In December 2013, Altria signed a contract including a set of licensing, supply and cooperation agreements with Philip Morris International (PMI). The two companies were combined until 2008; Altria is US-based and owns Philip Morris USA. Financial terms of the agreements were not disclosed.
Under the agreement, Altria gained the right to exclusively sell in the United States two "modified risk tobacco products" being developed by PMI, which heat the tobacco without burning it, and in return PMI now has the right to exclusively sell Altria's e-cigarettes outside the United States. The companies also said they would work together on scientific assessments and regulatory authorisations; the commercialisation of reduced risk products in the United States is subject to approval by the US Food and Drug Administration.
Altria started testing its e-cigarette “MarkTen” in Indiana and Arizona in 2013. The plan was to bring it to the market mid-2013, but early feedback was mixed – as one industry analyst wrote, “MarkTen products did not start moving until Altria blast e-mailed Indiana smokers with a $2 MarkTen coupon.” The national roll-out is now expected in the second quarter of 2014.
Green Smoke Inc.
In February 2014, Altria Group Inc. announced to have bought the e-cigarette company Green Smoke Inc. for about $110 million in cash and up to $20 million in incentive payments. Green Smoke was founded in 2008 and has operations in the U.S. and Israel. It has sold e-cigarette products since 2009, mostly in the U.S; the revenue last year was about $40 million (compared to Altria’s $24.5 billion in 2013 revenue). Green Smoke will keep its key management infrastructure and work force, and will continue to focus on electronic cigarettes that turn nicotine liquid into vapor.
Other TobaccoTactics Resources
- Reuters, Philip Morris, Altria team up on cigarette alternatives, 23 December 2013, accessed January 2014
- Mike Esterl and John Kell, Altria to Enter E-Cigarette Market, Wall Street Journal, 25 April 2013, accessed 2 May 2013
- Nik Modi, US Tobacco 2014 Playbook, RBC Capital Markets, 12 December 2013
- Mike Esterl,Big Tobacco Begins its Takeover of the E-Cigarette Market Corporate Intelligence, WSJ, 18 November 2013, accessed February 2014