Key Points
● Smokeable profit growth: Altria’s adjusted smokeable operating profit rose 2.4% in the second quarter, as Marlboro pricing partly offset lower cigarette volumes and an unfavourable discount mix.
● Cigarette trade-down: Discount cigarettes reached 33.8% of U.S. retail volume; Basic’s share rose from 0.6% to 2.9%, while Marlboro’s total market share fell to 39.5%.
● Pouch competition intensifies: on! PLUS expanded to about 120,000 stores, but on!’s nicotine-pouch share declined year on year as competition shifted towards strength, flavour, format and retail execution.
● E-vapor remains regulation-driven: NJOY ACE stayed off the market, with its return dependent on patent proceedings, a supplemental premarket tobacco product application and further regulatory progress.
● A multi-track U.S. market: Cigarettes are shifting towards lower prices, nicotine pouches are expanding, and e-vapor remains shaped by authorisation and enforcement rather than demand alone.
2Firsts
July 31, 2026
Altria Group increased adjusted profit from its smokeable-products business by 2.4% in the second quarter, as higher cigarette pricing, rapid growth at discount brand Basic and import-related tax refunds offset lower U.S. volumes and a further decline in Marlboro’s market share.
The results reflected a widening split in the U.S. cigarette market. Marlboro retained its position within the premium segment, but more volume shifted towards lower-priced products as inflation, fuel costs and pressure on disposable income continued to affect smokers.
Competition also intensified outside cigarettes. Altria expanded its on! PLUS nicotine-pouch range and prepared additional strengths and flavours, while its NJOY e-vapor business remained off the market and pursued a new regulatory route for a redesigned product.
The Richmond, Virginia-based company released its second-quarter and first-half results on the morning of July 30, U.S. Eastern Time. 2Firsts listened live to the full earnings call and analyst question-and-answer session, where executives provided additional detail on Marlboro pricing, Basic’s expansion, on! PLUS, cigarette import and export activity and NJOY’s planned return.
Second-quarter net revenues were broadly unchanged at $6.11 billion. Revenues net of excise taxes increased 1.2% to $5.36 billion, while adjusted diluted earnings per share rose 2.8% to $1.48.
For the first half, net revenues increased 1.6% to $11.54 billion and adjusted diluted EPS rose 4.9% to $2.80. Altria raised the lower end of its full-year forecast and now expects adjusted diluted EPS of $5.61 to $5.72, representing growth of 3.5% to 5.5%.
Key second-quarter figures included:
● Smokeable-products revenue net of excise taxes: $4.66 billion, up 2.0%
● Adjusted smokeable-products operating companies income, or OCI: $3.02 billion, up 2.4%
● Inventory-adjusted domestic cigarette volume: down an estimated 4.5%
● Marlboro retail share: 39.5%, down 1.5 percentage points
● Basic retail share: 2.9%, up 2.3 percentage points
● on! shipments: 49.9 million cans, down 4.2%
● Oral-tobacco adjusted OCI: $460 million, down 8.0%
Altria’s smokeable-products segment includes cigarettes and machine-made large cigars. OCI is the company’s non-GAAP measure of segment operating profit before corporate expenses and amortisation of intangible assets.
U.S. Smokers Trade Down as Marlboro Holds Premium and Basic Gains Share
Altria’s reported domestic cigarette shipments declined 3.2% in the second quarter to 15.55 billion sticks. After adjusting for movements in wholesale inventories, the company estimated that volumes fell 4.5%, slightly better than the 5% decline it estimated for the wider U.S. cigarette industry.
The rate of market contraction has moderated since 2025. Altria attributed part of the change to slower movement from cigarettes into unauthorised flavoured disposable e-vapor products, rather than an improvement in smokers’ financial position.
Management said inflation, elevated fuel prices and weak growth in disposable income continued to affect purchasing behaviour, with pressure particularly pronounced among lower-income consumers. Discount cigarettes accounted for 33.8% of U.S. retail volume in the second quarter, an increase of 2.6 percentage points from a year earlier.
Marlboro retained a 59.6% share of the premium cigarette segment, but its share of the total market fell to 39.5% from 41.0%. Shipments declined 7.4%.
Basic, Altria’s discount cigarette brand, expanded rapidly. Its retail share increased to 2.9% from 0.6%, helping Philip Morris USA’s total cigarette share rise 0.3 percentage points to 45.5%. Shipments of Altria’s discount cigarettes, including Basic and L&M, increased 67.3% during the quarter.
