Altria

Not to be confused with Altera or Nutria.
Altria Group, Inc.
Type Public (NYSE: MO)
S&P 500 Component
Industry Tobacco
Founded 1985
Founder(s) Philip Morris, Kraft Foods, Nabisco Holdings Corporation
Headquarters Henrico County, VA, US
Area served Worldwide
Key people Michael E. Szymanczyk
(Chairman) & (CEO)[1]
Products See below
Revenue increase US$23.6 Billion (FY 2009)[2]
Operating income increase US$4.86 Billion (FY 2009)[2]
Net income increase US$3.21 Billion (FY 2009)[2]
Total assets increase US$36.7 Billion (FY 2009)[3]
Total equity increase US$4.07 Billion (FY 2009)[3]
Employees 10,400 - March 2009
Website Altria.com

Altria Group, Inc. (NYSE: MO) (previously named Philip Morris Companies Inc.) is based in Henrico County, Virginia, and is the parent company of Philip Morris USA, John Middleton, Inc., United States Smokeless Tobacco, Inc., Philip Morris Capital Corporation, and Chateau Ste. Michelle Wine Estates. It is one of the world's largest tobacco corporations. Philip Morris International was spun off in 2008. In addition, Altria Group, Inc. has a 28.7% economic and voting interest in one of the world's largest brewing companies, UK based SABMiller plc. It is a component of the S&P 500 and was a component of the Dow Jones Industrial Average until February 19, 2008. The company has its headquarters in unincorporated Henrico County, Virginia, less than five miles West the city limit of Richmond and less than ten miles from its downtown Richmond buildings.

On January 27, 2003, Philip Morris Companies Inc. changed its name to Altria Group, Inc. On March 30, 2007, a spin out of Kraft Foods subsidiary (publicly traded since 2001) was concluded through distribution of the remaining stake of shares (88.1%) to Altria shareholders. As a result, Altria no longer holds any interest in Kraft Foods. On March 28, 2008 a similar spin out of Philip Morris International was completed with 100% of shares being distributed to Altria shareholders.

On January 6, 2009, Altria Group, Inc. completed the acquisition of UST Inc., a moist smokeless tobacco manufacturer; UST owned Ste Michelle Wine Estates, a wine company.

Contents

History

Altria is a relatively new company that clearly emerged out of Philip Morris although the strategic reasoning for the creation of this entity is a matter of speculation (the company webpage provides one explanation). The onset 'rebranding' of Philip Morris Companies to Altria took place in 2003 (Philip Morris would later split, with PM USA remaining Altria's primary and only consistently held asset). One explanation is that the company wished to emphasize that its business portfolio had come to consist of more than Philip Morris USA and Philip Morris International; at the time, it owned an 84% stake in Kraft,[4] although that business has since been spun off.[5] The name "Altria" comes from the Latin word for "high" and was part of a trend of companies rebranding to names that previously did not exist, Accenture and Verizon being two other notable examples.[6] The rebranding took place amidst social, legal and financially troubled circumstances.[7] In 2003 Altria was ranked Fortune number 11, and has steadily declined since. In 2010 Altria Group (MO) ranked at Fortune number 137, whereas their former asset, Philip Morris International topped them with Fortune rank 94.[8]

In 2007, Altria began selling all its shares of Philip Morris International to Altria stockholders. The company also began a move to purchase cigar manufacturer John Middleton Co. from Bradford Holdings, Inc., which went into effective in 2008. After Philip Morris International spun off, the foreign Philip Morris companies halted the purchase of tobacco from America, which was a major factor associated with the closing of a newly renovated plant in North Carolina, approximate 50% reduction in manufacturing, large scale layoffs and induced early retirements.[9]

In 2008, Altria officially moved its headquarters to Richmond, although this change was largely symbolic. With few exceptions all blue collar, white collar, and executive employees had long been based out of one the several Philip Morris buildings in Richmond and the greater Richmond area (including the current headquarters in Henrico County, which is effectively West Richmond, just beyond city limits). The move of white collar operations to Richmond took place after Philip Morris sold its downtown offices in New York City a decade earlier. Asides from the Philip Morris / Altria headquarters, some of their other buildings included the Philip Morris Center for Research and Technology in downtown, the Manufacturing Center in South Richmond, and the adjacent Operations Center which began shutting down in 2007-2008, as a result of the loss of demand from PMI member companies. The layoffs beginning in 2007 had affected thousands of Altria, Altria Client Services, Philip Morris USA, and contracted employees in Richmond and North Carolina in 2008. While most employees were offered competitive "opt out" or termination packages, the disproportionately low-wage, minority, and poor contractors serving Altria employees received no benefits.

