MO Expands Smoke-Free Portfolio: Can It Offset Combustible Declines?

Altria Group, Inc.’s (MO) push into smoke-free products gained further traction in the second quarter of 2025, led by its oral nicotine pouch brand, on!. Shipments of on! rose 26.5% year over year to 52.1 million cans, lifting the brand’s share of the total oral tobacco category to 8.7%. The nicotine pouch segment now represents more than half of the category, underscoring a structural consumer shift away from traditional moist smokeless tobacco.

Helix Innovations, which markets on!, bolstered brand awareness through targeted activations at events like NASCAR and music festivals, reaching more than 170,000 adult consumers in the first half of the year. Combined with robust digital engagement, on! awareness climbed 7 percentage points. This momentum helped drive a 10.9% jump in adjusted operating income for Altria’s oral tobacco segment, with margins expanding to 68.7%.

Yet the gains come against the backdrop of steep combustible volume declines, Altria’s domestic cigarette shipments fell 10.2% in the second quarter. While pricing and brand management have cushioned the impact, the company’s ability to offset combustible erosion hinges on accelerating smoke-free adoption. on! has shown it can scale quickly, but competition is intensifying and legacy moist smokeless brands continue to lose share. Whether this growth can fully bridge the combustible gap remains an open question, but for now, on! is anchoring Altria’s smoke-free ambitions.

MO Faces PM, TPB in Smoke-Free Market Race

Philip Morris International (PM) is aggressively scaling its smoke-free portfolio, anchored by IQOS heated tobacco and ZYN nicotine pouches. In the second quarter of 2025, Philip Morris International’s smoke-free net revenues grew 17.3% organically, with ZYN U.S. offtake surging 26% and international pouch volumes up 65%. IQOS heated tobacco shipments continued to grow, reinforcing Philip Morris International’s leadership in reduced-risk products.

Turning Point Brands, Inc. (TPB) is carving a niche in modern oral nicotine. In the first quarter of 2025, Turning Point Brands’ white pouch sales, under FRE and ALP, grew nearly 10x year over year, prompting a full-year guidance boost to $80-$95 million. Turning Point Brands is leveraging retail partnerships, online sales and targeted marketing to chase double-digit market share in the fast-growing U.S. pouch category.

MO’s Price Performance, Valuation & Estimates

Shares of Altria have gained 3.8% in the past month against the industry’s decline of 1.6%.

From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 11.4X, down from the industry’s average of 14.9X.

The Zacks Consensus Estimate for MO’s 2025 and 2026 earnings per share has inched up by 2 cents each in the past seven days to $5.39 and $5.55, respectively.

Altria currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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