Altria will dump its underperforming vapor products, the company announced today. The country’s largest cigarette manufacturer is eliminating the MarkTen and Green Smoke brands, along with an obscure oral nicotine product called VERVE.
The company had already dropped its MarkTen Elite and Apex pod devices in October, when it announced its plan to help reduce youth vaping, as ordered by FDA Commissioner Scott Gottlieb. At that time, Altria also said it would stop selling its remaining vapor products in flavors other than tobacco, menthol and mint.
It won’t be much of a loss to the cigarette giant, or to anyone else. Altria’s products only account for about four percent of the convenience store/gas station segment of the vapor market (which is about half of the total market). When Gottlieb announced his plan to eliminate flavored products in c-stores, it didn’t matter to Altria at all.
Over the last two years, JUUL has become the dominant player in that segment, grabbing more than 75 percent of c-store sales, and forcing the once-dominant tobacco company vapes to battle for the scraps. JUUL has become a problem, even affecting Altria’s stock price.
With cigarettes smoking in decline, the tobacco companies are hoping their alternative nicotine devices will keep them relevant, but Altria’s “reduced-risk product” portfolio hasn’t been strong. The company is depending on something big to save the day for them, and their MarkTen products certainly aren’t it.
“We remain committed to being the leader in providing adult smokers innovative alternative products that reduce risk, including e-vapor,” said Altria CEO Howard Willard. “We do not see a path to leadership with these particular products and believe that now is the time to refocus our resources.”
Altria is waiting for the FDA to take action on Philip Morris International’s premarket tobacco (PMTA) and modified risk tobacco product (MRTP) applications for IQOS. If approved, Altria will license the heat-not-burn tobacco product from its stepbrother Philip Morris International (PMI was spun off from Altria, which owns Philip Morris USA).
"Even without a single vapor product to sell, Altria’s market value is $100 billion."
Both companies are convinced that IQOS is a game-changing product that will take the U.S. smoking market by storm, as it has in Japan. But nicotine-containing vapes are illegal in Japan, and IQOS — which will be classified as a cigarette in the U.S. — will be much more expensive than vapes, and restricted to tobacco and menthol flavors.
That’s why it might be smart for Altria to hedge its bets by owning a piece something that’s actually popular, like JUUL. Last week, rumors surfaced that Altria might buy a minority stake in JUUL Labs., a move that would theoretically improve Altria’s position in the low-risk nicotine marketplace, and offer JUUL increased distribution reach and access to Altria’s scientific and legal/regulatory departments.
If the IQOS applications and JUUL purchase fall through, Altria can console itself with its cigarette sales. The company’s Marlboro brand makes up half of all U.S. cigarette sales — and there are still at least 34 million smokers in the country. Even without a single vapor product to sell, Altria’s market value is $100 billion.
Jim McDonald
Vaping for: 13 years
Favorite products:
Favorite flavors: RY4-style tobaccos, fruits
Expertise in: Political and legal challenges, tobacco control haters, moral panics
Jim McDonald
Smokers created vaping without help from the tobacco industry or anti-smoking crusaders, and I believe vapers have the right to continue innovating to help themselves. My goal is to provide clear, honest information about the challenges vaping faces from lawmakers, regulators, and brokers of disinformation. I’m a member of the CASAA board, but my opinions aren’t necessarily CASAA’s, and vice versa. You can find me on Twitter @whycherrywhy
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