Is Altria's on! Pouch Gaining Enough Steam in Oral Tobacco?

Altria Group, Inc. MO is making steady progress toward a smoke-free future, with its oral nicotine pouch brand on! emerging as a key growth driver. As consumer preferences shift toward reduced-risk products (RRPs), on! is gaining strong traction in the evolving oral tobacco category.

In the first quarter of 2025, on! shipment volume rose 18% year over year to over 39 million cans. At retail, the product expanded its share of the oral tobacco category to 8.8%, a 1.8 share point increase. Within the nicotine pouch segment specifically, on! reached 17.9% market share, gaining 0.5 points. These improvements came despite optimizing promotional resources and increased retail pricing — a sign of growing brand equity and consumer loyalty.

As a result, Altria’s Oral Tobacco Products segment posted revenues of $654 million, up 0.5% year over year, driven largely by pricing strength in the first quarter. This mirrors the company’s broader strategy of using its pricing power to protect profitability amid shifting volumes and regulatory challenges.

To support long-term growth, Altria has launched its "Optimize & Accelerate" initiative, targeting at least $600 million in cost savings over five years. The program focuses on improving speed, efficiency and reinvestment toward smoke-free innovation.

With on! gaining ground and new resources being channeled into transformation efforts, Altria is positioning itself to lead in the smoke-free nicotine space. While challenges remain, early data suggests on! is becoming a cornerstone of the company’s next growth phase.

MO’s Competition in the Smoke-Free Category

Philip Morris International Inc. PM and British American Tobacco p.l.c. BTI are the key tobacco companies competing with Altria in the smoke-free category.

Philip Morris is accelerating its shift toward RRPs, with smoke-free offerings contributing 44% of first-quarter 2025 gross profit. Driven by IQOS, ZYN and VEEV, it saw strong volume growth, a 20.4% rise in net revenues and a 33.1% increase in smoke-free gross profit. ZYN shipments rallied 53% in the United States, while VEEV volumes more than doubled in Europe. With products in 95 markets and 38.6 million users, Philip Morris is advancing toward a smoke-free future.

British American Tobacco is reshaping its business around RRPs, targeting 50 million consumers by 2030 and 50% revenue contribution by 2035. In 2024, its smokeless user base reached 29.1 million, with New Category revenues up 2.5%. British American Tobacco’s flagship brands — Vuse, glo and Velo — have collectively driven over £3 billion in revenues, reflecting its progress toward a smoke-free future.

MO’s Price Performance, Valuation and Estimates

Shares of Altria have gained 13.5% year to date compared with the industry’s growth of 38.8%.

From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 10.87X, below the industry’s average of 15.49X.

The Zacks Consensus Estimate for MO’s 2025 earnings implies year-over-year growth of 4.5%, whereas its 2026 earnings estimate suggests a year-over-year uptick of 3.5%. The estimates for 2025 and 2026 have remained unchanged in the past 30 days.

MO stock 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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