Company:Altria

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Short description: American tobacco corporation
Altria Group, Inc.
TypePublic
  • NYSE: MO
  • S&P 100 component
  • S&P 500 component
IndustryTobacco
Founded1985; 39 years ago (1985) (as Philip Morris Companies, Inc.)
HeadquartersReynolds Metals Company International Headquarters
Henrico County, Virginia, U.S.
Area served
Worldwide
Key people
Billy Gifford
(Chairman & CEO)
RevenueIncrease US$21.111 billion (2021)[1]
Increase US$11.560 billion (2021)[1]
Increase US$2.475 billion (2021)[1]
Total assetsDecrease US$39.523 billion (2021)[1]
Total equityDecrease -US$1.606 billion (2021)[1]
Number of employees
6,000 (2021)[2]
Subsidiaries
Websitealtria.com

Altria Group, Inc. (previously known as Philip Morris Companies, Inc.) is an American corporation and one of the world's largest producers and marketers of tobacco, cigarettes, and related products. It operates worldwide and is headquartered in Henrico County, Virginia, just outside the city of Richmond.

Altria is the parent company of Philip Morris USA, John Middleton, Inc., U.S. Smokeless Tobacco Company, Inc., and Philip Morris Capital Corporation. Altria also maintains large minority stakes in Belgium-based brewer AB InBev and the Canadian cannabis company Cronos Group. It is a component of the S&P 500 and was a component of the Dow Jones Industrial Average from 1985 to 2008, dropping due to spin-offs of Kraft Foods Inc. in 2007 and Philip Morris International in 2008.[3]

History

Philip Morris

thumb|Advertisement for Philip Morris cigarettes during the early 20th century thumb|250px|The "Altria Center for Research and Technology" in Downtown Richmond, Virginia, March 2020Altria emerged from Philip Morris. The onset of "rebranding" of Philip Morris Companies to Altria took place in 2003 (Philip Morris would later split, with PM USA remaining Altria's primary and only consistently held asset). Altria was created because Philip Morris wished to emphasize that its business portfolio had come to consist of more than Philip Morris USA and Philip Morris International; at the time, it owned an 84% stake in Kraft,[4] although that business has since been spun off.[5] The name "Altria" is claimed to come from the Latin word for "high" and was part of a trend of companies rebranding to names that previously did not exist, Accenture (previously Andersen Consulting) and Verizon being notable examples,[6] though linguist Steven Pinker suggests that in fact the name is an "egregious example" of phonesthesia—with the company attempting to "switch its image from bad people who sell addictive carcinogens to a place or state marked by altruism and other lofty values".[7]

The company's branding consultants, the Wirthlin Group, said: "The name change alternative offers the possibility of masking the negatives associated with the tobacco business", thus enabling the company to improve its image and raise its profile without sacrificing tobacco profits.[8]

Philip Morris executives thought a name change would insulate the larger corporation and its other operating companies from the political pressures on tobacco.[8]

The rebranding took place amidst social, legal, and financially troubled circumstances.[vague][9] In 2003 Altria was ranked Fortune number 11, and has steadily declined since. In 2010 Altria Group (MO) ranked at Fortune number 137, whereas its former asset, Philip Morris International, was ranked 94th.[10]

In 2006, a United States court found that Philip Morris "publicly ... disputed scientific findings linking smoking and disease knowing their assertions were false."[11] In a 2006 ruling, a federal court found that Altria, along with R. J. Reynolds Tobacco, Lorillard and Philip Morris were found guilty of misleading the public about the dangers of smoking.[12] Within this ruling, it was noted that "defendants altered the chemical form of nicotine delivered in mainstream cigarette smoke for the purpose of improving nicotine transfer efficiency and increasing the speed with which nicotine is absorbed by smokers."[13] This was done by manipulating smoke pH with ammonia. Adding ammonia increases the smoke pH, in a process called "freebasing" which causes smokers to be "exposed to higher internal nicotine doses and become more addicted to the product."[14]

On March 30, 2007, Altria's 88.1% stake in Kraft Foods was spun off, through a distribution of the remaining stake of shares (88.1%) to Altria shareholders. That same year, Altria began selling all its shares of Philip Morris International to Altria stockholders, a spin-off that was completed on March 28, 2008. Again in 2007 the company began the acquisition of cigar manufacturer John Middleton Co. from Bradford Holdings, which was complete in 2008. After Philip Morris International spun off, the former international subsidiaries halted the purchase of tobacco from America, which was a major factor in the closing of a newly renovated plant in North Carolina, an approximately 50% reduction in manufacturing, large-scale layoffs, and induced early retirements.[15]

In 2008, Altria officially moved its headquarters from New York City to Richmond, Virginia, after Philip Morris sold its downtown offices in New York City a decade earlier. With a few exceptions, all manufacturing, commercial, and executive employees had long been based in and around Richmond. Currently the company is headquartered in an unincorporated area within Henrico County, less than five miles west of the city limits of Richmond and less than ten miles from its downtown Richmond campus.

