Altria Looks to Grow Non-Cigarette Tobacco Business

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Altria Looks to Grow Non-Cigarette Tobacco Business

06/02/2008

Altria Group Inc. reiterates to shareholders its interest in growing its business in other tobacco categories as domestic cigarette sales continue to decline because of concerns about health, smoking bans and price increases.

"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," says chief executive of Altria, Michael Szymanczyk, during the question-and-answer portion of the first shareholder meeting since the March spinoff of its international segment, Philip Morris International Inc.

Szymanczyk says its domestic tobacco unit, Philip Morris USA, 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 percent to 3 percent in the United States over the next few years.

Last year, Philip Morris began testing of its Marlboro-branded moist smokeless tobacco product -- cut tobacco placed in the mouth -- in Atlanta and recently expanded to counties in the surrounding metropolitan area. It also began testing its spitless product, which is a moist powdered tobacco, called Marlboro Snus (pronounced "snoose") in Dallas last year, and also has expanded to Indianapolis.

Szymanczyk says the company already has made a number of modifications to those products based on input from consumers in the test markets.

Shareholders, along with re-electing eight directors to its board, defeated six shareholder proposals, including one to allow investors to vote on an advisory resolution proposed by management on executive pay.

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