Nu Mark to sell only tobacco, menthol and mint varieties, discontinuing all other flavor variants of cig-a-like products until products receive a market order from the FDA or the issue of underage use of e-vapor products is otherwise addressed.

Altria Group Inc. announced its 2018 third-quarter and nine-months business results and addressed the steps the company plans to take in response to a U.S. Food and Drug Administration request that several tobacco companies present plans for curbing underage use of e-vapor products.

“Altria delivered excellent third-quarter adjusted diluted earnings per share growth of 20% and continued to return large amounts of cash to our shareholders. Our tobacco businesses are successfully executing against their strategies, while making strategic investments to drive long-term success,” said Howard Willard, Altria’s chairman and CEO. “We believe our year-to-date performance positions us well to deliver on our full-year plans. As a result, we are tightening our guidance range to $3.95 to $4.03, representing a growth rate of 16.5% to 19%.”

FDA Activity
In September, the FDA announced a number of additional steps to address underage use of e-vapor products. The FDA also asked several companies, including Altria, to provide plans to address underage use of e-vapor products. Altria welcomed FDA’s action and recently met with FDA Commissioner Gottlieb to discuss actions that could be taken.

Today, Altria announces the following actions, which are included in Altria’s response letter to the FDA posted at altria.com:

Nu Mark will remove from the market MarkTen Elite and Apex by MarkTen pod-based products until these products receive a market order from the FDA or the youth issue is otherwise addressed;

For the remaining MarkTen and Green Smoke cig-a-like products, Nu Mark will sell only tobacco, menthol and mint varieties. Nu Mark will discontinue the sale of all other flavor variants of our cig-a-like products until these products receive a market order from the FDA or the youth issue is otherwise addressed; and

Altria will support federal legislation to establish 21 as the minimum age to purchase any tobacco product.

On Altria’s website, CEO Willard responded to a Q&A on these decisions.

In response to why Altria is removing its pod-based products, Willard responded, “Based on publicly-available information from FDA and others, we believe pod-based products significantly contribute to the rise in youth use of e-vapor products. We don’t believe our products are the issue, but we don’t want to risk contributing to the problem.”

On Altria’s decision to support an increase in the minimum age to 21, Willard noted, “We believe now is the time. FDA is calling underage e-vapor use an epidemic. Today, the number one way kids get tobacco products is through social access, meaning the purchase of tobacco products by someone of legal age for use by minors. Raising the minimum age nationally to 21 should go a long way to solving that problem. Addressing the alarming rise in youth use of e-vapor is important if we want policy makers to more fully support the idea of giving adults greater access to and information about less harmful products.​” ​

​Willard also addressed Altria’s decision to remove some flavors. “FDA has raised concerns about non-traditional flavors and how they are marketed. We strongly believe that flavors play an important role in helping to convert adult smokers from cigarettes to satisfying non-combustible products and intend to offer flavor options to adults through FDA’s authorization process or when the youth issue is addressed.” ​

Innovation
Approximately 80% of Nu Mark’s e-vapor volume in the third-quarter of 2018 will remain on the market after removing MarkTen Elite and Apex by MarkTen pod-based products and discontinuing the sale of flavor variants of Nu Mark’s cig-a-like products, other than tobacco, menthol and mint varieties.

The FDA accepted and filed for substantive scientific review USSTC’s modified risk tobacco product application for Copenhagen Snuff submitted by USSTC in the first quarter.

PM USA is ready to deploy its initial lead market plans for IQOS upon FDA authorization.

2018 Full-Year Guidance
Altria tightened its guidance for 2018 full-year adjusted diluted EPS to be in a range of $3.95 to $4.03, representing a growth rate of 16.5% to 19% from an adjusted diluted EPS base of $3.39 in 2017. This guidance range excludes the special items for the first nine months of 2018. Altria’s 2018 guidance reflects investments in focus areas for long-term growth, including innovative product development and launches, regulatory science, brand equity, retail fixtures and future retail concepts.

Altria expects its 2018 full-year adjusted effective tax rate will be in a range of approximately 23% to 24%.