Management said targeted promotional support for Basic had expanded to about 35,000 stores during the first half. The company said the strategy captured volume that might otherwise have moved to competing discount brands while limiting additional pressure on Marlboro.
Altria does not disclose the previous brand choices of Basic’s new consumers or a nationwide average retail price for the brand. Basic is positioned in a lower price tier than Marlboro. The company’s results showed that the higher proportion of discount cigarettes had an unfavourable effect on product mix.
Marlboro remains central to Altria’s profit structure. Management estimated during the earnings call that the premium price tier generates about 85% of U.S. cigarette-category profit.
Marlboro’s average retail price increased by 60 cents to $10.15 a pack. Smokeable-products price realisation rose 4.5%, driven primarily by Marlboro pricing and partly offset by the mix effect from higher Basic volume.
Marlboro Cowboy Cut is a lower-priced line within the Marlboro franchise aimed at more price-sensitive premium smokers. Management described it as part of Philip Morris USA’s revenue-growth-management system, which targets promotions by market, price tier and consumer segment.
Philip Morris USA therefore operates across a broader range of price points. Marlboro’s main range supports premium pricing and profit, Cowboy Cut offers a lower-priced option within the franchise, and Basic competes directly in the discount segment.
Adjusted smokeable-products operating profit rose 2.4% to $3.02 billion in the second quarter, while the margin increased 0.3 percentage points to 64.8%. Higher Marlboro pricing and refunds of taxes and duties paid on imported cigarettes supported the result, while lower volume, higher promotional spending, an unfavourable mix and increased costs partly offset those benefits.
Lower-priced cigarette brands are also gaining elsewhere in the U.S. market. According to earlier 2Firsts coverage of Japan Tobacco’s first-half results, JT’s U.S. cigarette volume increased 0.7%, led by 32.6% growth for lower-priced brand LD, while its market share rose to 8.6%.
The results from Altria and JT reflect continued competition for price-sensitive smokers within a contracting market, rather than a recovery in total U.S. cigarette demand.
on! Expands Into a More Competitive Pouch Market
Nicotine pouches represented 59.9% of the U.S. oral-tobacco category in the second quarter, up 8.1 percentage points from a year earlier.
Altria’s oral category includes nicotine pouches and traditional oral tobacco products such as moist smokeless tobacco, or MST. Copenhagen and Skoal are the company’s main MST brands.
The total oral category grew by an estimated 6% in the first half, driven by nicotine pouches. Altria’s reported oral-product shipments declined 6%, as growth in on! was more than offset by lower Copenhagen and Skoal volumes.
Copenhagen shipments fell 10.9% in the second quarter, while Skoal declined 13.7%. On! shipments decreased 4.2% to 49.9 million cans during the quarter, although first-half shipments rose 5.1% to 96.1 million.
Management attributed the quarterly decline to wholesale inventory movements, the timing of the national on! PLUS launch and a difficult comparison with the previous year, when promotional activity coincided with supply disruption at a major competitor.
Estimated retail takeaway, which measures sales from retailers to consumers rather than Altria’s shipments into wholesale channels, increased to 47.2 million cans from 40.8 million in the first quarter.
On!’s share of the total oral category reached 8.6%, up 0.3 percentage points from a year earlier and 0.8 points sequentially. Its share within the faster-growing nicotine-pouch segment fell 1.7 percentage points to 14.4%.
On! PLUS, a larger and softer pouch offered at higher nicotine strengths than the original on! range, had expanded to about 120,000 stores. Altria said those outlets represented about 90% of U.S. nicotine-pouch category volume.
Management said the product attracted existing on! consumers, users of competing nicotine-pouch brands and some MST consumers. The company also accepted that part of its growth could come from the original on! range, provided consumers remained within the wider brand portfolio.
The rollout increased costs. Adjusted OCI in the oral-tobacco segment fell 8% to $460 million, while the adjusted margin declined two percentage points to 66.7%.
Altria attributed the decrease to lower total volume, additional investment behind on! PLUS and introductory trial offers, partly offset by pricing. The company does not disclose standalone revenue or profit for on!.
Altria plans to expand 12-milligram on! PLUS nationally in the third quarter after resuming shipments in Florida, North Carolina and Texas. Blueberry Mint and Mango Pineapple variants are planned for the fourth quarter across 6-, 9- and 12-milligram strengths.
The products do not all have the same regulatory status.
