Tag Archives: Altria

Juul, Juul, Uncategorized

Altria now trying to buy into Juuls

Well, this was as predictable as the day is long.

I wrote a few days ago about how Altria is expanding its business to marijuana. Altria, which already owns the e-cigarette brand MarkTen, is now making a move to buy into the biggest e-cigarette brand out there, Juul.

It’s interesting. A lot of people think e-cigarettes and cigarettes are somehow in competition. Nothing could be further from the truth. They’re really two sides of the same coin, doing a cutesy little dance around each other.

At one time, Big Tobacco controlled about 80 percent of the e-cigarette market. Altria had MarkTen, RJ Reynolds controlled Blu for a while, then Blu was sold to and controlled by Imperial Brands, a subsidiary of Philip Morris. Meanwhile, RJ Reynolds kept control of Vuse. Those three brands constituted about 80 percent of the e-cigarette market.

So, no, e-cigarettes were not competing with Big Tobacco. E-cigarettes WERE Big Tobacco. All those people usuing e-cigarettes to get off cigarettes. All those people using e-cig to say “F U” to the tobacco industry. Hey, you were giving your money to the same CEOs. Big Tobacco was selling you both the disease and the cure.

Then, along came Juul to overturn the apple cart. Juul is a relatively new player in the e-cigarette market and sometime around 2017, this company started dominating the e-cig industry, pushing down Big Tobacco’s share in the market. Juul’s share got up to 75 percent. They did this in about two years.

Now, Altria is following the Big Tobacco playbook. When you can’t beat them in the marketplace, simply buy them out. 

Juuls are incredibly convenient. They look exactly like a computer flash drive. They can charge up by plugging them into a laptop. And the flavour viles are little and easy to use.

Juuls are controversial with a lot of people in the tobacco control industry because the company, much like Blu, was pretty fucking brazen about marketing to teens. Juul relied heavily on social media to market itself and they got themselve in the crosshairs big time not only of the tobacco control community, but of the FDA. After the FDA started suggesting that it was cracking down on e-cigs because of the explosion of e-cig use by teenagers, Juul very quickly abandoned all of its social media accounts and announced that it would no longer sell many of its fruity and surgary flavours.

Along comes Altria to save the day. Altria, the parent company behind what used to be known as Philip Morris, is abandoning its failed MarkTen product.

According to this CNBC article, Altria is looking at buying a “significant” share of Juul. And again, we follow the same pattern as Blu and MarkTen and Vuse.

Now, this news came out around the same time as the FDA announced that it was cracking down on e-cigs, mostly by requiring that e-cigs be sold in areas closed off to minors, and Juul shut down its social media accounts. We all know Altria has a long, long history of playing cutesy with the “Marketing to teens? Moi? Never!” game that Juul and every other e-cig brand has copied from.

I see this as Altria evolving and trying to stay an active player in the nicotine addiction game, via e-cigs and international marekts. (And my concern about Altria getting involved in marijuana is over the company cooking up schemes to add nicotine to marijuana to make it more addictive). This is a multi-billion dollar corporation that has no plans of simply slinking off into the sunset.

Altria, marijuana

I toldja! Big Tobacco looks to get into the pot business

The Marlboro Head

I toldja! I toldja!

I knew this would happen. In fact, to be honest, I’m surprised it took this long.

As marijuana becomes legal in more and more of the U.S., I knew sooner or later Big Tobacco would look to get into the game. 

Sure enough, a bunch of huge stories came out this week that Altria … the parent company of Philip Morris, makers of Marlboros, is investing $1.8 billion in Cronos, a Canadian marijuana company. And as we all know, marijuana was legalized across ALL of Canada a couple of months ago.

About 80 million people in the U.S. live in states where marijuana is now legal. Add that to the 36 million of so people in Canada … that’s a lot of legal marijuana users. And that number is just going to continue to grow as more and more states figure out that keeping pot illegal is not just stupid but also a waste of a BIG potential tax source.

So, tobacco sales in the U.S. have been in decline for decades. Big Tobacco is being forced to diversify … by pouring more energy in developing tobacco markets in the Third World, by investing in e-cigarettes (though the future of e-cigs is now in doubt with new FDA regulations being proposed) and now pot. It was totally predictable.

My biggest concern about Big Tobacco getting their beak wet in the pot industry is my fear that they’ll pull the same underhanded, amoral crap with pot that they’ve pulled with marijuana for decades. For instance, I could totally see Big Tobacco artificially adding nicotine into marijuana to make it physically addictive like cigarettes. (And then acting all “Moi? Not us!” before Congressional committees about it). Think of it. The pure, amoral genius of it. The most addictive substance in the world added … to marijuana. They would do it, too. They totally would.

One of the biggest worries about legalizing pot was allowing big corporations to take over the pot industry. I remember an article from a year or two ago worrying that the beer industry would get involved in pot. Honestly, that doesn’t scare me nearly as much as Altria or any tobacco company getting their paws on it. 