In 2009, Altria finalized its purchase of UST Inc., whose products included smokeless tobacco (made by U.S. Smokeless Tobacco Company) and wine (made by Ste. Michelle Wine Estates).[10] This ended a short era of competition between the new Marlboro smokeless tobacco products such as snus, and those produced by UST Inc.

Holdings

Altria Group, Inc. owns 100 percent of Philip Morris USA, John Middleton, Inc. and Philip Morris Capital Corporation. It also owns 28.7% of SABMiller PLC.

Before the recent restructuring, the net revenue (and operating income) of Altria Group, Inc. came predominantly from its tobacco business, as is shown in the following table. Altria's share of SABMiller's revenue and profits is not included in the table below because its holding is too small to be consolidated in the group accounts.[11]

Activity Net revenue
in 2006
(millions USD)		 Net revenue
in 2006
(%)		 Operating
income
in 2006
(millions USD)		 Operating
income
in 2006
(%)
USA tobacco 18,474 18.2% 4,812 26.5%
International tobacco 48,260 47.6% 8,458 46.5%
North American food 23,118 22.8% 3,753 20.7%
International food 11,238 11.1% 964 5.3%
Financial services 317 0.3% 176 1.0%
Total 101,407 100% 18,163 100%

Brands

Tobacco

Philip Morris USA brands:

Wine

Corporate governance

Board of directors

Current members of the board of directors of Altria Group are:[12]

Headquarters

Prior to being based in Virginia, Philip Morris had its headquarters in Midtown Manhattan, New York City.[13] In 2003 Philip Morris announced that it would move its headquarters to Virginia. The company said that it planned to keep around 750 employees in its former headquarters. Brendan McCormick, a spokesperson for Philip Morris, said that the company estimated that the move would save the company over $60 million each year.[14] The company now has its head offices in unincorporated Henrico County, Virginia, in Richmond.[15]

Political influence

According to the Center for Public Integrity, Altria spent around $101 million on lobbying the United States government between 1998 and 2004, making it the second most active organization in the nation.[16][17]

See also

References

  1. ↑ "Top Management Compensation". http://www.neumann-compensation.com/managers/company/altria-group-inc/. Retrieved 30 Aug. 2010. 
  2. ↑ 2.0 2.1 2.2 Altria Group (MO) annual SEC income statement filing via Wikinvest
  3. ↑ 3.0 3.1 Altria Group (MO) annual SEC balance sheet filing via Wikinvest
  4. ↑ Philip Morris completes its rebranding to Altria Group - Brand Republic News - Brand Republic
  5. ↑ Coca-Cola vs. Altria: Altria
  6. ↑ "Altria Director Discusses Rebranding Company, CNNfn". Finance Wire. November 11, 2003. http://www.accessmylibrary.com/coms2/summary_0286-2337818_ITM. 
  7. ↑ US TOBACCO giant Philip Morris changed the name of its parent company to Altria last week but the rebranding failed to hide the weak state of its business.
  8. ↑ http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/326.html
  9. ↑ http://www.usatoday.com/money/economy/2007-06-26-4197533990_x.htm
  10. ↑ "Our History - Altria: 2001-Present". altria.com. http://www.altria.com/en/cms/About_Altria/At_A_Glance/Our_History/default.aspx?src=top_nav. Retrieved 2010-09-16. 
  11. ↑ US Securities and Exchange Commission, Altria Group, Inc. Annual report 2006
  12. ↑ http://www.altria.com/about_altria/1_4_ourmanagement.asp
  13. ↑ "Contact Us." Philip Morris Companies. April 9, 2001. Retrieved on October 19, 2009.
  14. ↑ "Philip Morris to Move Headquarters from New York City to Richmond, Va.." New York Daily News. March 5, 2003. Retrieved on October 19, 2009.
  15. ↑ "Contact Us." Altria. Retrieved on October 19, 2009.
  16. ↑ The Center for Public Integrity: Altria Group, Inc.
  17. ↑ The Center for Public Integrity: Top 100 Companies and Organizations

External links

Altria
Philip Morris USA

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U.S. Smokeless Tobacco

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John Middleton Co.

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Ste. Michelle Wine Estates

Chateau Ste. Michelle · Col Solare (50%) · Columbia Crest · Conn Creek · Domaine Ste. Michelle · Erath · Eroica (50%) · 14 Hands · Hawk Crest · Northstar · Red Diamond · Snoqualmie · Spring Valley Vineyard · Stag's Leap Wine Cellars (50%) · Stimson Estate Cellars · Villa Mt. Eden