The U.S. Food and Drug Administration has issued Marketing Granted Orders, or MGOs, for on! PLUS in tobacco, mint and wintergreen flavours at 6 and 9 milligrams. An MGO is the FDA’s formal permission for a new tobacco product to be marketed in the United States.
As of July 27, the FDA had not issued marketing orders for other on! or on! PLUS products, including the 12-milligram range and planned new flavours.
Helix, Altria’s nicotine-pouch subsidiary, has submitted Premarket Tobacco Product Applications, or PMTAs, for additional products. A PMTA is the main FDA application pathway for new tobacco and nicotine products.
FDA guidance issued in May stated that the agency generally would not prioritise enforcement against certain e-vapor and nicotine-pouch products with applications undergoing scientific review, or qualifying supplemental applications pending for more than 180 days. Enforcement discretion is not marketing authorisation.
Competition in U.S. nicotine pouches is broadening. As previously reported by 2Firsts, PMI’s U.S. ZYN shipments increased 1.8% in the second quarter, while the company prepared higher investment in products, distribution and marketing. BAT reported U.S. Modern Oral volume growth of 188%, driven largely by Velo Plus and Grizzly.
Higher nicotine strengths, moist formats, new flavours, different pouch sizes and wider retail support are shifting competition towards product design, pricing and shelf execution.
NJOY Prepares a Return as Enforcement Reshapes E-Vapor
NJOY remains a limited contributor to Altria’s current results. The e-vapor operation was returned to the company’s “All Other” reporting category in the first quarter after management concluded that it was no longer expected to remain significant enough to qualify as a separate reportable segment.
NJOY ACE, Altria’s main closed-pod e-vapor platform, has been absent from the U.S. market since March 31, 2025. The U.S. International Trade Commission found that the original product infringed four patents asserted by JUUL and issued orders prohibiting its importation and sale.
The orders remain in effect while Altria appeals.
Chief Executive Sal Mancuso said NJOY had redesigned ACE to avoid the disputed patents. U.S. Customs and Border Protection subsequently found that the modified product fell outside the existing exclusion order, according to the company.
NJOY has submitted a supplemental PMTA for the redesigned product. A favourable customs decision on the scope of a patent exclusion order does not constitute FDA marketing authorisation.
Altria intends to return to the e-vapor category but has not announced a launch date. Its full-year guidance continues to assume that NJOY ACE will not return to the market during 2026.
The wider U.S. e-vapor market remains heavily influenced by unauthorised flavoured disposable products.
Altria estimated that the country had approximately 20 million adult e-vapor consumers at the end of June. About 14.6 million, or 73%, used disposable products that the company classifies as illicit.
The estimated number of disposable-product consumers declined modestly from a year earlier, while the total number of adult e-vapor consumers was broadly unchanged.
Altria cited federal seizures exceeding $250 million, tighter controls at the border, state legal action and restrictions introduced by commerce and payment platforms. Management said growth in illicit disposable products had begun to moderate but remained substantial.
BAT’s U.S. results offer a contrasting case. Earlier 2Firsts reporting showed that Vuse revenue rose 19.8% in the first half, with BAT attributing the increase partly to stronger enforcement and changes in the competitive environment.
Vuse’s growth contrasted with NJOY’s absence, reflecting differences in product availability, patent status and regulatory readiness.
The U.S. Market Enters a Multi-Track Phase of Competition
Change in the U.S. tobacco and nicotine market is no longer a simple, one-way shift from cigarettes to smoke-free products.
Cigarette volumes continue to decline, but consumers are becoming more price-sensitive, allowing discount brands to gain share while premium brands rely on pricing to protect profit. Nicotine pouches remain a growth category, but competition is increasingly centred on strength, flavour, product format, retail distribution and promotional investment. In e-vapor, commercial performance is being shaped as much by marketing authorisation, patent disputes and enforcement as by consumer demand.
Altria’s second-quarter results captured this divergence. Marlboro pricing continued to support earnings, while Basic benefited from consumers moving towards lower-priced cigarettes. On! expanded its product range and distribution but faced stronger competition within a rapidly growing pouch category. NJOY’s return, meanwhile, depends on regulatory and legal progress rather than demand alone.
For companies operating in the United States, competition is no longer determined only by whether they participate in cigarettes, nicotine pouches or e-vapor. Price-tier coverage, retail execution, product authorisation and the ability to manage enforcement and intellectual-property risks are increasingly defining which parts of the market remain commercially accessible.
For further coverage of international tobacco companies and developments across the global tobacco and nicotine industry, continue to follow 2Firsts.
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