Altria earnings fall short amid lower cigarette sales and competition for nicotine products

Altria Shares Fall as Cigarette Decline and Competition Hit Earnings

Altria Group’s shares dropped more than 2.4% Thursday after the tobacco giant reported flat fourth-quarter earnings, hampered by declining cigarette sales and intensifying competition in the growing nicotine alternatives market.

The Richmond, Virginia-based company posted a 2% revenue slide to $5.8 billion, primarily due to weakening cigarette sales. While tobacco companies have long managed the gradual decline of traditional cigarettes, Altria CEO Billy Gifford noted an additional challenge from unauthorized disposable electronic cigarettes flooding the market.

“We have long advocated for stronger enforcement against illicit products,” Gifford told investors during Thursday’s earnings call. These unauthorized products often undercut legitimate offerings with lower prices and appealing fruit and candy flavors that attract consumers.

The company reported adjusted net income of $1.30 per share, falling short of analyst expectations of $1.32 per share according to Zacks Investment Research. Despite missing earnings projections, Altria’s adjusted revenue of $5.08 billion exceeded Wall Street forecasts of $5 billion.

Altria’s diversification efforts remain a central focus as traditional tobacco products continue their downward trajectory. The company provided investors with updates on its push into next-generation products like e-cigarettes and nicotine pouches, though it has struggled to establish market dominance in either category.

In December, Altria received Food and Drug Administration authorization for its on! Plus nicotine pouches in several flavors, including mint and wintergreen. While the brand has been available for years, the FDA authorization represents a significant regulatory milestone, allowing for national expansion and marketing.

However, the company’s latest results reveal troubling market trends. Altria reported that on! pouches’ market share contracted to approximately 13%, down about 5 percentage points from the previous year. The U.S. nicotine pouch market remains dominated by Zyn, Philip Morris International’s flavored brand, which commands more than two-thirds of category sales according to Nielsen data.

Executives acknowledged facing aggressive pricing competition from Philip Morris during the quarter, including 2-for-1 promotions for Zyn products. Gifford indicated Altria plans its own strategic pricing approach as it expands distribution of its FDA-authorized nicotine pouches regionally and then nationally later this year.

“Certainly as we introduce at retail we’ll have various introductory price promotions,” Gifford explained. “We feel very excited about the differentiation we have and the consumer feedback.”

The company’s electronic cigarette business encountered a significant setback last year when international trade regulators ruled that Altria’s vaping devices, sold under the NJOY brand, infringed on patents held by rival Juul. This ruling effectively blocks imports and sales of NJOY Ace products in the United States.

The ruling came as a particularly harsh blow after Altria invested $2.75 billion to acquire NJOY in 2023, following its exit from its troubled investment in Juul. The company recorded a substantial $1.3 billion charge on the value of its vaping business in the most recent quarter, reflecting these challenges.

Looking ahead, Altria projects full-year 2026 earnings between $5.56 and $5.72 per share, signaling cautious optimism despite the current headwinds.

The company’s struggles highlight the broader transformation underway in the tobacco industry, as manufacturers race to develop and market reduced-risk products while managing the decline of their traditional cigarette businesses. With increasing regulatory scrutiny and competition from both legitimate and illicit alternatives, established players like Altria face a challenging path to sustainable growth in the evolving nicotine marketplace.