RICHMOND, Va.--(BUSINESS WIRE)--Altria Group, Inc. (Altria) (NYSE: MO) today announced a new structure to maximize its core tobacco businesses while realizing its aspiration to be the U.S. leader in authorized, non-combustible, reduced-risk products.
Key components of this new structure include:
- Establishment of two divisions – core tobacco and innovative tobacco products;
- Creation of a Chief Growth Officer function to accelerate speed to market for innovative products and technologies; and
- Aligning product development efforts more directly to the core and innovative tobacco product businesses.
“This is a dynamic time in the tobacco industry, and just as we lead in traditional tobacco products, we intend to lead in offering adult smokers more choices in innovative, non-combustible, reduced-risk products,” said Howard Willard, Altria’s Chairman and CEO. “We expect this new structure to accelerate our innovation pipeline, maximize our core tobacco businesses and allow us to continue to reward shareholders.”
Core and Innovative Tobacco Products
Altria will adapt its structure from a Chief Operating Officer who oversees all operating companies to a structure aligned with the company’s dual strategies – maximizing income from core tobacco businesses and growing new income with innovative tobacco products.
PM USA, USSTC, Middleton, and Nat Sherman will form Altria’s core tobacco division.
Jody Begley, as Senior Vice President, Tobacco Products, Altria, will oversee the core tobacco businesses, as well as their product development and engineering support. He will report to Billy Gifford, Vice Chairman and CFO. Leading those businesses will be:
- Heather Newman, President and CEO, PM USA
- Shannon Leistra, President and CEO, USSTC
- Ryan Bauersachs, Managing Director and General Manager, Middleton
- Dominik Meier, Managing Director and General Manager, Nat Sherman
Jody has been President and General Manager of Nu Mark since 2015. He brings to this role 23 years of experience in sales, marketing and strategy from PM USA, USSTC and Nu Mark, as well as leadership positions in Altria Group Distribution Company and Strategy & Business Development.
Nu Mark, Altria’s innovation company, will focus on developing a compelling portfolio of non-combustible products that adult smokers enjoy and have the potential to drive adult smoker conversion. This portfolio includes oral nicotine-containing products, e-vapor and innovative inhalable products.
Brian Quigley, as President and CEO, Nu Mark, will oversee the innovative products business, reporting to Howard Willard. Brian has been President and CEO, USSTC since 2012. He joined PM USA in 2003 and has served in brand management leadership roles in PM USA and USSTC.
Chief Growth Officer
Altria has established a Chief Growth Officer function which will identify and pursue Altria’s strategic and innovative growth priorities across the tobacco landscape. This function will identify marketplace and adult tobacco consumer insights and translate them into strategies for product development, consumer engagement, future of commerce and business development.
This group will also be responsible for innovative product development and enhancing the company’s capabilities by building and acquiring the competencies, technologies and talent to achieve Altria’s aspiration of being the U.S. leader in authorized, non-combustible, reduced-risk products.
K.C. Crosthwaite is appointed Senior Vice President and Chief Growth Officer, Altria Client Services LLC (ALCS), reporting to Howard Willard. K.C. has been President and CEO, PM USA for the past year. Before that, he was VP, Strategy & Business Development, ALCS, and VP & General Manager, Marlboro, PM USA. K.C. joined PM USA in 1997 and brings to his new role many years of experience leading and supporting major brands.
These changes will be effective June 1, 2018.
Altria Profile
Altria is a Fortune 200 company, headquartered in Richmond, Virginia. Altria’s wholly-owned subsidiaries include Philip Morris USA Inc. (PM USA), U.S. Smokeless Tobacco Company LLC (USSTC), John Middleton Co. (Middleton), Sherman Group Holdings, LLC and its subsidiaries (Nat Sherman), Nu Mark LLC (Nu Mark), Ste. Michelle Wine Estates Ltd. (Ste. Michelle) and Philip Morris Capital Corporation (PMCC). Altria holds an equity investment in Anheuser-Busch InBev SA/NV (AB InBev).
The brand portfolios of Altria’s tobacco operating companies include Marlboro®, Black & Mild®, Copenhagen®, Skoal®, MarkTen® and Green Smoke®. Ste. Michelle produces and markets premium wines sold under various labels, including Chateau Ste. Michelle®, Columbia Crest®, 14 Hands® and Stag’s Leap Wine Cellars™, and it imports and markets Antinori®, Champagne Nicolas Feuillatte™, Torres® and Villa Maria Estate™ products in the United States. Trademarks and service marks related to Altria referenced in this release are the property of Altria or its subsidiaries or are used with permission. More information about Altria is available at altria.com and on the Altria Investor app.
Forward-Looking and Cautionary Statements
This release contains forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Important factors that may cause actual results and outcomes to differ materially from those contained in the projections and forward-looking statements included in this release are described in Altria’s publicly filed reports, including its Annual Report on Form 10-K for the year ended December 31, 2017 and its Quarterly Report on Form 10-Q for the period ended March 31, 2018.
These factors include the following: significant competition; changes in adult consumer preferences and demand for Altria’s operating companies’ products; fluctuations in raw material availability, quality and price; reliance on key facilities and suppliers; reliance on critical information systems, many of which are managed by third-party service providers; fluctuations in levels of customer inventories; the effects of global, national and local economic and market conditions; changes to income tax laws; federal, state and local legislative activity, including actual and potential federal and state excise tax increases; increasing marketing and regulatory restrictions; the effects of price increases related to excise tax increases and concluded tobacco litigation settlements, consumption rates and consumer preferences within price segments; health concerns relating to the use of tobacco products and exposure to environmental tobacco smoke; privately imposed smoking restrictions; and, from time to time, governmental investigations.
Furthermore, the results of Altria’s tobacco businesses are dependent upon their continued ability to promote brand equity successfully; to anticipate and respond to evolving adult consumer preferences; to develop, manufacture, market and distribute products that appeal to adult tobacco consumers (including, where appropriate, through arrangements with, and investments in, third parties); to improve productivity; and to protect or enhance margins through cost savings and price increases.
Altria and its tobacco businesses are also subject to federal, state and local government regulation, including by the U.S. Food and Drug Administration. Altria and its subsidiaries continue to be subject to litigation, including risks associated with adverse jury and judicial determinations, courts reaching conclusions at variance with the companies’ understanding of applicable law, bonding requirements in the limited number of jurisdictions that do not limit the dollar amount of appeal bonds and certain challenges to bond cap statutes.
In addition, the factors related to Altria’s investment in AB InBev include the following: the risk that Altria’s equity securities in AB InBev are subject to restrictions on transfer until October 10, 2021; the risk that Altria’s reported earnings from and carrying value of its equity investment in AB InBev and the dividends paid by AB InBev on shares owned by Altria may be adversely affected by unfavorable foreign currency exchange rates and other factors, including the risks encountered by AB InBev in its business; the risk that the tax treatment of Altria’s transaction consideration from the AB InBev/SABMiller business combination and the accounting treatment of its equity investment are not guaranteed; and the risk that the tax treatment of Altria’s investment in AB InBev may not be as favorable as Altria anticipates.
Altria cautions that the foregoing list of important factors is not complete and does not undertake to update any forward-looking statements that it may make except as required by applicable law. All subsequent written and oral forward-looking statements attributable to Altria or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above.