Aside from the Philip Morris/Altria headquarters, some of their other buildings included the Altria Center for Research and Technology in downtown Richmond, their manufacturing center in South Richmond, and the adjacent operations center which began shutting down in 2007–2008, as a result of the loss of demand from PMI member companies. The layoffs beginning in 2007 affected thousands of Altria, Altria Client Services, Philip Morris USA, and contracted employees in Richmond and North Carolina.

In 2009, Altria finalized its purchase of UST Inc., whose products included smokeless tobacco (made by U.S. Smokeless Tobacco Company) and wine (made by Chateau Ste. Michelle).[16] This ended a short era of competition between the new Marlboro smokeless tobacco products such as snus, and those produced by UST Inc.

On December 8, 2018, Altria announced its intent to acquire a 45% stake in Cronos Group for $1.8 billion.[17]

On December 20, 2018, Altria finalized the acquisition of a 35% stake in JUUL Labs, an e-cigarette company based out of San Francisco, California, for $12.8 billion.[18] On November 3, 2019, it was reported that Altria was taking a $4.5 billion writedown on its stake in Juul, 35% of its original value.[19] On July 28, 2022, it was reported that Altria's investment in Juul is now worth only 5% of the original amount of $12.8 billion. Despite the losses, Altria has announced that it will continue to support Juul and avoid investing in competing products.[20]

Altria is taking a stake in the global business of Swiss tobacco company Burger Söhne (Helix Innovations with the On! brand) for $372 million in June 2019.

Altria and Japan Tobacco announced a joint venture called Horizon Innovations LLC on October 27, 2022. Horizon, owned 75 percent by Altria and 25 percent by Japan Tobacco, intends to sell Ploom heated tobacco sticks in the United States. FDA approval was expected to take until 2025, with customers able to buy Ploom by 2027.[21]

Altria completed the acquisition of NJOY Holdings, Inc. on June 1, 2023.[22]

Finances

For the fiscal year 2020, Altria reported earnings of US$4.45 billion, with an annual revenue of US$26.15 billion. Altria's shares traded at over $66 per share, and its market capitalization was valued at over US$118.5 billion in October 2018.[23] As of 2018, the company ranked 154th on the Fortune 500 list of the largest United States corporations by revenue.[24]

Year Revenue
in mil. US$ 		Net income
in mil. US$ 		Total Assets
in mil. US$ 		Price per Share
in US$ 		Employees
2006 18,790 12,022 104,270 9.59
2007 18,664 9,786 57,746 11.98
2008 19,356 4,930 27,215 12.11
2009 23,556 3,206 36,677 11.06
2010 24,363 3,890 37,402 15.08
2011 23,800 3,377 36,751 19.25
2012 24,618 4,167 35,329 24.79
2013 24,466 4,535 34,859 28.70 9,000
2014 24,522 5,058 34,475 35.86 9,000
2015 25,434 5,231 31,459 47.86 8,800
2016 25,744 14,215 45,932 59.00 8,300
2017 25,576 10,208 43,202 77.41 8,300
2018 25,364 6,955 55,495 48.89 8,300
2019 25,110 −1,300 49,271 49.91 7,300
2020[25] 26,153 4,454 47,414 41.00 7,100

Corporate governance

Board of directors

Members of the board of directors of Altria Group as of February 2013 were:[26]

  • Elizabeth E. Bailey, professor emerita, the Wharton School, University of Pennsylvania
  • Gerald L. Baliles (2008–2019), director, Miller Center of Public Affairs at University of Virginia; former Virginia governor
  • Martin Barrington, chairman and chief executive officer, Altria Group, Inc.
  • John T. Casteen III (2010– ), president emeritus, University of Virginia
  • Dinyar S. Devitre (2008– ), special advisor, General Atlantic Partners, New York, NY; former SVP and CFO of Altria
  • Thomas F. Farrell II (2008–2021), chairman, president and CEO, Dominion Resources, Richmond, VA
  • Thomas W. Jones (2002– ), senior partner, TWJ Capital LLC, Stamford, CT; formerly with Citigroup, Travelers and TIAA-CREF
  • Debra J. Kelly-Ennis (2013– ), former president and CEO of Diageo Canada, Inc.; also formerly with RJR Nabisco, Inc., Coca-Cola, General Motors and Grand Metropolitan
  • W. Leo Kiely III (2011– ), retired CEO, MillerCoors LLC, Golden, CO; formerly with Frito-Lay
  • Kathryn B. McQuade (2012– ), retired EVP and CFO, Canadian Pacific Railway Limited; formerly with Norfolk Southern Corporation
  • George Muñoz (2004– ), principal, Muñoz Investment Banking Group, LLC, Washington, DC; Partner, Tobin & Muñoz, Chicago, IL; formerly Overseas Private Investment Corporation and assistant secretary of the United States Treasury Department
  • Nabil Y. Sakkab (2008– ), retired Senior Vice President, corporate research and development, Procter & Gamble, Cincinnati, OH

Headquarters

Former Altria Headquarters in Manhattan, New York.

