WHAT TO WATCH FOR: The premium Marlboro brand has been under
pressure from competitors and lower-priced cigarette brands as consumers
face economic stress and high unemployment.
The economic challenges are in addition to the tax hikes, smoking bans, health concerns and social stigma that have made the cigarette business tougher.
Meanwhile, the industry continues to raise prices despite falling cigarette volumes.
The Marlboro brand sold for an average of $5.79 per pack during the first quarter, compared with an average of $4.32 per pack for the cheapest brand.
The company has introduced several new products with the Marlboro brand, often with lower promotional pricing. They include special blends of both menthol and non-menthol cigarettes to try to keep the brand growing and to lure smokers away from its competitors.
Marlboro volumes fell more than 5 percent to 25.4 billion cigarettes in the first quarter but it gained 0.2 percentage points to end up with 43.6 percent of the U.S. market.
Altria's overall its cigarette volume fell about 5 percent to 29.7 billion cigarettes during the quarter. Volumes for discount cigarette brands like L&M increased nearly 6 percent and volume for its other premium brands fell by more than 12 percent.
Still the company's share of the U.S. retail market rose 0.5 percentage points to 50.5 percent during the quarter.
Altria continues to face pressure from less-expensive brands such as Pall Mall from Reynolds American Inc. and Maverick from Lorillard Inc. Pall Mall volume fell 2 percent during the first quarter but its market share grew 0.5 percentage points to 9 percent. Maverick's volume fell 6.5 percent during the same period.
Altria and other tobacco companies also are looking for growth from cigarette alternatives such as cigars, snuff and chewing tobacco. So analysts will want to see how Altria's Black & Mild cigars and Copenhagen and Skoal smokeless tobacco products. The company may also provide further details on its rollout of its first electronic cigarette under the MarkTen brand in Indiana starting in August.
Altria also owns a wine business, holds a voting stake in brewer SABMiller, and has a financial services division.
As the company anticipates volume declines in its core cigarette business, it's also cutting costs. After completing a $1.5 billion multiyear cost savings program last year, the company rolled out a plan to cut $400 million in "cigarette-related infrastructure costs" by the end of 2013 in advance of anticipated cigarette volume declines.
WHY IT MATTERS: Increased spending on premium brands like Marlboro could signal consumers are adjusting to paying more for cigarettes following federal and state tax increases.
WHAT'S EXPECTED: Analysts expect Altria to earn 63 cents per share on revenue of $4.62 billion, according to FactSet.
LAST YEAR'S QUARTER: Altria reported adjusted net income of 59 cents per share on revenue of $4.6 billion. Figures for both periods exclude excise taxes the company passes through to the government.
The economic challenges are in addition to the tax hikes, smoking bans, health concerns and social stigma that have made the cigarette business tougher.
Meanwhile, the industry continues to raise prices despite falling cigarette volumes.
The Marlboro brand sold for an average of $5.79 per pack during the first quarter, compared with an average of $4.32 per pack for the cheapest brand.
The company has introduced several new products with the Marlboro brand, often with lower promotional pricing. They include special blends of both menthol and non-menthol cigarettes to try to keep the brand growing and to lure smokers away from its competitors.
Marlboro volumes fell more than 5 percent to 25.4 billion cigarettes in the first quarter but it gained 0.2 percentage points to end up with 43.6 percent of the U.S. market.
Altria's overall its cigarette volume fell about 5 percent to 29.7 billion cigarettes during the quarter. Volumes for discount cigarette brands like L&M increased nearly 6 percent and volume for its other premium brands fell by more than 12 percent.
Still the company's share of the U.S. retail market rose 0.5 percentage points to 50.5 percent during the quarter.
Altria continues to face pressure from less-expensive brands such as Pall Mall from Reynolds American Inc. and Maverick from Lorillard Inc. Pall Mall volume fell 2 percent during the first quarter but its market share grew 0.5 percentage points to 9 percent. Maverick's volume fell 6.5 percent during the same period.
Altria and other tobacco companies also are looking for growth from cigarette alternatives such as cigars, snuff and chewing tobacco. So analysts will want to see how Altria's Black & Mild cigars and Copenhagen and Skoal smokeless tobacco products. The company may also provide further details on its rollout of its first electronic cigarette under the MarkTen brand in Indiana starting in August.
Altria also owns a wine business, holds a voting stake in brewer SABMiller, and has a financial services division.
As the company anticipates volume declines in its core cigarette business, it's also cutting costs. After completing a $1.5 billion multiyear cost savings program last year, the company rolled out a plan to cut $400 million in "cigarette-related infrastructure costs" by the end of 2013 in advance of anticipated cigarette volume declines.
WHY IT MATTERS: Increased spending on premium brands like Marlboro could signal consumers are adjusting to paying more for cigarettes following federal and state tax increases.
WHAT'S EXPECTED: Analysts expect Altria to earn 63 cents per share on revenue of $4.62 billion, according to FactSet.
LAST YEAR'S QUARTER: Altria reported adjusted net income of 59 cents per share on revenue of $4.6 billion. Figures for both periods exclude excise taxes the company passes through to the government.
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