Altria tries to wean off cigarettes

An open pack of Marlboro Lights lays by a lit cigarette in an ash tray. Altria is feeling pressure to expand Phillip Morris' business as cigarette smoking decreases annually in the U.S.

TEXT OF STORY

Scott Jagow: We're expecting an announcement today from the company Altria today. Altria's plans are to spin off Phillip Morris International. It'll keep Phillip Morris USA.

What will it do with the American market? Good question. Marketplace's Janet Babin has more from North Carolina Public Radio.


Janet Babin: It's an uphill battle for cigarette companies in the U.S. Smoking here declines every year. And that trend's expected to continue.

Analyst Gregg Warren with Morningstar says that puts added pressure on Altria and Phillip Morris USA to branch out:

Gregg Warren: I could see them potentially making an acquisition, like UST, which is a big smokeless tobacco producer, just to sort of diversify their revenue streams. Because as it stands right now, they're just collecting money for the states.

Under a 1998 settlement, U.S. tobacco companies, including Phillip Morris, pay a portion of their revenues to states each year to cover tobacco-related health costs.

Philip Morris recently bought cigar maker John Middleton in an effort to become less dependent on cigarettes. Meanwhile, parent company Altria also has a 20 percent stake in the company that makes Miller Beer.

I'm Janet Babin for Marketplace.

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