Altria Group, Inc. (previously named Philip Morris Companies Inc.) is based in Henrico County, Virginia, and is the parent company of Philip Morris USA, John Middleton, Inc., United States Smokeless Tobacco, Inc., Philip Morris Capital Corporation, and Chateau Ste. Michelle Wine Estates. It is one of the world's largest tobacco corporations. Philip Morris International was spun off in 2008. In addition, Altria Group, Inc. has a 28.7% economic and voting interest in one of the world's largest brewing companies, UK based SABMiller plc, where it has 3 seats on the 11-person board of directors. It is a component of the S&P 500 and was a component of the Dow Jones Industrial Average until February 19, 2008. The company has its headquarters in unincorporated Henrico County, Virginia, less than five miles West of the city limit of Richmond and less than ten miles from its downtown Richmond buildings.
On January 27, 2003, Philip Morris Companies Inc. changed its name to Altria Group, Inc. On March 30, 2007, a spin out of Kraft Foods subsidiary (publicly traded since 2001) was concluded through distribution of the remaining stake of shares (88.1%) to Altria shareholders. As a result, Altria no longer holds any interest in Kraft Foods. On March 28, 2008 a similar spin out of Philip Morris International was completed with 100% of shares being distributed to Altria shareholders.
On January 6, 2009, Altria Group, Inc. completed the acquisition of UST Inc., a moist smokeless tobacco manufacturer; UST owned Ste Michelle Wine Estates, a wine company.
Altria is a relatively new company that clearly emerged out of Philip Morris although the strategic reasoning for the creation of this entity is a matter of speculation (the company webpage provides one explanation). The onset 'rebranding' of Philip Morris Companies to Altria took place in 2003 (Philip Morris would later split, with PM USA remaining Altria's primary and only consistently held asset). One explanation is that the company wished to emphasize that its business portfolio had come to consist of more than Philip Morris USA and Philip Morris International; at the time, it owned an 84% stake in Kraft, although that business has since been spun off. The name "Altria" comes from the Latin word for "high" and was part of a trend of companies rebranding to names that previously did not exist, Accenture and Verizon being two other notable examples. The rebranding took place amidst social, legal and financially troubled circumstances. In 2003 Altria was ranked Fortune number 11, and has steadily declined since. In 2010 Altria Group (MO) ranked at Fortune number 137, whereas their former asset, Philip Morris International topped them with Fortune rank 94.
In 2007, Altria began selling all its shares of Philip Morris International to Altria stockholders. The company also began a move to purchase cigar manufacturer John Middleton Co. from Bradford Holdings, Inc., which went into effective in 2008. After Philip Morris International spun off, the foreign Philip Morris companies halted the purchase of tobacco from America, which was a major factor associated with the closing of a newly renovated plant in North Carolina, approximate 50% reduction in manufacturing, large scale layoffs and induced early retirements
Distribution Strategy
The deal, rumored to be worth more than $10 billion, could be announced as early as Monday, though the timing could be sooner given media reports of the negotiations. UST shares are up 24 percent in trading from a close of $54 on Thursday. As expected, Altria spokesman David Sylvia declined to comment on speculation about a deal. A UST spokesman could not be reached for comment.
Given the long term future of smoking, Altria moving into this market is a must. Even if Altria is forced to raise its price to $70 a share, that would only represent a 16% premium to UST's January high, not expensive by any means given the brands in UST control.
It would also add about $1 billion a year in earnings (rough number not accounting for synergies) to the $4 billion Altria already produces.
The larger point here would be gaining access to UST sales and distribution channels for its own smokeless offering. Rather than develop these, a UST purchase simply allows those folks to begin offering and pushing Altria's smokeless products through its channels. That, is a very valuable asset for Altria.
Altria Sales & Distribution Services was created by combining the sales forces from PM USA and U.S. Smokeless, according to Szymanczyk. The new entity serves all three tobacco companies with an organization the size of PM USA's sales force before the UST integration. "We expect this new organization will provide increased retail-store coverage and better execution at retail, including improved product freshness, better merchandising and more-effective management of promotions."
Richmond, Va.-based Altria Group would not share any details of the new business unit beyond sharing Szymanczyk's earlier comments; however, details of the service are available to "participating retailers" at Insightsc3m.com, the company's new "category-management resource." Among things available on the website are:
Downloadable Altria Sales & Distribution payment details to the store level.
PM USA Price Promotion information specific to retail stores.
PM USA Product Promotion details for retailers.
24/7 access to tobacco category news and other information to help retailers responsibly merchandise cigarettes.
Altria is the parent company of Kraft Foods, Philip Morris International, Philip Morris USA, and Philip Morris Capital Corporation. Altria produces products like tobacco and packaged food and beverages. Altria is primarily operating in USA and Europe. Altria receives 65.8% of its revenue from the tobacco industry, 33.9% of its revenue from the food and beverage industry, and .3% of its revenue from the financial service industry. Altria is not more dependant on any one region or product segment (Altria Group, Inc., 2007). Altria acquired General Foods in 1985 and acquired Kraft in 1988 in order to diversify its business (Schneiderman, 2007).
Altria Group Inc. is eyeing up acquisitions to grow its business. Aside from cost savings, the company is counting on the strength of the Marlboro brand and growth in segments like smokeless tobacco, including through possible acquisitions, Michael Szymanczyk, who will become Altria's CEO.
