Altria

Altria Group, Inc.

Type	Public S&P 500 Component
Traded as	NYSE: MO
Industry	Tobacco
Founded	1985 (1985)
Founder	Philip Morris, Kraft Foods Inc, Nabisco Holdings Corporation
Headquarters	Henrico County, Virginia, U.S.
Area served	Worldwide
Key people	Martin Barrington (Chairman) & (CEO)
Products	Tobacco and wine
Revenue	US$ 24.5 Billion (2014)[1]
Operating income	US$ 7.06 Billion (2014)[1]
Net income	US$ 5.05 Billion (2014)[1]
Total assets	US$ 34.475 billion (2014) [2] US$ 35.329 billion (2012) [3]
Total equity	US$ 3.01 Billion (2014)[4]
Number of employees	9,000 (2014)
Website	Altria.com

Altria Group, Inc. (previously named Philip Morris Companies Inc.) is one of the world's largest tobacco and cigarette corporations. It is an American multinational corporation based in Henrico County, Virginia, United States of America; it is the parent company of Philip Morris USA, John Middleton, Inc., U.S. Smokeless Tobacco Company, Inc., Philip Morris Capital Corporation, and Chateau Ste. Michelle Wine Estates. 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, where it has 3 seats on the 11-person board of directors. 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 an unincorporated area within Henrico County, less than five miles west of the city limits 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-off of Kraft Foods Inc 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-off 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 smokeless tobacco manufacturer; UST owned Ste Michelle Wine Estates, a wine company.

History

Altria emerged from Philip Morris. The onset of "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). Altria was created because Philip Morris 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,^[5] although that business has since been spun off.^[6] The name "Altria" is claimed to come from the Latin word for "high" and was part of a trend of companies rebranding to names that previously did not exist, Accenture (previously Arthur Andersen) and Verizon being notable examples,^[7] though linguist Steven Pinker suggests that in fact the name is an "egregious example" of phonesthesia — with the company attempting to "switch its image from bad people who sell addictive carcinogens to a place or state marked by altruism and other lofty values".^[8]

The company's branding consultants, the Wirthlin Group, said: “The name change alternative offers the possibility of masking the negatives associated with the tobacco business,” thus enabling the company to improve its image and raise its profile without sacrificing tobacco profits.^[9]

Philip Morris executives thought a name change would insulate the larger corporation and its other operating companies from the political pressures on tobacco.^[9]

The rebranding took place amidst social, legal and financially troubled circumstances.^[10] In 2003 Altria was ranked Fortune number 11, and has steadily declined since. In 2010 Altria Group (MO) ranked at Fortune number 137, whereas its former asset, Philip Morris International, was ranked 94th.^[11]

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 effect 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 in the closing of a newly renovated plant in North Carolina, an approximately 50% reduction in manufacturing, large-scale layoffs, and induced early retirements.^[12]

In 2008, Altria officially moved its headquarters to Richmond, Virginia. With a few exceptions, all blue collar, white collar, and executive employees had long been based at one of several Philip Morris buildings in Richmond and the greater Richmond area. The move of white collar operations to Richmond had taken place after Philip Morris sold its downtown offices in New York City a decade earlier. Aside from the Philip Morris/Altria headquarters, some of their other buildings included the Philip Morris Center for Research and Technology in downtown Richmond, their 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 affected thousands of Altria, Altria Client Services, Philip Morris USA, and contracted employees in Richmond and North Carolina.

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).^[13] This ended a short era of competition between the new Marlboro smokeless tobacco products such as snus, and those produced by UST Inc.

In 2015 the company was criticized for a number of active and possible lawsuits with countries such as Uruguay, Australia and Ireland over proposed changes to their cigarette packaging and anti-smoking laws.^[14]

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 are too small to be consolidated in the group accounts.^[15]

Brands

Corporate governance

Board of directors

Members of the board of directors of Altria Group as/of February 2013 were:^[16]

• Elizabeth E. Bailey (1989– ), professor emerita, the Wharton School, University of Pennsylvania
• Gerald L. Baliles (2008– ), director, Miller Center of Public Affairs at University of Virginia; former Virginia governor
• Martin J. Barrington — chairman and chief executive officer, Altria Group, Inc.
• John T. Casteen III (2010– ), president emeritus, University of Virginia
• Dinyar S. Devitre (2008– ), special advisor, General Atlantic Partners, Greenwich, CT; former SVP and CFO of Altria
• Thomas F. Farrell II (2008– ), chairman, president and CEO, Dominion Resources, Richmond, VA
• Thomas W. Jones (2002– ), senior partner, TWJ Capital LLC, Stamford, CT; formerly with Citigroup, Travelers and TIAA-CREF
• Debra J. Kelly-Ennis (2013– ), former president and CEO of Diageo Canada, Inc.; also formerly with RJR Nabisco, Inc., Coca-Cola, General Motors and Grand Metropolitan
• W. Leo Kiely III (2011– ), retired CEO, MillerCoors LLC, Golden, CO; formerly with Frito-Lay
• Kathryn B. McQuade (2012– ), retired EVP and CFO, Canadian Pacific Railway Limited; formerly with Norfolk Southern Corporation
• George Muñoz (2004– ), principal, Muñoz Investment Banking Group, LLC, Washington, DC; Partner, Tobin & Muñoz, Chicago, IL; formerly Overseas Private Investment Corporation and assistant secretary of the United States Treasury Department
• Nabil Y. Sakkab (2008– ), retired SVP, corporate research and development, Procter & Gamble, Cincinnati, OH

Headquarters

Prior to being based in Virginia, Philip Morris had its headquarters in Midtown Manhattan, New York City.^[17] 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.^[18] The company now has its head offices in an unincorporated area of Henrico County, Virginia, in Richmond.^[19] In addition, the company has a 450,000-square-foot, $350 million Center for Research and Technology located in downtown Richmond at the Virginia BioTechnology Research Park that employs approximately 600 scientists, engineers and support staff.

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.^[20][21]

Altria also funded The Advancement of Sound Science Coalition which lobbied against the scientific consensus on anthropogenic climate change.^[22]

Daniel Smith, representing Altria, sits on the Private Enterprise Board of the American Legislative Exchange Council (ALEC).^[23]

See also

• Tobacco industry
• Philip Morris USA
• Tobacco Master Settlement Agreement

References

External links

• Official website
• Altria companies grouped at OpenCorporates
• Altria Group U.S. political contributions from Influence Explorer at the Sunlight Foundation

Big five tobacco companies Altria British American Tobacco Imperial Tobacco Japan Tobacco Philip Morris International Tobacco companies