Which Businesses Does Altria Hold Stakes In?
Rewritten Article:
"Tobacco titan Altria (MO 0.04%) dominates the smoking scene in the U.S., thanks to its best-seller, Marlboro. But this powerhouse isn't resting on its laurels. With a knack for diversifying its portfolio, Altria has ventured beyond traditional smoking products. It's acquired the popular moist smokeless tobacco brand, Copenhagen, and ventured into nicotine-based smokeless products. Its investments stretch beyond the tobacco realm, reaching into beer and cannabis industries.*
Let's dive into the companies Altria owns and how its portfolio is shaping up.
The Coys It Controls
Altria owns a stellar portfolio of tobacco brands for the U.S. market. Its offerings include smokeable and smokeless products. Below, we'll delve into some of its key companies and investments.*
Philip Morris USA
Philip Morris USA leads the pack with a 45.7% market share in 2024. Marlboro, its flagship brand, commands a mighty 41.7% share of the U.S. cigarette market, more than any other brand combined.*
Market Share
Market share is the percentage of revenue a product, service or company captures within its category. Philip Morris USA's operations are confined to the U.S., leaving the international franchising rights to Philip Morris International. Altria spun off Philip Morris International in 2008, granting greater independence to the latter.
John Middleton
In 2007, Altria swooped in to buy U.S. cigar manufacturer John Middleton from privately-held Bradford Holdings for $2.9 billion.*
U.S. Smokeless Tobacco Company
Altria bought U.S. Smokeless Tobacco Company for an impressive $10.4 billion in 2009, making it the country's most profitable smoke-free company.*
Helix Innovations
In 2019, Altria invested in Burger Group's oral pouch brand, on!. Altria initially paid $372 million for the stake and subsequently bought the remaining 20% for $250 million in 2020-2021.*
NJOY
Altria added e-vapor products to its roster in 2023, buying NJOY Holdings for $2.75 billion. The FDA-approved NJOY ACE is its star product in the vaping industry.*
Horizon Innovations
In 2022, Altria joined forces with J.T. Group to launch Horizon Innovations, a venture focused on marketing and commercializing heated tobacco stick products in the U.S.*
Anheuser-Busch InBev
Beer enthusiasts will appreciate Altria's 10% stake in the world's largest brewing company, Anheuser-Busch InBev.*
Cronos Group
Altria purchased a 45% stake in Cronos, a leading Canadian cannabinoid company, for $1.8 billion in 2019. However, the shares weren't all upside. Warrants to increase stake to 55% expired and the stock price took a tumble.
Smokeable products (Phillip Morris USA and John Middleton) make up the majority of Altria's revenue. In the first nine months of 2024, the company posted $15.3 billion in revenues, with smokeable products accounting for 87%.*
Altria's oral tobacco products segment contributed about $2 billion in revenue, with Copenhagen accounting for more than half the volume, at 52%. The brand saw declining volumes of 8.7% and 9.5% for Copenhagen and Skoal, respectively. However, on! recorded a 38.7% volume growth, driving revenue growth for the segment.
As Altria aims to reduce its dependence on smoking, it targets a 35% increase in the U.S. smoke-free portfolio's volumes from its 2022 base of 800 million units. It also aims to nearly double its smoke-free product revenue to $5 billion, with $2 billion from innovative smoke-free products.*
This plan signals that U.S. Smokeless Tobacco Company, Helix Innovations, and NJOY will play a significant role in Altria's financial growth.*
Future Gains
As Altria expands beyond smoking, it's eyeing acquisitions to expedite its smokeless journey. Opportunities include expanding into non-nicotine products like cannabis or caffeine pouches.*
Mergers and acquisitions could also see Altria take full control of cannabis businesses like Cronos or caffeine-pouch manufacturers like Grinds Coffee Pouches.*
Altria's diversification could even extend into food and beverage industries, as it once owned Kraft Foods in 1998 and General Foods in 1999.*
In buying beverage stocks or snacking/confectionery companies, Altria can reap the benefits of their growth potential.*
The company's plans aim to keep smokeless products top of mind, as experiences like its investment in JUUL Labs (a failed $12.8 billion bet) demonstrate."*
Altria is exploring opportunities in diversifying its portfolio beyond tobacco, considering investments in non-nicotine products such as cannabis or caffeine pouches. The company's past experience in food and beverage industries, where it once owned Kraft Foods and General Foods, could potentially guide such acquisitions.
With its investment in Horizon Innovations, Altria is focused on marketing and commercializing heated tobacco stick products in the United States, aiming to expand its smokeless portfolio and reduce its dependence on smoking.
