Altria Pushing OTP Over Cigarettes

Altria Group Inc. told shareholders this week that it’s looking to bolster its OTP business as domestic cigarette sales continue to decline, a decision also motivated by concerns about health, smoking bans and price increases, the Associated Press reported.

Altria CEO Michael Szymanczyk told shareholders that while Altria will still be able to build market share in the declining cigarette business, success depends on finding alternative products that are satisfying to consumers and reduce health risks, the news service reported.

"As the company looks to the future, it has clear recognition of the fact that conventional cigarettes are harmful in society and we’d like to make some progress on improving that situation," Szymanczyk said.

Szymanczyk said its domestic tobacco unit, Philip Morris USA – the No. 1 cigarette manufacturer – will deal with fewer cigarette sales by capitalizing on its Marlboro brand and selling more smokeless products. It has projected that cigarette sales volume will fall between 2.5% to 3% in the U.S. over the next few years.

Last year, Philip Morris began testing its Marlboro-branded moist smokeless tobacco product in Atlanta and recently expanded to counties in the surrounding metropolitan area. It also began testing Marlboro Snus in Dallas last year, and has expanded to Indianapolis.

Szymanczyk said the company already has made a number of modifications to those products based on input from consumers in the test markets. "We’re making remarkable progress," he said. "We’ve learned a lot that will allow us to efficiently develop our products further."

Altria now consists mainly of Philip Morris USA, cigar manufacturer John Middleton Inc., Philip Morris Capital Corp. and a 29% stake in London-based SABMiller PLC, brewer of Miller beer.


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