Altria Group Inc

Hazy outlook for Altria; ESG issues tied to search for replacement market

November 8, 2019

Altria‘s write-down of its investment in JUUL Labs – a $4.5 billion haircut on $12.8 billion spent less than a year ago – is perhaps not too surprising; if you run with the wild unicorns, you have to be prepared to get knocked around by an errant hoof or horn. Worse than lost billions, the JUUL affair represents a failing bet that was important to Altria’s strategy.

  • ESG picture shows underperformance in key areas of Dynamic Materiality: categories which are most discussed by stakeholders and third parties
  • JUUL Labs is a bellwether for Altria‘s e-cigarette efforts, and data on Truvalue Platform for JUUL demonstrates range of ESG issues that mainly can be tied back to Customer Welfare
  • Barring growth in nicotine users, leveraging pricing to pay dividends to investors has limits: studies and price increases show that smokers are price-sensitive, and that course will prompt quitting

Material Categories
Customer Welfare
Management of the Regulatory and Legal Environment
Product Quality and Safety
Supply Chain Management