- Altria exceeded Q1 2025 earnings expectations despite declining shipment volumes in cigarettes and cigars across the industry. However, the company raised concerns about the growing dominance of unregulated vape products and is pushing for stricter enforcement and regulatory reforms to address the issue.
In its first earnings call of 2025, tobacco conglomerate Altria posted a robust performance, but highlighted unregulated vape products as a thorn in the side of the industry.
Altria, best known as the parent company of Marlboro cigarette maker Philip Morris USA and Black & Mild cigar manufacturer John Middleton, has identified transitioning customers to a smoke-free experience as one of its core missions.
However, the brand said it has needed to turn to politicians to ensure a crackdown on unauthorized, unregulated e-vaping products which are flooding the market.
On its earnings call earlier this week, Altria announced results that surpassed market expectations and reaffirmed its earnings per share (EPS) outlook for the year.
While net revenues were down 5.7% in Q1 compared to the same period last year, at $5.2 billion for the quarter ending March 2025, it still beat market expectations of around $4.6 billion.
Likewise, Altria posted adjusted EPS of $1.23 for Q1, compared to the $1.19 expected by the Street. It also confirmed the repurchase of 5.7m shares in the quarter, adding that it expects an EPS growth rate for the year of between 2% and 5% in 2024.
“Our highly profitable traditional tobacco businesses performed well in a challenging environment in the first quarter,” said Billy Gifford, Altria’s CEO. “The smokeable products segment delivered solid adjusted operating company income growth behind the strength of Marlboro.”
That being said, the tobacco industry is changing with shifting consumer behaviors. When adjusted for inventory fluctuations, calendar differences, and other external factors, domestic cigarette shipment volumes dropped by 9%, Altria added.
Likewise, the reported shipment volumes for cigars dropped 2.9%, Altria added.
In the place of these tobacco products are vapes, which the Fortune500 company believes 2.6 million more consumers are using now compared to a year ago—bringing the total number of e-vapor users to more than 20 million people.
Altria is in the e-vapor sector following its acquisition of the NJOY vape brand in 2023, which was purchased for approximately $2.75 billion.
The company, based in Richmond, Virginia, is subject to the rulings of the Food & Drug Administration (FDA), but said its work was being undermined by a “flood” of illicit vapes flowing to the U.S. from China.
Altria estimates that approximately 60% of the vape market—worth $14m—is made up of unauthorized devices, which pose concerns for public health.
“To address the illicit e-vapor issue we remain focused on advocating for regulatory reforms to accelerate product authorizations and enhance enforcement against illicit actors,” Gifford told investors on the call. “We are actively engaging with members of Congress and key administrative staff to highlight the importance of this issue and are urging the new administration and the federal multi-agency task force established last year to take stronger, more coordinated action.”
Gifford added that consumers are also turning to unauthorized products because they can purchase flavors not currently approved by the FDA.
The FDA has scored several wins in its battle against illicit vapes making their way into the U.S.
In January, the administration seized $7m worth of illegal e-cigarettes, which originated from China, following the bust of $76m worth of products uncovered in October.
Tariff concerns
Of course, it wouldn’t be an earnings call in the first half of 2025 without some mention of tariffs—particularly from a consumer-facing conglomerate like Altria.
“We will continue to closely monitor the state of our consumers, including how the economic impact of tariffs could affect their purchasing behaviors,” said Altria’s CFO, Sal Mancuso.
That said, the executives added that price elasticity is still lower on consumers’ priorities than factors like a premium experience and flavor.
“Within the highly profitable premium segment, where smoker purchasing behavior tends to reflect high levels of brand loyalty, Marlboro maintained its long-standing leadership in the category,” Mancuso added.
Likewise, on flavors for e-vapors, Gifford added: “We certainly are seeing the consumer under pressure, and we’ve been noting it for a number of quarters … It’s the cumulative impact of the inflation. It’s not just one quarter standalone, it’s the cumulative impact over time.
“And we are seeing … pricing from a consumer perspective move up. It’s certainly not number one. Flavors are still number one, and the flexibility [customers] have and the amount of choices they have in the marketplace are the number one thing. But price is certainly moving up and becoming a more prominent factor.”
