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Altria’s Cigarette Sales and Market Share

Altria’s logo. Source: Flickr

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 than cigars to Altria.

Without further ado, let’s take a look!

Altria’s Smokeable Products Sales (Yearly)

Altria smokeable product sales by year

Altria smokeable product sales by year

* Smokeable product revenue is a GAAP measure and is obtained from Altria’s annual and quarterly financial reports.
* Revenue net of excise taxes is shown in the chart to rule out the effect of excise taxes.

Let’s first look at Altria’s smokeable product sales on an annual basis which is shown in the chart above.

For your information, Altria’s smokeable product revenue comes mainly from cigarette and cigar sales.

Between FY2014 and FY2020, Altria’s smokeable products sales have been on a steady rise.

However, Altria’s smokeable product sales increased the most in FY2020, by about 6.5% compared to FY2019, even during the height of the COVID-19 pandemic.

As of FY2020, Altria’s smokeable product sales reached a massive $17.9 billion in revenue net of excise taxes, a $1.1 billion higher than that of FY2019.

Altria’s Smokeable Products Shipment Volumes (Yearly)

Altria smokeable product shipment volumes by year

Altria smokeable product shipment volumes by year

* Smokeable product shipment volumes data is obtained from Altria’s annual and quarterly financial reports.

For your information, Altria’s smokeable product shipment volumes consist of the shipment volumes of cigarettes and cigars.

While Altria’s smokeable product sales have been on a rise, it has been the opposite in terms of its shipment volumes.

As seen from the chart, Altria’s smokeable product shipment volumes have been on a steady decline between FY2014 and FY2020.

By FY2020, Altria’s smokeable product shipment volumes reached only 103 billion sticks, the worst the company has ever reported.

Altria’s Cigarette Shipment Volumes (Yearly)

Altria cigarette shipment volumes by year

Altria cigarette shipment volumes by year

* Cigarette shipment volumes data is obtained from Altria’s annual and quarterly financial reports.

Altria’s smokeable product shipment volumes can be broken down into 2 categories, and they are (1) cigarettes and (2) cigars.

This section shows Altria’s cigarette shipment volumes between FY2014 and FY2020.

In the last 7 years, Altria’s cigarette shipment volumes have been on a decline.

By FY2020, Altria’s cigarette shipment volumes reached only 101 billion sticks, the lowest the company has ever reported.

Altria’s Cigar Shipment Volumes (Yearly)

Altria cigar shipment volumes by year

Altria cigar shipment volumes by year

* Cigar shipment volumes data is obtained from Altria’s annual and quarterly financial reports.

Aside from cigarettes, Altria’s smokeable products are also made up of cigars.

This section shows Altria’s cigar shipment volumes between FY2014 and FY2020.

Over the last 7 years, Altria’s cigar shipment volumes have been on a rise, with the FY2020 result being the best.

As of FY2020, Altria reported a cigar shipment volume of 1.8 billion sticks, a record high for the company.

However, Altria’s cigar shipment volumes make up less than 2% of the company’s total smokeable product shipment volumes.

Although Altria’s cigar shipment volumes have been increasing, its effect has been negligible.

Altria’s Smokeable Product Sales (Quarterly)

Altria quarterly smokeable product sales

Altria quarterly smokeable product sales

* Smokeable product sales data is a GAAP measure and is obtained from Altria’s annual and quarterly financial reports.
* Both revenue and revenue net of excise taxes are shown to show readers the amount of excise taxes that have been paid.

In terms of quarterly results, Altria’s smokeable product sales have been flat in the last 4 years.

As of Q1 2021, Altria made about $5.2 billion in revenue and $4.1 billion in revenue net of excise taxes for smokeable products.

Altria’s Smokeable Product Sales (TTM)

Altria TTM smokeable product sales

Altria TTM smokeable product sales

* TTM results consist of the sum of the quarterly results on a trailing 12-month or 4-quarter basis.
* Both revenue and revenue net of excise taxes are shown to show readers the amount of excise taxes that have been paid.
* Quarterly revenue and revenue net of excise taxes are obtained from Altria’s annual and quarterly financial reports.

The quarterly plot may not clearly show the trend of Altria’s smokeable product sales.

Therefore, the TTM or trailing 12-month plot is created above to show the long-term trend of Altria’s smokeable product sales.

As seen from the chart, Altria’s TTM smokeable product sales have indeed been increasing, albeit at a very slow rate.

As of Q1 2021, Altria’s TTM smokeable product sales reached $22.7 billion in net revenue and $17.7 in revenue net of excise taxes.

The 1Q 2021 TTM figure was slightly lower compared to the prior quarter.

Altria’s Smokable Products Shipment Volumes (Quarterly)

Altria quarterly smokeable product shipment volumes

Altria quarterly smokeable product shipment volumes

* Quarterly smokeable product shipment volumes data is obtained from Altria’s annual and quarterly financial reports.

On a quarterly basis, Altria’s total smokeable product sales have been gradually declining in the past 3 years, dropping year over year and reached only 22.5 billion sticks in 2021 1Q.

The 2021 1Q figure represents a year-on-year decline of 4%.

In short, Altria sold significantly fewer smokable products in 2020 compared to 2017 on a quarterly basis.

