Altria is hoping to light a fire under its efforts to diversify away from traditional tobacco products, announcing on Tuesday that it was creating two new divisions — one for “core” tobacco like cigarettes, and a separate unit for “innovative” products like vaping devices, as smokers increasingly seek out less harmful options.
Altria said that its new “core” division will comprise cigarette maker Philip Morris USA, pipe tobacco and cigar company John Middleton, snuff maker US Smokeless Tobacco Co and Nat Sherman, and its line of premium cigarettes and cigars. The new unit will be headed by Jody Begley, who has held various roles at the company, most recently as president and general manager of Altria’s innovation company Nu Mark.
The new “innovative” division will focus on non-combustible products seen as healthier alternatives like nicotine-containing oral products, e-vapour and other inhalable products. The new division will be led by Brian Quigley, currently president and chief executive of US Smokeless Tobacco Company.
Additionally, Altria said it was creating a new position — chief growth officer — to help identify and act on strategically important priorities. It has appointed K.C. Crosthwaite — president and chief executive of Philip Morris USA — to the role.
Altria chairman and chief executive Howard Willard said in a statement:
“This is a dynamic time in the tobacco industry, and just as we lead in traditional tobacco products, we intend to lead in offering adult smokers more choices in innovative, non-combustible, reduced-risk products. We expect this new structure to accelerate our innovation pipeline, maximise our core tobacco businesses and allow us to continue to reward shareholders.”
Even as they come under heavy fire from health authorities around the world, tobacco giants like Altria have been well-loved for years by Wall Street for paying fat dividends. As cigarette smoking starts to taper off, these companies are looking for new revenue streams, including alternative “smokeless” devices like the IQOS, which its maker Philip Morris claims is healthier because it heats tobacco rather than burn it.
Altria and Philip Morris International have teamed up to bring the IQOS device to market and have sought the US Food and Drug Administration’s permission to market it as a reduced-risk product.
Altria shares, which were up just 5 per cent last year, are down 22.5 per cent so far in 2018. Enditem