Something to keep an eye on.

Altria, Blu, Lorillard, Philip Morris, RJ Reynolds

Slumping cigarette sales prompts R.J. Reynolds-Lorillard to talk merger

reynolds

A very interesting story about major changes in the works in the tobacco industry.

The No. 2 tobacco company in America — R.J. Reynolds — is in talks to buy the No. 3 tobacco company in America — Lorillard (which I have misspelled Lollilard more times than I can count.). Imperial Tobacco is also involved in the deal.

This deal would create a $56 billion company and would create a monster rival to the dominant No. 1 tobacco company in America — Altria, otherwise known as Philip Morris (its dominant brand is Marlboro, of course).

Reynolds and Lorillard would combine for 42 percent of the cigarette market, joining Reynolds’ big product — Camel — what Lorillard’s — Newport. Other Lorillard brands are Kent and Old Gold, while other Reynolds’ other brands are Pall Mall, Winston, Salem and Kool. But, Camel and Newport are the dominant brands.

dbpix-camel-tmagArticle

The new joint company then would sell off several of their smaller brands to Imperial Tobacco, a British-owned company that would then become the No. 3 company in America.

According to the New York Times, declining cigarette sales are driving this move, as both companies work to restore their past profits. E-cigs are also a factor in this deal, as the e-cig industry is booming (got mixed feelings about that), and Lorillard owns the No. 1 e-cig brand, Blu E-Cigarettes.

According to the New York Times:

Still, a takeover of Lorillard by Reynolds would represent the industry’s boldest response yet to a declining, if still profitable, market. A general drop in smoking rates and aggressive public health campaigns aimed at curbing smoking have cut into sales in the United States.

About 42 million people in the United States, or nearly 18 percent of the adult population, smoke cigarettes, according to the Centers for Disease Control and Prevention. That compares with about 21 percent of the adult population nearly a decade ago and 43 percent of the adult population in 1965, according to the C.D.C.

What remains of the traditional cigarette industry is dominated by Altria, whose Philip Morris arm sells one out of every two cigarettes in the United States.

Opportunity has beckoned in the new business of e-cigarettes. A deal by Reynolds to buy the leading purveyor of e-cigarettes could spur other mergers within the industry as manufacturers jockey for position.

“This transaction in our view will be very positive for the global tobacco industry and could be just the beginning of future transactions with e-cigs/vapor being the underlying catalyst,” Wells Fargo analysts wrote in a note.

Anyway, interesting story as the industry adjusts to a rapidly changing and evolving market. This deal is not cast in stone, as it must be approved by federal regulators and could face scrutiny over

Altria, Big Tobacco, cigarettes, Philip Morris, smoking, Tobacco

Philip Morris profits down 8 percent in second quarter 2013

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philip morris

Oh, happy day. Philip Morris (Altria), the No. 1 private cigarette manufacturer in the world, saw its profits drop a dramatic 8 percent in the second quarter of 2013, mostly due to lagging sales. Philip Morris shares dropped 2.5 percent as a result.

Here’s what is interesting. We all know the sales of cigarettes is down, so at first blush, this doesn’t seem to be a big surprise.

What IS a big surprise? The biggest reason for the drop in profits is the drop in sales of Philip Morris brands (mostly Marlboro) overseas.

One thing a lot of people may not realize is that while cigarette sales have been obviously dropping the U.S., the tobacco industry has weathered the storm just fine, mostly by expanding its overseas markets in burgeoning smoking regions such as India,  the Philippines and Africa. Philip Morris is blaming a sluggish economy overseas:

According to USAToday:

The cigarette maker reported earnings of $2.12 billion, or $1.30 per share, in the quarter ended June 30, down from $2.32 billion, or $1.36 per share, a year ago.

Excluding excise taxes, revenue fell 2.5% to $7.9 billion despite higher prices. Costs to make and sell cigarettes rose more than 1% to $2.7 billion.

Cigarette shipments fell about 4% to 228.9 billion cigarettes as it saw volume declines in all of its regions. Total Marlboro volumes fell nearly 6% to 72.4 billion cigarettes.

Philip Morris International said economic woes in the European Union and increased excise taxes drove shipments down nearly 6% during the quarter. Shipments fell 3.6% in the company’s region that encompasses Eastern Europe, the Middle East and Africa. Shipments also fell 2.4% in Latin America and Canada.

In Asia, one of its largest growth areas, the company said that cigarette volume fell 3.5%, hurt by a recent tax increase in the Philippines, which saw a 16.5% decline in shipments.

Smokers face tax increases, bans, health concerns and social stigma worldwide, but the effect of those on cigarette demand generally is less stark outside the United States. Philip Morris International has compensated for volume declines by raising prices and cutting costs.

Anytime the tobacco industry is hurting that is great news. Perhaps its a bad economy, but maybe smoking bans, higher taxes and lower smoker rates in other countries is having an effect, as well. Of course, Philip Morris would never admit THAT.