Altria’s Smokable Products Shipment Volumes (TTM)

Altria TTM smokeable product shipment volumes

Altria TTM smokeable product shipment volumes

* TTM results consist of the sum of the quarterly results on a trailing 12-month or 4-quarter basis.
* Quarterly smokeable product shipment volumes data are obtained from Altria’s annual and quarterly financial reports.

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 100.2 billion sticks as of Q1 2021.

The TTM plot reinforces the quarterly plot result that Altria’s total smokable products are indeed decreasing in shipment volumes.

Altria’s Cigarette Shipment Volume (Quarterly)

Altria quarterly cigarette shipment volumes

Altria quarterly cigarette shipment volumes

* Quarterly cigarette shipment volumes data is obtained from Altria’s annual and quarterly financial reports.

In terms of cigarette sales alone, Altria has been selling fewer cigarettes from 2017 to 2021, as depicted in the chart above.

Year over year, Altria’s total cigarette sales have declined by as much as 12% and reached only 22 billion sticks in 1Q 2021, driven primarily by the decline in Marbolo shipment volume.

Similarly, Altria’s Marlboro cigarette sales stood at 19.4 billion sticks as of 1Q 2021, representing a year-on-year decline of roughly 11%.

Altria’s Cigarette Shipment Volume (TTM)

Altria TTM cigarette shipment volumes

Altria TTM cigarette shipment volumes

* TTM results consist of the sum of the quarterly results on a trailing 12-month or 4-quarter basis.
* Quarterly cigarette shipment volumes data are obtained from Altria’s annual and quarterly financial reports.

The trailing 12-months (TTM) plot above clearly shows Altria’s decline in both total cigarette and Marlboro cigarette sales from 2018 to 2021.

As of 2021 Q1, both total cigarette and Marlboro cigarette shipment volumes have headed to an all-time low of 98 billion and 86 billion sticks, respectively, on a TTM basis.

Again, the TTM plot clearly depicts the downtrend of Altria’s cigarette sales in the last 4 years.

Altria’s Cigar Shipment Volume (Quarterly)

Altria quarterly cigar shipment volumes

Altria quarterly cigar shipment volumes

* Quarterly cigar shipment volumes data is obtained from Altria’s annual and quarterly financial reports.

In contrast, Altria’s cigars shipment volume has gone upward over the last 4 years and reached 480 million sticks in Q1 2021, a record high for the company.

Year over year, Altria’s 2021 1Q result represents a rise of as much as 11% compared to the same quarter a year ago.

Again, the quarterly result has been in line with that of the annual chart as seen in prior discussion.

Altria’s Cigar Shipment Volume (TTM)

Altria TTM cigar shipment volumes

Altria TTM cigar shipment volumes

* TTM results consist of the sum of the quarterly results on a trailing 12-month or 4-quarter basis.
* Quarterly cigar shipment volumes data are obtained from Altria’s annual and quarterly financial reports.

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 and 2021.

As of 1Q 2021, Altria’s TTM cigar sales totaled 1.8 billion sticks, representing an increase of 9% year on year.

While cigars shipment volumes have been increasing over the years, its sales volume made up less than 2% of Altria’s total smokable product shipment volumes.

For this reason, Altria still relies heavily on cigarette sales to drive revenue growth and subsequently, profitability.

Altria’s Cigarettes Market Share by Quarter

Altria cigarette market share by quarter

Altria cigarette market share by quarter

* Quarterly market share data is obtained from Altria’s annual and quarterly financial reports.
* Quarterly market share data do not comes from restated results triggered by product updates, accounting rules changes, sales of subsidiary, etc.

According to Altria, the market share or retail share results for cigarettes are measured based on the following assumption:

  • Retail share results for cigarettes are based on data from IRI/Management Science Associates, Inc., a tracking service that uses a sample of stores and certain wholesale shipments to project market share and depict share trends.

    This service tracks sales in the food, drug, mass merchandisers, convenience, military, dollar store and club trade classes.

    For other trade classes selling cigarettes, the retail share is based on shipments from wholesalers to retailers through the Store Tracking Analytical Reporting System (“STARS”).

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 1Q21, 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 43.1% in 1Q21.

Altria’s Cigarettes Market Share by Year

Altria cigarette market share by year

Altria cigarette market share by year

* Yearly market share data is obtained from Altria’s annual and quarterly financial reports.
* Yearly market share data do not comes from restated results triggered by product updates, accounting rules changes, sales of subsidiary, etc.

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 50.9% in FY2014 to 49.2% in FY2020.

A similar trend occurs for Marlboro cigarette market share which plunged from 43.8% in FY2014 to 43% in FY2020.

Summary

In summary, Altria’s shipment volume for cigarettes has steadily been declining over the past 4 years. A similar downtrend is seen in cigarette market share.

In contrast, Altria’s cigars sales have actually been increasing in the past 4 years, reaching a new high as of 1Q21. However, cigars sales represent less than 2% of Altria’s total smokable product shipment volumes.

Although Altria’s cigarette sales and market share have continued to plunge, its net revenue and revenue net of excise taxes have 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 Altria’s annual and quarterly filings available in Altria SEC Filings.

2. Featured images in this article are used under creative commons license and sourced from the following websites: flickr.com/volver-avanzar and Ivan Radic.

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