Prior to being based in Virginia, Philip Morris had its headquarters in Midtown Manhattan, New York City.[27] In 2003, Philip Morris announced that it would move its headquarters to Virginia. The company said that it planned to keep around 750 employees in its former headquarters. Brendan McCormick, a spokesperson for Philip Morris, said that the company estimated that the move would save the company over $60 million each year.[28] The company now has its head offices in an unincorporated area of Henrico County, Virginia, near Richmond.[29] In addition, the company has a 450,000-square-foot, $350 million Center for Research and Technology located in downtown Richmond at the Virginia BioTechnology Research Park that employs approximately 600 scientists, engineers and support staff.

Political influence

According to the Center for Public Integrity, Altria spent around $101 million on lobbying the United States government between 1998 and 2004, the second-highest such figure for any organization in the nation.[30][31]

Altria also funded The Advancement of Sound Science Coalition which lobbied against the scientific consensus on anthropogenic climate change.[32]

Daniel Smith, representing Altria, sits on the Private Enterprise Board of the American Legislative Exchange Council.[33]

Controversies

In August 2006, the Altria group was found guilty of civil fraud and racketeering.[34][35] The lawsuit claimed that Altria's marketing of "light" and "low tar" cigarettes constituted fraudulent misrepresentations under the Maine Unfair Trade Practices Act (MUTPA) because it deceived smokers into thinking the products are safer than regular cigarettes.

