Altria Expands Beyond Nicotine: Is MO's Strategy Worth Watching?

Altria Group, Inc. MO has long been defined by its leadership in U.S. tobacco. But the company is increasingly pointing to non-nicotine and wellness categories as part of its “long-term adjacent growth” strategy. This direction was reinforced in late 2025 through a collaboration memorandum of understanding with KT&G Corporation, highlighting Altria’s intent to explore consumer opportunities beyond traditional nicotine-based products.

A key pillar of the partnership is the joint exploration of U.S. non-nicotine opportunities, aligning with Altria’s broader diversification ambition first articulated in March 2023. Management has indicated that the collaboration combines KT&G’s product expertise with Altria’s U.S. commercialization capabilities, allowing the latter to evaluate whether its distribution scale and consumer reach can support products outside tobacco and nicotine.

Altria has indicated that the initiative is not intended to drive near-term growth. Instead, non-nicotine exploration is being approached as part of a broader review of adjacent markets that could help diversify the business over time as cigarette volumes decline. By including these efforts within its “Optimize & Accelerate” framework, the company is emphasizing a structured approach focused on evaluating execution and strategic alignment.

Overall, the wellness initiative underscores a gradual broadening of Altria’s strategic scope. While still in the early stages, the effort reflects management’s interest in understanding how far the company’s commercial capabilities can extend beyond its traditional tobacco and smoke-free product portfolio, without committing to immediate scale or material investment.

How MO’s Strategy Stacks Up Against Key Peers

Philip Morris International Inc. PM is advancing its smoke-free transformation, with smoke-free products accounting for roughly 41% of total net revenues in the third quarter of 2025. While it remains focused on nicotine-based innovation through brands such as IQOS and ZYN, Philip Morris has also reassessed the broader wellness ambitions. Recent disclosures indicate a cautious approach, with wellness viewed as a longer-term opportunity while Philip Morris remains focused on advancing its core smoke-free product portfolio.

Turning Point Brands, Inc. TPB is expanding primarily through its Modern Oral segment, led by white nicotine pouch brands FRE and ALP. In the third quarter of 2025, Turning Point Brands’ Modern Oral sales surged 627.6% year over year and accounted for 30.8% of total net sales. Turning Point Brands is supporting this growth through increased sales investment and the planned start-up of a new U.S. manufacturing facility in early 2026.

Altria’s Price Performance, Valuation & Estimates

Shares of Altria have gained 9.3% in the past month compared with the industry’s growth of 6.3%.

From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 11.28X, down from the industry’s average of 15.3X.

The Zacks Consensus Estimate for MO’s current and next financial years’ earnings has inched up 3 cents to $5.44 and 2 cents to $5.58, respectively, in the past 30 days.

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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