages, but US tobacco giant Philip Morris is the first to jump head first into smokeables. PM USA's parent Altria has acquired a 45% stake in Canadian cannabis producer Cronos Group for a lavish $1.8bn, with an option to acquire majority control before 2022. The two partners aim to establish marijuana as a standard consumer product on a par with alcohol. Altria is also in talks to invest in leading US e-cig marketer Juul.
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