RICHMOND, Va.--(BUSINESS WIRE)--Dec. 7, 2018--
Altria Group, Inc. (Altria) (NYSE:MO) today announces the
discontinuation of production and distribution of all MarkTen and Green
Smoke e-vapor products and VERVE oral nicotine containing
products. This decision is based upon the current and expected financial
performance of these products, coupled with regulatory restrictions that
burden Altria’s ability to quickly improve these products. The company
will refocus its resources on more compelling reduced-risk tobacco
“We remain committed to being the leader in providing adult smokers
innovative alternative products that reduce risk, including e-vapor,”
said Howard Willard, Chairman and CEO, Altria Group, Inc. “We do not see
a path to leadership with these particular products and believe that now
is the time to refocus our resources. We recognize the impact this
decision has on our employees and business partners, which we do not
Altria’s subsidiaries will begin working with their retailers,
wholesalers, contract manufacturers and suppliers to ensure an orderly
process. MarkTen cig-a-likes are currently in distribution at
retail and through e-commerce. Green Smoke is primarily available
on e-commerce with limited retail presence. VERVE is in
limited distribution at retail and e-commerce.
Altria expects to record one-time pre-tax charges of approximately $200
million, the majority of which would be non-cash asset impairment
charges, in the fourth quarter of 2018 as a result of this decision.
These charges will be excluded from Altria’s adjusted results.
Altria’s wholly-owned subsidiaries include Philip Morris USA Inc. (PM
USA), U.S. Smokeless Tobacco Company LLC (USSTC), John Middleton Co.
(Middleton), Sherman Group Holdings, LLC and its subsidiaries (Nat
Sherman), Nu Mark LLC (Nu Mark), Ste. Michelle Wine Estates Ltd. (Ste.
Michelle) and Philip Morris Capital Corporation (PMCC). Altria holds an
equity investment in Anheuser-Busch InBev SA/NV (AB InBev).
The brand portfolios of Altria’s tobacco operating companies include Marlboro®,
Black & Mild®, Copenhagen®,
Skoal®, VERVE®, MarkTen®
and Green Smoke®. Ste. Michelle produces
and markets premium wines sold under various labels, including Chateau
Ste. Michelle®, Columbia Crest®,
14 Hands® and Stag’s Leap Wine Cellars™,
and it imports and markets Antinori®, Champagne
Nicolas Feuillatte™, Torres®
and Villa Maria Estate™ products in
the United States. Trademarks and service marks related to Altria
referenced in this release are the property of Altria or its
subsidiaries or are used with permission.
More information about Altria is available at altria.com and on the
Altria Investor app or follow us on Twitter, Facebook and LinkedIn.
Forward-Looking and Cautionary Statements
This release contains projections of future results and other
forward-looking statements that involve a number of risks and
uncertainties and are made pursuant to the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995.
Important factors that may cause actual results and outcomes to differ
materially from those contained in the projections and forward-looking
statements included in this press release are described in Altria’s
publicly filed reports, including its Annual Report on Form 10-K for the
year ended December 31, 2017 and its Quarterly Report on Form 10-Q for
the period ended September 30, 2018.
These factors include the following: significant competition; changes in
adult consumer preferences and demand for Altria’s operating companies’
products; fluctuations in raw material availability, quality and price;
reliance on key facilities and suppliers; reliance on critical
information systems, many of which are managed by third-party service
providers; fluctuations in levels of customer inventories; the effects
of global, national and local economic and market conditions; changes to
income tax laws; federal, state and local legislative activity,
including actual and potential federal and state excise tax increases;
increasing marketing and regulatory restrictions; the effects of price
increases related to excise tax increases and concluded tobacco
litigation settlements, consumption rates and consumer preferences
within price segments; health concerns relating to the use of tobacco
products and exposure to environmental tobacco smoke; privately imposed
smoking restrictions; and, from time to time, governmental
Furthermore, the results of Altria’s tobacco businesses are dependent
upon their continued ability to promote brand equity successfully; to
anticipate and respond to evolving adult consumer preferences; to
develop, manufacture, market and distribute products that appeal to
adult tobacco consumers (including, where appropriate, through
arrangements with, and investments in, third parties); to improve
productivity; and to protect or enhance margins through cost savings and
Altria and its tobacco businesses are also subject to federal, state and
local government regulation, including by the U.S. Food and Drug
Administration. Altria and its subsidiaries continue to be subject to
litigation, including risks associated with adverse jury and judicial
determinations, courts reaching conclusions at variance with the
companies’ understanding of applicable law, bonding requirements in the
limited number of jurisdictions that do not limit the dollar amount of
appeal bonds and certain challenges to bond cap statutes.
In addition, the factors related to Altria’s investment in AB InBev
include the following: the risk that Altria’s equity securities in AB
InBev are subject to restrictions on transfer until October 10, 2021;
the risk that Altria’s reported earnings from and carrying value of its
equity investment in AB InBev and the dividends paid by AB InBev on
shares owned by Altria may be adversely affected by unfavorable foreign
currency exchange rates and other factors, including the risks
encountered by AB InBev in its business; the risk that the tax treatment
of Altria’s transaction consideration from the AB InBev/SABMiller
business combination and the accounting treatment of its equity
investment are not guaranteed; and the risk that the tax treatment of
Altria’s investment in AB InBev may not be as favorable as Altria
Altria cautions that the foregoing list of important factors is not
complete and does not undertake to update any forward-looking statements
that it may make except as required by applicable law. All subsequent
written and oral forward-looking statements attributable to Altria or
any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements referenced above.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181207005175/en/
Source: Altria Group, Inc.
Altria Client Services