Altria Ramps Up Its Presence in Oral Nicotine
BOCA RATON, Fla. — Altria Group Inc., which entered the oral nicotine pouch space in 2019, sees the alternative tobacco offering as a key element to its 10-year journey toward a noncombustible future.
The Richmond, Va.-based tobacco company boosted its noncombustible lineup when it inked a definitive agreement to acquire 80 percent of certain companies of Burger Söhne Holding AG that will commercialize on! products worldwide. On! is an oral tobacco-derived nicotine pouch product, as Convenience Store News previously reported.
Altria closed on the transaction in August and, according to Chairman and CEO Howard Willard, it has since started production of on! products at its Richmond manufacturing center.
"This remarkable turnaround time is a testament to our talented manufacturing teams and the Burger Group employees, who facilitated a fast and efficient knowledge transfer," Willard said. "Our Richmond manufacturing center is a state-of-the-art, FDA-compliant facility that's a key competitive advantage to our success as an enterprise. We believe our ability to seamlessly fold the production of on! within the facility provides significant cost efficiencies."
Howard provided an update for on! as he outlined Altria's 10-year vision for a noncombustible future at the Consumer Analyst Group of New York conference, held Feb. 19 in Boca Raton.
According to the chief executive, Altria expects to have annualized capacity of 50 million cans by mid-year and 75 million cans by the end of the year. The company also has enhanced on! — which has 35 SKUs — with a new can design.
On! is currently distributed in three of the top five U.S. convenience store chains by smokeless volume, with plans to be in all five by the end of first-quarter 2020.
"We will also be enhancing on!'s visibility at retail by merchandising the product using premium fixture space," Willard explained.
On the regulatory front, Altria completed research in support of the premarket tobacco application (PMTA) for on! The research "provides strong evidence of its appeal to adult smokers," the chief executive noted.
In the study, adult smokers and dippers used on! for six weeks after a screening and trial period. These consumers were provided the product in various nicotine levels and flavor varieties. At the end of the study, more than a quarter of the adult smokers and more than 70 percent of the adult dippers completely switched to on! products. Women were just as likely as men to switch to on! at the end of the study.
"While these results must be considered in the context of study limitations, the data illustrates the promise offered by on! and support our belief that various nicotine levels and flavor options are important to adult tobacco consumers looking to switch to potentially less harmful products," Willard said.
Altria is on track to file PMTAs for the on! portfolio in May.
Altria's wholly owned subsidiaries include Philip Morris USA Inc., U.S. Smokeless Tobacco Co. LLC, John Middleton Co., Sherman Group Holdings LLC and its subsidiaries, Ste. Michelle Wine Estates Ltd. and Philip Morris Capital Corp. Altria also owns an 80-percent interest in Helix Innovations LLC, and holds equity investments in Anheuser-Busch InBev SA/NV, JUUL Labs Inc., and Cronos Group Inc.