Altria Group, Inc. (Altria) (NYSE:MO) today announces that we have entered into a non-binding Global Collaboration Memorandum of Understanding (the MOU) with KT&G Corporation (KT&G), a top-tier global tobacco and consumer products company, to use the companies' complementary strengths and offerings in the joint pursuit of long-term growth opportunities with modern oral nicotine products, non-nicotine products and operating efficiency in traditional tobacco.
The MOU aligns with Altria's pursuit of its long-term adjacent growth goals in international innovative smoke-free products and non-nicotine products that we announced in March 2023.
"We are excited to collaborate with KT&G and their strengths across innovative nicotine and non-nicotine products," said Billy Gifford, Altria's Chief Executive Officer. "We believe the complementary market experience and capabilities of our two companies can accelerate the pursuit of our long-term adjacent growth goals across international regions and adjacent product categories."
"Through our collaboration, we secured a path to growth in next-generation tobacco products by expanding our business from cigarettes to nicotine pouches and other areas," stated KT&G CEO Kyung-man Bang. "KT&G and Altria will seek to maximize synergies based on our capabilities and expect to accelerate innovation across the nicotine and non-nicotine spaces."
Modern Oral
Altria and KT&G will explore opportunities to collaborate and, when appropriate, contribute their respective resources and capabilities to expand the global demand for nicotine pouch products. These efforts may include the expansion of the on! and on! PLUS product portfolio to select countries, and/or strategic transactions in the modern oral space.
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As an initial step in this exploration, an Altria subsidiary signed a definitive agreement with KT&G whereby, concurrent with KT&G's acquisition of Another Snus Factory Stockholm AB (ASF), a Nordic-based nicotine pouch company, Altria's subsidiary will acquire an ownership interest in ASF. ASF owns the LOOP brand internationally.
Non-nicotine
An Altria subsidiary and KT&G's subsidiary, Korea Ginseng Corporation (KGC), a leading Korean ginseng company, will jointly explore opportunities in the U.S. with a focus in the growing energy and wellness segment. The exploration will seek ways to apply KGC's product expertise and capabilities alongside our deep consumer insights and established go-to-market infrastructure.
Enhancing Operational Efficiency
In addition to the focus on innovative nicotine and non-nicotine products, Altria and KT&G have agreed to jointly pursue ways to optimize operating processes for traditional tobacco products to benefit the competitiveness of each company in their respective home regions. This pursuit complements our Enterprise Goals by building capabilities that could be transferable to our efforts with international nicotine products.
About KT&G
KT&G is the number one Korean tobacco manufacturer and one of the global Top 5 tobacco companies. KT&G exports "ESSE" and other brands to 140 countries. Its business areas include tobacco, health functional foods, pharmaceuticals, and cosmetics. The company is advancing its future growth through active global expansion in the cigarette and heated tobacco spaces. Furthermore, through its subsidiary KGC, the company continues to expand its Korean and international health functional foods business with emphasis on its premium red ginseng brand "Jung Kwan Jang".
Altria's Profile
We have a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. We are Moving Beyond Smoking®, by responsibly transitioning adult smokers to a smoke-free future, competing vigorously for existing smoke-free adult nicotine consumers and exploring new growth opportunities — beyond the United States and beyond nicotine (Vision). To achieve our Vision, we will pursue initiatives designed to promote the long-term welfare of our company, our stakeholders, society at large and the environment.
Our wholly owned subsidiaries include leading manufacturers of both combustible and smoke-free products. In combustibles, we own Philip Morris USA Inc. (PM USA), the most profitable U.S. cigarette manufacturer, and John Middleton Co. (Middleton), a leading U.S. cigar manufacturer. Our smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Company LLC (USSTC), the leading global moist smokeless tobacco (MST) manufacturer, Helix Innovations LLC (Helix), a leading manufacturer of oral nicotine pouches, and NJOY, LLC (NJOY), an e-vapor manufacturer with products covered by marketing granted orders from the U.S. Food and Drug Administration (FDA).
Additionally, we have a majority-owned joint venture, Horizon Innovations LLC (Horizon), for the U.S. marketing and commercialization of heated tobacco stick products.
Our equity investments include Anheuser-Busch InBev SA/NV (ABI), the world's largest brewer, and Cronos Group Inc. (Cronos), a leading Canadian cannabinoid company.
The brand portfolios of our operating companies include Marlboro®, Black & Mild®, Copenhagen®, Skoal®, on!® and NJOY®. Trademarks related to Altria referenced in this release are the property of Altria or our subsidiaries or are used with permission.
Learn more about Altria at www.altria.com and follow us on X (formerly known as Twitter), Facebook and LinkedIn.
Forward Looking and Cautionary Statements
This release contains certain forward-looking statements with respect to Altria's wholly-owned products and the strategic collaboration with KT&G relating to long-term growth opportunities with modern oral nicotine products and non-nicotine products and the pursuit of enhanced operating efficiency in traditional tobacco products, which are subject to various risks and uncertainties. Such forward looking statements relate to, among other things, the expansion of Altria's wholly-owned nicotine pouch products in select international markets, potential strategic transactions in the modern oral space, the exploration of business opportunities in the U.S. energy and wellness segment, the pursuit of operating process optimization with respect to traditional tobacco products, the growth of capabilities regarding international nicotine products and Altria's pursuit of its Vision and Enterprise Goals.
Factors that may cause actual results to differ include changes in the global demand for nicotine pouch products, non-nicotine products in the energy and wellness segment and traditional tobacco products, the receipt of regulatory authorizations, risks relating to our ability to realize the anticipated benefits of the transactions and future collaboration in the expected manner or timeframe, if at all, prevailing economic, market, regulatory or business conditions, or changes in such conditions, negatively affecting the parties or their plans for future collaboration, the outcome of any legal proceedings or investigations that may be instituted against the parties or others related to the transaction, significant changes in price, availability or quality of raw materials or component parts, including as a result of changes in macroeconomic, climate and geopolitical conditions, ability of Altria and KT&G to enter into future collaboration on terms acceptable to both parties and in the expected manner or timeframe, if at all, and the risk of an extended disruption at a facility of, or of service by, a supplier, distributor or distribution chain service provider of our subsidiaries or KT&G.
Other risk factors are detailed from time to time in our quarterly reports on Form 10-Q and most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. These forward-looking statements speak only as of the date of this press release. We assume no obligation to provide any revisions to, or update, any projections and forward-looking statements contained in this release.
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