Altria Group (formerly Philip Morris Companies), is the world's largest tobacco firm. Altria operates its cigarette business through subsidiaries Philip Morris USA and Philip Morris International, which sell Marlboro -- the world's best-selling cigarette brand since 1972. The firm, which controls about half of the US tobacco market... makes Parliament, Virginia Slims, and Basic cigarette brands. Altria owns some 29% of brewer SABMiller plc. Its long-awaited spinoff of Kraft Foods (Jell-O, Kool-Aid, Maxwell House) to shareholders was completed in March 2007. Altria also plans to spin off its international arm in March 2008
On January 27, 2003, Philip Morris Companies Inc. changed its name to Altria Group, Inc. On March 30, 2007, a spin out of Kraft Foods subsidiary (publicly traded since 2001) was concluded through distribution of the remaining stake of shares (88.1%) to Altria shareholders. As a result, Altria no longer holds any interest in Kraft Foods. On March 28, 2008 a similar spin out of Philip Morris International was completed with 100% of shares being distributed to Altria shareholders.
On January 6, 2009, Altria Group, Inc. completed the acquisition of UST Inc., a moist smokeless tobacco manufacturer; UST owned Ste Michelle Wine Estates, a wine company.
Altria is a relatively new company that clearly emerged out of Philip Morris although the strategic reasoning for the creation of this entity is a matter of speculation (the company webpage provides one explanation). The onset 'rebranding' of Philip Morris Companies to Altria took place in 2003 (Philip Morris would later split, with PM USA remaining Altria's primary and only consistently held asset). One explanation is that the company wished to emphasize that its business portfolio had come to consist of more than Philip Morris USA and Philip Morris International; at the time, it owned an 84% stake in Kraft, although that business has since been spun off. The name "Altria" comes from the Latin word for "high" and was part of a trend of companies rebranding to names that previously did not exist, Accenture and Verizon being two other notable examples. The rebranding took place amidst social, legal and financially troubled circumstances. In 2003 Altria was ranked Fortune number 11, and has steadily declined since. In 2010 Altria Group (MO) ranked at Fortune number 137, whereas their former asset, Philip Morris International topped them with Fortune rank 94.
In 2007, Altria began selling all its shares of Philip Morris International to Altria stockholders. The company also began a move to purchase cigar manufacturer John Middleton Co. from Bradford Holdings, Inc., which went into effective in 2008. After Philip Morris International spun off, the foreign Philip Morris companies halted the purchase of tobacco from America, which was a major factor associated with the closing of a newly renovated plant in North Carolina, approximate 50% reduction in manufacturing, large scale layoffs and induced early retirements
Distribution Strategy
The deal, rumored to be worth more than $10 billion, could be announced as early as Monday, though the timing could be sooner given media reports of the negotiations. UST shares are up 24 percent in trading from a close of $54 on Thursday. As expected, Altria spokesman David Sylvia declined to comment on speculation about a deal. A UST spokesman could not be reached for comment.
Given the long term future of smoking, Altria moving into this market is a must. Even if Altria is forced to raise its price to $70 a share, that would only represent a 16% premium to UST's January high, not expensive by any means given the brands in UST control.
It would also add about $1 billion a year in earnings (rough number not accounting for synergies) to the $4 billion Altria already produces.
The larger point here would be gaining access to UST sales and distribution channels for its own smokeless offering. Rather than develop these, a UST purchase simply allows those folks to begin offering and pushing Altria's smokeless products through its channels. That, is a very valuable asset for Altria.
Altria Sales & Distribution Services was created by combining the sales forces from PM USA and U.S. Smokeless, according to Szymanczyk. The new entity serves all three tobacco companies with an organization the size of PM USA's sales force before the UST integration. "We expect this new organization will provide increased retail-store coverage and better execution at retail, including improved product freshness, better merchandising and more-effective management of promotions."
Richmond, Va.-based Altria Group would not share any details of the new business unit beyond sharing Szymanczyk's earlier comments; however, details of the service are available to "participating retailers" at Insightsc3m.com, the company's new "category-management resource." Among things available on the website are:
Downloadable Altria Sales & Distribution payment details to the store level.
PM USA Price Promotion information specific to retail stores.
PM USA Product Promotion details for retailers.
24/7 access to tobacco category news and other information to help retailers responsibly merchandise cigarettes.
Altria is the parent company of Kraft Foods, Philip Morris International, Philip Morris USA, and Philip Morris Capital Corporation. Altria produces products like tobacco and packaged food and beverages. Altria is primarily operating in USA and Europe. Altria receives 65.8% of its revenue from the tobacco industry, 33.9% of its revenue from the food and beverage industry, and .3% of its revenue from the financial service industry. Altria is not more dependant on any one region or product segment (Altria Group, Inc., 2007). Altria acquired General Foods in 1985 and acquired Kraft in 1988 in order to diversify its business (Schneiderman, 2007).
Altria Group Inc. is eyeing up acquisitions to grow its business. Aside from cost savings, the company is counting on the strength of the Marlboro brand and growth in segments like smokeless tobacco, including through possible acquisitions, Michael Szymanczyk, who will become Altria's CEO.
Altria Group (formerly Philip Morris Companies), is the world's largest tobacco firm. Altria operates its cigarette business through subsidiaries Philip Morris USA and Philip Morris International, which sell Marlboro -- the world's best-selling cigarette brand since 1972. The firm, which controls about half of the US tobacco market... makes Parliament, Virginia Slims, and Basic cigarette brands. Altria owns some 29% of brewer SABMiller plc. Its long-awaited spinoff of Kraft Foods (Jell-O, Kool-Aid, Maxwell House) to shareholders was completed in March 2007. Altria also plans to spin off its international arm in March 2008
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