When it comes to cigarettes, you may not have heard of Altria (NYSE:MO), but you certainly have heard of Marbolo. For your information, Marbolo is a popular cigarette brand that belongs to Philip Morris USA and Philip Morris International.
And, the company that owns Philip Morris USA, the maker of Marlboro cigarettes, is Altria. Additionally, Altria also owns John Middleton, which is also a leading maker of Black & Mild cigars.
Both Philip Morris USA and John Middleton alone, generated more than $20 billion in net revenue for Altria in 2019, representing nearly 90% of the company’s total sales, according to this article: Altria’s revenue and revenue breakdown.
As you can see, cigarettes and cigars sales still make up the largest portion of Altria’s total revenue, driving profitability and giving investors a continuous stream of dividend incomes over the past 30 years, according to Altria’s Dividend Information.
In this article, we will take an in-depth look at Altria’s cigarette sales and shipment volume as well as the market share.
Other than cigarettes, we will also look at the company’s cigars sales and shipment volume even though it contributed significantly less revenue to Altria.
Without further ado, let’s take a look!
Altria’s Smokable Products Shipment Volume (Quarterly)
The chart above shows Altria’s total smokable product shipment volume measured in numbers of sticks in millions from 2017 to 2020.
Altria’s total smokable product shipment volume combines both cigarettes and cigars sales.
According to the quarterly chart, Altria’s total smokable product sales have been gradually declining in the past 3 years, dropping year over year and reached only 25.4 billion sticks in 2020 2Q.
The 2020 2Q figure represents a year-on-year decline of 8.7%.
In short, Altria sold significantly fewer smokable products in 2020 compared to 2017 on a quarterly basis.
Altria’s Smokable Products Shipment Volume (TTM)
The quarterly chart may not be showing the large picture. As such, I have created the above trailing 12-months (TTM) plot to smooth out the bumps and give readers a clearer trend.
As shown, Altria’s total smokable product shipment volume is clearly on a downtrend on a TTM basis.
Sales of total smokable products have been declining 5% on average in the last 3 years and headed to an all-time low of 102.5 billion sticks as of Q2 2020.
The TTM plot reinforces the quarterly plot result that Altria’s total smokable products are indeed decreasing in sales.
Altria’s Cigarette Shipment Volume (Quarterly)
In terms of cigarette sales alone, Altria has been selling fewer cigarettes from 2017 to 2020, as depicted in the chart above.
Year over year, Altria’s total cigarette sales have declined by as much as 9% and reached only 24.9 billion sticks in 2Q 2020, driven primarily by the decline in Marbolo shipment volume.
Similarly, Altria’s Marlboro cigarette sales stood at 21.8 billion sticks in 2Q 2020, representing a year-on-year decline of roughly 8%.
Altria’s Cigarette Shipment Volume (TTM)
The trailing 12-months (TTM) plot above clearly shows Altria’s decline in both total cigarette and Marlboro cigarette sales from 2018 to 2020.
As of 2020 Q2, both total cigarette and Marlboro cigarette shipment volumes have headed to an all-time low of 100.8 billion sticks and 87.8 billion sticks, respectively, on a TTM basis.
Again, the TTM plot clearly depicts the downtrend of Altria’s cigarette sales.
Altria’s Cigar Shipment Volume (Quarterly)
In contrast, Altria’s cigars shipment volume has gone upward over the last 3 years and reached 422 million sticks in Q2 2020.
Year over year, the 2Q 2020 figure remained roughly the same while the long-term trend indicates that Altria has been selling more cigars from 2017 to 2020.
Altria’s Cigar Shipment Volume (TTM)
Similarly, the trailing 12-months (TTM) plot above indicates that Altria’s cigar shipment volume has indeed been increasing and reached multiple new highs in 2020.
As of 2Q 2020, Altria’s TTM cigar sales totaled 1.7 billion sticks, representing an increase of 6% year on year.
While cigars shipment may have been increasing over the years, its sales volume made up less than 2% of Altria’s total smokable product shipment volume.
For this reason, Altria still relies heavily on cigarette sales to drive revenue growth and subsequently, profitability.
Altria’s Cigarettes Market Share by Quarter
According to Altria, the market share or retail share results for cigarettes are measured based on the following assumption:
As shown in the quarterly chart above, Altria’s total cigarette market share has indeed been slowly declining from 51% reported in 1Q17 to 49% reported in 2Q20, as much as a 2% point decrease over the last 3 years.
Altria’s Marlboro cigarette is seeing a similar market share decline from 43.7% in 1Q17 to 42.8% in 2Q20.
Altria’s Cigarettes Market Share by Year
On a yearly basis, we are seeing a similar market share decline for both total cigarettes and Marlboro cigarettes.
Accordingly, Altria’s total cigarette market share has slightly plunged from 51.2% in 2016 to 49.7% in 2019.
A similar trend occurs for Marlboro cigarette market share which plunged from 43.8% in 2016 to 43.1% in 2019.
In summary, Altria’s shipment volume for cigarettes has steadily been declining over the past 3 years. A similar downtrend is seen in cigarette market share.
In contrast, Altria’s cigars sales have actually been increasing in the past 3 years, reaching a new high as of 2Q20. However, cigars sales represent less than 2% of Altria’s total smokable product shipment volume.
Although cigarettes sales and market share for Altria has continued to plunge, net revenue and revenue net of excise taxes has actually been increasing, suggesting that Altria has, perhaps, been raising prices of cigarettes all these years.
References and Credits
1. All financial and sales data in the charts in this article were referenced and obtained from annual and quarterly filings available in Altria SEC Filings.
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