Results and Strategy
Altria is leaning on lower price points to keep smokers in the fold as household budgets get squeezed. US cigarette shipments slipped 2.9% in the third quarter, a smaller decline than the 8% drop a year earlier and better than the wider industry trend. Revenue came in at $5.4 billion, ahead of the average analyst forecast compiled by Bloomberg, and adjusted earnings were $1.52 a share, also a narrow beat.
The company nudged up the high end of its full year adjusted EPS outlook to $5.74 from $5.72. The stock rose around 2% before the open and is up 27% this year through Wednesday's close, outpacing the S&P 500's 13% gain.
To meet value seekers, Altria launched a lower priced Marlboro Cowboy Cut earlier this year. Chief Executive Officer Sal Mancuso said Cowboy Cut has bolstered Marlboro's position, and the discount brand Basic has continued to win market share.
Who Is Buying and Why It Matters
Cigarette users tend to earn less, making them more exposed to higher living costs. The recent jump in gas prices has reduced their spending power, which tilts demand toward cheaper options. Even so, there is no clear sign that smoking is making a comeback. The latest government figures put the US smoking rate at about 9%, down from roughly 20% two decades ago.
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The Pouch Push
Altria is positioning its On! nicotine pouches as a more premium choice as cigarette volumes continue to drift lower. The newest version, called On! Plus, uses softer, more flexible pouches and has been gaining ground in a fast growing market.
In the third quarter, On shipments rose 13.3% even as competition intensified. Shipments for On increased 11% last year, compared with a 40% jump in 2024.
To better match rivals, Altria has begun selling stronger pouch options. Philip Morris owned Zyn recently updated its product to offer up to 11 milligrams of nicotine per pouch, versus 3 mg to 6 mg for regular pouches. Headquartered in Richmond, Virginia, Altria has broadened On Plus to include blueberry and mango, and plans to introduce a watermelon mint flavor that can reach 12 mg of nicotine per pouch. Over the past 52 weeks, On held roughly 5% of the US market, while Zyn had about 30%, per Circana figures assembled by Bloomberg Intelligence.
What It Means for Your Portfolio
The playbook is straightforward: protect the cigarette base with sharper price points and push a premium pouch line that is growing faster. Revenue and EPS beats, a small guidance lift, and management's note that Cowboy Cut strengthened Marlboro while Basic kept gaining share support the near term. The long term mix still hinges on how quickly pouches scale and how much pressure lower income consumers continue to feel.
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