Since Altria operates largely in the U.S., it can’t rely on other markets for growth as sales in the U.S. slump. That puts Altria in a tougher spot than peers like British American Tobacco, Philip Morris International and Japan Tobacco. It also makes Juul and Cronos’ intended international growth all the more attractive to it.
Juul is available in eight markets overseas, including Canada and the U.K., with plans for even more international expansion to countries like Indonesia and other Asian markets, where smoking rates are high.
Juul has “significant opportunities for further growth, both domestically and in international markets,” Willard told analysts Thursday morning. Meantime, he noted the company believes the global cannabis sector is poised for “rapid growth.”
Over the past 17 years, Altria’s U.S. cigarette volume has decreased 3 percent every year, according to a review of the company’s financial statements. The company has managed to offset these declines through price increases. However, the declines have started accelerating, worrying some analysts and investors this strategy may be unsustainable.
Altria has been adding new tobacco products to its portfolio, including its 2007 acquisition of cigar marker John Middleton and its 2008 acquisition of smokeless tobacco manufacturer UST. It also inked a deal with Philip Morris International to sell its heated tobacco product, iQOS, in the U.S. should the Food and Drug Administration allow it to be sold here.The companies are still awaiting a decision from the agency.
Altria on Thursday reiterated its support for the product, saying its investment in Juul doesn’t change any of its plans around iQOS. PMI has pitched iQOS as something that is more likely to appeal to adult smokers who enjoy cigarettes and aren’t interested in fruity e-cigarette flavors.
“We’re excited about what we believe will be the most compelling offering for adult tobacco consumers and investors with ownership or exposure to the leading brands in each of our categories, including Marlboro, Black & Mild, Copenhagen, Juul, and iQOS,” Willard said.