Altria Expands Growth Avenues With Global KT&G Partnership

Altria Group, Inc. (MO) has entered into a global memorandum of understanding ("MOU") with KT&G Corporation (KT&G), a leading South Korean tobacco and consumer goods company. The agreement lays the groundwork for collaboration in oral nicotine, wellness products and efficiency improvements in traditional tobacco operations.

This partnership is a strategic move for both companies. It helps Altria build new revenue streams beyond the core cigarette business, while enabling KT&G to expand the global reach by leveraging the former’s extensive distribution network and market knowledge.

Altria Expands Into New Categories and Efficiency Gains

The companies plan to grow global demand for pouch products, including Altria’s on! and on! PLUS brands. As part of this effort, Altria’s subsidiary will purchase an ownership interest in Another Snus Factory Stockholm AB (“ASF”), a Nordic-based maker of LOOP pouches, concurrent with KT&G’s acquisition of it.

Through KT&G’s Korea Ginseng Corporation (“KGC”), the partners will assess ways to enter the U.S. energy and wellness market. The initiative is expected to combine KGC’s heritage in ginseng and wellness products with Altria’s established retail presence and consumer insights in the U.S. market.

In addition to new product categories, Altria and KT&G will share best practices to improve efficiency in cigarette manufacturing and supply chains, strengthening competitiveness in their respective home markets. These operational insights may also support international nicotine product growth.

Overall, the collaboration positions Altria to accelerate its expansion into smoke-free nicotine and wellness products, while giving KT&G a pathway to broaden global portfolio beyond traditional cigarettes.

What More Should Investors Know About MO?

Altria continues to rely on its pricing strength to navigate soft cigarette volumes and a challenging consumer environment. In the second quarter of 2025, the smokeable products segment saw net price realization of 10%. This drove adjusted operating income up 4.2% and expanded margins by 290 basis points to 64.5%, highlighting the company’s ability to maintain profitability through disciplined pricing.

Altria’s smokeable products segment continues to maintain market leadership. Marlboro, the company’s flagship brand, expanded its share in the premium category to 59.5%, reflecting effective brand management and consumer loyalty. This resilience demonstrates the company’s ability to defend its core portfolio even as overall cigarette volumes decline, supporting steady cash flow and long-term competitiveness in a challenging market.

The on! nicotine pouch brand remains a key growth driver for Altria’s oral tobacco segment. Shipments rose 26.5% in the second quarter to 52.1 million cans. Supported by marketing campaigns and strategic brand activations, the oral tobacco segment’s adjusted operating income increased 10.9%, with margins expanding 310 basis points to 68.7%, underscoring progress in building a strong smoke-free portfolio.

Nonetheless, the core combustible business faces significant pressure. Domestic cigarette shipments decreased 10.2% in the second quarter, reflecting ongoing declines across the industry. Rising competition from flavored disposable e-vapor products further challenges traditional volumes. Sustained growth will depend on Altria’s ability to expand smoke-free alternatives while defending its combustible portfolio, balancing near-term performance with long-term strategic transformation.

In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 10.1% against the industry’s decline of 1.2%.

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