L'Opinion - - Gi­lets Jaunes : La Mon­tée Des Pé­rils - Jen­ni­fer Ma­lo­ney

Cro­nos’s stock price jum­ped by near­ly 16% this week af­ter Reu­ters re­por­ted on the Al­tria talks.

Clo­se­ly held Juul, a threeyear-old com­pa­ny with more than 1,000 em­ployees, was va­lued at $16 bil­lion in a fun­ding round this sum­mer. Juul’s sales have sur­ged over the past year, even as it contends with a cra­ck­down by the Food and Drug Ad­mi­nis­tra­tion ai­med at cur­bing wi­des­pread use of its pro­ducts by teens.

Al­tria re­pre­sents 46% of the U.S. mar­ket for com­bus­tible ci­ga­rettes. Its stock has de­cli­ned more than 20% over the past year, as the com­pa­ny has been buf­fe­ted by de­clines in tra­di­tio­nal smo­kers and a po­ten­tial U.S. ban on men­thols. The to­bac­co giant still has a mar­ket va­lue of more than $100 bil­lion.

The U.S. ci­ga­rette in­dus­try has for years used price in­creases to boost re­ve­nue and pro­fits­des­pite fal­ling ci­ga­rette vo­lumes. But that de­cline has sped up in recent months to a le­vel that some ana­lysts see as un­sus­tai­nable. Al­tria’s long-term ci­ga­rette vo­lume fo­re­cast had

been a de­cline of bet­ween 3% and 4%. For the year en­ded Nov. 17, its ci­ga­rette vo­lumes fell 4.5%, a rate that has stee­pe­ned to 7.6% in the most recent four weeks, ac­cor­ding to a Wells Far­go ana­ly­sis of Niel­sen da­ta.

Al­tria CEO Ho­ward Willard in Oc­to­ber on a con­fe­rence call with ana­lysts ack­now­led­ged the shar­pe­ning de­cline, at­tri­bu­ting it to hi­gher gas prices, which re­duce dis­cre­tio­na­ry spen­ding, and the gro­wing po­pu­la­ri­ty of e-ci­ga­rettes.

“It’s hard to tell how long it’s going to per­sist,” he said of the slide. “I think we’re going to have to wait and see what hap­pens with both gas prices…and whe­ther or not the growth rate of e-va­por slows down.”

Mr. Willard confir­med that the com­pa­ny was ex­plo­ring op­por­tu­ni­ties in the can­na­bis in­dus­try. “We ack­now­ledge that it is cur­rent­ly fe­de­ral­ly ille­gal in the U.S., but I think we think it’s worth ex­plo­ring the ca­te­go­ry be­cause that might change in the fu­ture,” he said.

With these two in­vest­ments, Al­tria could buy it­self out of a bind, Co­wen ana­lyst Vi­vien Azer said, no­ting that it will be­come more dif­fi­cult to use price in­creases to off­set fal­ling ci­ga­rette sales.

Al­tria has long had an in­ter­est in can­na­bis. An in­ter­nal do­cu­ment in 1970 said that the Jus­tice De­part­ment had as­ked the to­bac­co com­pa­ny to per­form a che­mi­cal ana­ly­sis of ma­ri­jua­na smoke, and the com­pa­ny vie­wed the re­quest as an op­por­tu­ni­ty to ex­plore a contro­ver­sial pro­duct that was in­crea­sin­gly po­pu­lar among young people.

“We are in the bu­si­ness of re­laxing people who are tense and pro­vi­ding a pi­ckup for people who are bo­red or de­pres­sed,” the do­cu­ment said, ex­plai­ning the de­ci­sion to grant the DOJ’s re­quest. “The hu­man needs that our pro­duct fills will not go away. Thus, the on­ly real threat to our bu­si­ness is that so­cie­ty will find other means of sa­tis­fying these needs.”

Jac­quie McNish contri­bu­ted to this ar­ticle


Al­tria re­pre­sents 46% of the U.S. mar­ket for com­bus­tible ci­ga­rettes. Its stock has de­cli­ned more than 20% over the past year.

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