See also

  • Tobacco industry
  • Tobacco Master Settlement Agreement

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 "Altria Group, Inc. 2020 Annual Report (Form 10-K)". Altria Group, Inc.. December 31, 2021. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000764180/1d4c732e-6e79-4c60-8760-b8a8df1f34de.pdf. 
  2. ↑ "2018 Annual Report (Form 10-K)". Altria Group, Inc.. February 2019. http://investor.altria.com/Cache/396883765.pdf. 
  3. ↑ "Altria, Honeywell Removed from DJIA; Bank of America, Chevron Added". February 11, 2008. https://www.thestreet.com/story/10402857/1/altria-honeywell-removed-from-djia-bank-of-america-chevron-added.html. 
  4. ↑ "Philip Morris completes its rebranding to Altria Group". http://www.prweek.com/article/1249231/philip-morris-completes-its-rebranding-altria-group. 
  5. ↑ Dan Caplinger (March 15, 2007). "Coca-Cola vs. Altria: Altria". http://www.fool.com/investing/general/2007/03/15/coca-cola-vs-altria-altria.aspx?terms=altria&vstest=search_042607_linkdefault. 
  6. ↑ "Altria Director Discusses Rebranding Company, CNNfn". Finance Wire. November 11, 2003. http://www.accessmylibrary.com/coms2/summary_0286-2337818_ITM. 
  7. ↑ Pinker, Steven (2007). The Stuff of Thought. Penguin Books. pp. 304. 
  8. ↑ 8.0 8.1 Smith, EA; Malone, RE (2003). "Altria Means Tobacco: Philip Morris's Identity Crisis". Am J Public Health 93 (4): 553–6. doi:10.2105/ajph.93.4.553. PMID 12660196. 
  9. ↑ "Business Plan facts, information, pictures – Encyclopedia.com articles about Business Plan". http://www.encyclopedia.com/doc/1G1-97170567.html. 
  10. ↑ "Fortune 500 2010: Top 1000 American Companies – Altria Group – MO – FORTUNE on CNNMoney.com". Money.cnn.com. https://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/326.html. 
  11. ↑ "The Verdict is In: Findings from United States v Philip Morris". Tobacco Legal Consortium. 2006. http://publichealthlawcenter.org/sites/default/files/resources/tclc-verdict-is-in.pdf. 
  12. ↑ "In Ads, Tobacco Companies Admit They Made Cigarettes More Addictive". NPR. https://www.npr.org/sections/health-shots/2017/11/27/566014966/in-ads-tobacco-companies-admit-they-made-cigarettes-more-addictive. 
  13. ↑ "United States of America v. Philip Morris USA, INC., (f/k/a Philip Morris, Inc.), et al. Civil Action No. 99-2496". https://www.tobaccofreekids.org/assets/content/what_we_do/industry_watch/doj/FinalOpinion.pdf. 
  14. ↑ van Amsterdam, Jan; Sleijffers, Annemarie; van Spiegel, Paul; Blom, Roos; Witte, Maarten; van de Kassteele, Jan; Blokland, Marco; Steerenberg, Peter et al. (December 2011). "Effect of ammonia in cigarette tobacco on nicotine absorption in human smokers". Food and Chemical Toxicology 49 (12): 3025–3030. doi:10.1016/j.fct.2011.09.037. ISSN 1873-6351. PMID 22001171. 
  15. ↑ Walker, Dionne (June 26, 2007). "Altria closing North Carolina plant". USA Today. https://www.usatoday.com/money/economy/2007-06-26-4197533990_x.htm. 
  16. ↑ "Our History – Altria: 2001-Present". altria.com. http://www.altria.com/en/cms/About_Altria/At_A_Glance/Our_History/default.aspx?src=top_nav. 
  17. ↑ Speights, Keith (December 8, 2018). "Altria Buys a $1.8 Billion Stake in Cronos Group: 3 Things You Need to Know About the Monster Deal". https://www.fool.com/investing/2018/12/08/altria-buys-a-18-billion-stake-in-cronos-group-3-t.aspx. 
  18. ↑ Wamsley, Laurel (December 20, 2018). "Altria Buys 35 Percent Stake In E-Cigarette Maker Juul". https://www.npr.org/2018/12/20/678915071/altria-buys-35-percent-stake-in-e-cigarette-maker-juul. 
  19. ↑ Duprey, Rich (November 5, 2019). "Altria Can't Escape E-Cig Woes As It Wipes $4.5 Billion Off Juul Investment" (in en). https://www.fool.com/investing/2019/11/05/altria-cant-escape-e-cig-woes-as-it-wipes-45-billi.aspx. 
  20. ↑ PERRONE, MATTHEW (July 28, 2022). "Altria's $13B investment in Juul e-cigarettes vaporizes" (in en-US). https://abcnews.go.com/US/wireStory/altrias-13b-juul-investment-lost-95-87542023. 
  21. ↑ Craver, Richard (October 27, 2022). "Altria forms joint venture to access Japan Tobacco's Ploom heated cigarette in US". Winston-Salem Journal. https://journalnow.com/business/technology/altria-forms-joint-venture-to-access-japan-tobaccos-ploom-heated-cigarette-in-us/article_9f3186a4-55e7-11ed-8e06-b3da5094b788.html. 
  22. ↑ "Altria Completes Acquisition of NJOY Holdings, Inc.; Updates 2023 Full-Year Earnings Guidance" (in en). Bloomberg News. 2023-06-01. https://www.bloomberg.com/press-releases/2023-06-01/altria-completes-acquisition-of-njoy-holdings-inc-updates-2023-full-year-earnings-guidance. 
  23. ↑ "Altria Revenue 2006-2020 | MO". https://www.macrotrends.net/stocks/charts/MO/altria/revenue. 
  24. ↑ "Fortune 500 Companies 2018: Who Made the List". http://fortune.com/fortune500/list. 
  25. ↑ "Altria Form 10-k 2020". February 26, 2021. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000764180/1d4c732e-6e79-4c60-8760-b8a8df1f34de.pdf. 
  26. ↑ "Board of Directors" , Altria webpage; with associated bio pages. Retrieved February 26, 2013.
  27. ↑ "Contact Us." Philip Morris Companies. April 9, 2001. Retrieved on October 19, 2009.
  28. ↑ "Philip Morris to Move Headquarters from New York City to Richmond, Va.." New York Daily News. March 5, 2003. Retrieved on October 19, 2009.
  29. ↑ "Contact Us ." Altria. Retrieved on October 19, 2009.
  30. ↑ "LobbyWatch - The Center for Public Integrity". http://www.publicintegrity.org/lobby/profile.aspx?act=clients&year=2003&cl=L000203. 
  31. ↑ "Center for Public Integrity". http://projects.publicintegrity.org/lobby/top.aspx?act=topcompanies. 
  32. ↑ Monbiot, George (September 19, 2006). "George Monbiot on climate change and Big Tobacco". The Guardian (London). http://environment.guardian.co.uk/climatechange/story/0,,1875762,00.html. 
  33. ↑ "Private Enterprise Board". American Legislative Exchange Council. http://www.alec.org/about-alec/private-enterprise-board/. 
  34. ↑ "Judge finds tobacco racketeering". CNN. August 17, 2006. http://edition.cnn.com/2006/BUSINESS/08/17/tobacco.ruling/. 
  35. ↑ Levin, Myron (August 18, 2006). "Big Tobacco Is Guilty of Conspiracy". http://articles.latimes.com/2006/aug/18/nation/na-smoke18. 

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