Today’s smokers are more open to trying different types of tobacco than smokers of previous generations, and Altria Group Inc is working on new products to entice consumers who want a change from cigarettes, the company said.
- Marlboro Black cigarettes
The company, best-known for its Marlboro cigarettes, also stood by the profit forecast it gave in late January.
Altria, whose other products include Skoal and Copenhagen smokeless tobacco and Black & Mild cigars, has seen a shift in tobacco usage in the United States. While the number of smokers of both cigarettes and cigars has remained relatively flat, usage of smokeless tobacco has risen. Still, Marlboro – with 42 percent retail market share in the cigarette industry – remains the dominant brand in Altria’s portfolio.
Some smokers have been trying alternative products, such as smokeless tobacco, amid concerns about the health risks of smoking.
Altria is encouraged by the early sales of its new Marlboro Black brand, Vice Chairman Dave Beran told analysts and investors at the annual Consumer Analyst Group of New York, or CAGNY, conference held in Boca Raton, Florida.
Marlboro Black, which Altria’s Philip Morris USA unit began shipping in December, had over 1 percent retail market share earlier this month, said Beran, who is set to become Altria’s president and chief operating officer in May.
- Marlboro Black Menthol cigarettes
The new product is what the company calls a bold, modern spin on the traditional brand, and is packaged in a black box for menthol and nonmenthol varieties.
The Marlboro brand had a 42 percent share of the market in 2011, down from 42.6 percent in 2010. Marlboro is the best-selling cigarette in all U.S. states, but like other cigarettes faces a continued decline in the number of American smokers.
Altria said it has not seen much of a change in the mix of premium and discount brands.
There has been some volatility among price-sensitive shoppers who seek out promotions and shift between different discount brands, but consumers who buy the company’s premium products tend to be loyal, Chairman and Chief Executive Mike Szymanczyk told reporters at the conference.
About 90 percent of Marlboro smokers buy only that brand, according to the company’s research.
Altria also expects adjusted earnings to grow by 6 to 9 percent in 2012, to a range of $2.17 to $2.23 per share, executives said on Wednesday.
Analysts, on average, expect Altria to earn $2.20 per share, according to Thomson Reuters I/B/E/S.
Over time, Altria still aims to post average annual adjusted diluted earnings per share growth of 7 to 9 percent and issue a dividend that grows in line with its adjusted earnings per share growth.
Szymanczyk said last month that he plans to retire in May, and will be succeeded as chairman and CEO by Marty Barrington.
Shares of Altria were up 0.3 percent at $29.71 on Wednesday afternoon on the New York Stock Exchange.