Altria cites smokeless items as key for business..

May 20, 2009 - Altria Group Inc., the nation's largest tobacco maker, told its shareholders Tuesday, May 19th that recent acquisitions and a focus on the growing area of smokeless products put it in a strong position for long-term growth.

Chief Executive Michael E. Szymanczyk (suh-MAN-sihk) reiterated to shareholders the importance of smokeless products to the company as consumers turn away from cigarettes.

The health concerns and higher prices. The federal excise tax on cigarettes rose to $1 per pack from 39 cents on April 1, a move that should translate directly into fewer cigarettes bought. In an effort to move beyond cigarettes, Altria and other tobacco companies have introduced a number of smokeless products to keep smokers as buyers of other items. They are trying to convert smokers to products such as moist snuff, chewing tobacco and snus - a teabag-like pouches that users stick between their cheek and gum.

The Richmond-based company also is using its market-leading Marlboro brand to expand some of its smokeless offerings. Szymanczyk said its Marlboro Snus product is "off to a good start" in test marketing and the company is optimistic about its growth.

From the archive: Initially, it was felt that just the Marlboro brands would make the smokeless entries successful. This just has not happened. Nik Modi, a UBS tobacco analyst has stated, "The Marlboro brand name is not as transferable as many originally believed." Altria's growth depends on the Marlboro name.. Kessler, CEO UST (now : Clearly Marlboro is a great cigarette brand. That said, history clearly shows that it is difficult to extend brands from one category to another. UST, Inc. NOT Worried About New Moist Snuff Entry - Marlboro. Murray Kessler, former Chief Operating Officer of UST, we are very disappointed in the total performance of whether -- they call it Snus or we call it spit-free. We've been testing this thing now for seven years. The newer entrance [entrees], if you go back, is now, in original markets, is over two years, and it is not gaining the traction, given the level of investment that's been put there. Kessler has stated in the past that "Nine out of 10 smokers that try smokeless still reject the product." (Kessler is now Vice Chair of Altria Group, Inc.)

To add its offerings, Altria completed its $10.4 billion acquisition of smokeless tobacco company UST Inc. in January, giving it market-leading brands such as Skoal and Copenhagen. Earlier, it bought the John Middleton cigar company, maker of the Black & Mild brand.

Altria said it believes volume in the smokeless tobacco industry as a whole grew 6 percent to 7 percent in the first quarter compared with the same period a year earlier, and machine-made large-cigar volume grew 4 percent compared with a year earlier. Where's The Growth in Smokeless Tobacco Products...

The company's profit for 2008 fell 50 percent, reflecting the spinoff of Philip Morris International, which makes Marlboro and other cigarettes for sale overseas, in March 2008. Net income dropped to $4.93 billion, or $2.36 per share, from $9.79 billion, or $4.62 per share. Revenue rose 4 percent to $19.36 billion.

Investors also re-elected nine directors and rejected six shareholder proposals, including ones on say on executive pay and making future or expanded brands non-addictive.

Related shareholders meeting: Altria - proposal defeated to remove nicotine from future tobacco brands...

Select news briefs from archive: C-Store Update - Philip Morris USA to introduce another Marlboro menthol cigarette.. - May 10, 2009;
How's SNUS doing in the U.S. - will Susan Ivey tell us the truth?? April 27, 2009;
U.S. earning for big three cigarettes makers may be down in 1st quarter 2009.. - April 2, 2009;
C-store update: Sales of Copenhagen/Skoal, Conwood's Kodiak, Grizzly... - March 2, 2009;
Altria more layoffs in February 2009.. - February 22, 2009;
C-store update: Philip Morris $1.00 off promotion Skoal and Copenhagen.. - February 7, 2009;
More on Marlboro MST & Marlboro Snus.. - February 2, 2009;
PM USA - discontinues Marlboro Moist Snuff & revamps Marlboro Snus.. - January 29, 2009;
C-store update: Altria to tweak sales of Skoal and Copenhagen/Chewing Tobacco/Free Cans Camel SNUS.. - January 8, 2009;
Altria completes UST acquisition.. - January 7, 2009;
Altria will continue to test Marlboro Smokeless Tobacco Products.. - September 10, 2008;
UST to become a wholly owned subsidiary of Altria.. - September 9, 2008;
Altria being financially disciplined in test marketing their smokeless products.. - August 6, 2008;
Without PMI - Altria's Net Income Drops 58%.. - August 1, 2008;
With slow growth consolidation is predicted in sputtering tobacco industry.. - June 26, 2008;
Altria's Plan for Organic Growth is failing - so-called potentially safer cigarette Marlboro Ultra Smooth removed from U.S. market.. - June 23, 2008;
Altria falling short on growth because of slowness in developing smokeless tobacco products.. - June 12, 2008;
Three of the four largest U.S. cigarette makers are no longer a smart investment.. - May 2, 2008;
Altria's growth depends on the Marlboro name.. - April 13, 2008;
With organic (internal) development in the smokeless tobacco arena failing look for Philip Morris USA to expand through acquisitions.. - February 4, 2008;
Altria confirms commitment to smokeless tobacco market tests.. - January 31, 2008;
With Shrinking America Cigarette Sales Philip Morris USA More Dependent on the Smokeless Tobacco Market.. - January 29, 2008;
Altria completes Middleton acquisition.. - December 12, 2007;Altria - NOT in Any Hurry to Expand Marlboro SNUS Distribution.. - October 18, 2007.

Reference: Altria cites smokeless items as key for business by MICHAEL FELBERBAUM, Associated Press, 5/19/2009.