Altria Group (MO) has classified its business into the following segments:
- smokeable products
- smokeless products
In 4Q16, Altria’s smokeable products segment contributed 84.0% to the company’s total revenue. Smokeless products, wine, and others contributed 10.3%, 5.1%, and 0.60%, respectively.
2017 revenue estimates
Analysts are expecting Altria to post revenue of ~$19.8 billion in 2017, which represents a rise of 2.3% from ~$19.3 billion in 2016. Higher product prices and more product innovations are expected to offset the negative effect of the decline in the cigarette industry volume and allow Altria’s revenue to rise in 2017.
In November 2016, the company reduced its promotional allowance on Marlboro and L&M by $0.02 per pack and $0.08 per pack, respectively. During the same month, it raised the prices of Marlboro by $0.06 per pack and other cigarette brands by $0.08 per pack. Earlier, in May 2016, it raised the prices of all its cigarette brands by $0.07 per pack.
Looking at its smokeless products segment, we see that in December 2016, Altria increased the list price for Copenhagen and Skoal by $0.12 per can. It increased prices for all other brands by $0.07 per can. Earlier, in May 2016, it raised the prices of all its brands by $0.07 per pack.
Altria’s revenue will get a boost from the January 2017 acquisition of Nat Sherman, which has a line of handmade cigars and premium cigarettes. To succeed in a regulatory environment, Altria has also been focusing on bringing its Nu Mark products to market, the latest being MarkTen XL. The product has been received well by Altria’s customers.
Significant increases in taxes for cigarette products in Pennsylvania and California are expected to lower the cigarette industry volume by 1.0%. That’s expected to offset some of the growth in Altria’s 2017 revenue.