Is on! Brand Growth Enough to Offset MST Declines at Altria?

Altria Group, Inc.’s (MO) on! brand took center stage in the second quarter of 2025, with shipments surging 26.5% year over year and category share climbing to 8.7%, up 0.7 points from last year. The growth helped drive a 10.9% increase in the oral tobacco segment’s adjusted operating companies’ income.

But moist smokeless tobacco (“MST”) headwinds remain significant. Copenhagen and Skoal saw retail share declines of 3.5 percentage points and 1.6 percentage points, respectively, pushing the segment’s total retail share down 4.6 percentage points to 33.1%. Volumes for both brands also fell sharply in the quarter, down 7.7% for Copenhagen and 8.8% for Skoal.

The nicotine pouch category now represents more than half of the U.S. oral tobacco market, providing a strong backdrop for on!’s growth. Even so, competition is intensifying. on!’s share of the pouch segment was 16.7% in the quarter, a decline of 2.3 percentage points from last year, highlighting the challenge of sustaining share gains.

While on!’s volume momentum is helping offset MST weakness, the scale of the decline in traditional smokeless products means further share gains in the pouch category will be key to sustaining segment performance. The brand’s ability to hold and grow the position in an increasingly competitive space will determine how effectively it can counterbalance the ongoing erosion in legacy products.

How Are MO’s Rivals PM & TPB Shaping the Pouch Market?

Philip Morris International (PM) continues to strengthen its U.S. and global nicotine pouch position through ZYN, which saw U.S. offtake growth of 26% in the second quarter of 2025. Globally, Philip Morris’ ZYN volumes surged 43%, supported by expansion into 44 markets. Philip Morris’ multi-category smoke-free strategy, which includes IQOS and VEEV, underpins double-digit smoke-free revenue growth, enabling it to offset combustible volume declines and position ZYN as a long-term driver in the oral tobacco category.

Turning Point Brands, Inc. (TPB) is rapidly scaling in the white nicotine pouch category, with the second quarter of 2025, Modern Oral sales up nearly eightfold year over year to $30.1 million. Aided by a growing sales force and expanded chain distribution, Turning Point Brands' FRE and ALP are gaining traction through both direct-to-consumer and retail channels. Turning Point Brands aims for a double-digit U.S. market share by decade’s end, positioning itself as a nimble challenger to larger players in the evolving oral nicotine market.

MO’s Price Performance, Valuation & Estimates

Shares of Altria have gained 10.5% in the past month compared with the industry’s growth of 1.3%.

From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 11.7X, down from the industry’s average of 15.36X.

The Zacks Consensus Estimate for MO’s 2025 and 2026 earnings per share has inched up by 3 cents and 2 cents in the past 30 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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