Barclays predicts a 10% drop in Altria's cigarette shipment volumes for the fiscal year 2024 and a 2% reduction in EBIT (profits before interest and taxes, a widely used indicator of profitability).
Barclays states that "it is possible" that US cigarette volumes will increase if the FDA and DOJ are able to effectively curb the spread of disposable e-cigarettes. In the event that this occurs, US cigarette volumes will increase, and Altria will be able to fulfill its $5.00–$5.15 [profits per share] projection.
Modern disposable vapes have become more and more popular in recent years, directly competing with cigarettes at convenience shops and petrol stations. However, the FDA has not approved the sale of any of these devices.
To increase cigarette sales, Altria is in favor of PMTA registration legislation.
Barclays' observations clarify why Altria backs state legislation that would establish so-called PMTA registries (or directories) and outlaw the sale of e-cigarettes and other vaping devices without FDA authorization or with pending premarket tobacco applications (PMTAs). Certain legislation permits the sale of goods that the FDA has rejected but that are nevertheless available on the market because of orders from federal courts (such as refills for R.J. Reynolds' Vuse menthol).
Since January, state legislatures have seen the introduction of more than twenty PMTA registry legislation. Calls to action for 21 registry legislation have been issued by the Consumer Advocates for Free of Tobacco Alternatives Association (CASAA), suggesting that legislators are becoming more interested in them or that hearings have been planned. There are almost daily introductions of new legislation.
Gregory Conley, the American Vapor Manufacturers Association's (AVM) director of legislative and external relations, claims that representatives from Altria have spoken in support of registry measures during legislative hearings in many states.
The proposals aim to reduce the sales of bottled e-liquid and disposable vapes, which rival Altria's combustible cigarettes, which include the Marlboro brand. Altria's NJOY e-cigarettes are a competitor of disposable vapes, however NJOY is a minor participant in the vape industry (and in Altria's profits forecast). (R.J. Reynolds, the company that makes Vicuse cigarettes as well as Newport and Camel cigarettes, supports PMTA registration regulations.)
Having enacted registry legislation, Oklahoma, Louisiana, and Alabama already maintain registers of goods that are permitted for sale. This year, lawmakers in Oklahoma and Alabama have proposed legislation to strengthen legal enforcement.
R.J. Reynolds and Altria have also filed lawsuits to put an end to their rival vape businesses. A lawsuit against several producers, distributors, and retailers of disposable vapes, including those selling the Breeze, Elf Bar, Esco Bar, Flum, Juice Box, Lava Plus, Loon, Lost Mary, Mr. Fog, and Puff Bar brands, was brought in a federal district court last October by the Altria subsidiary NJOY. In addition to requesting that the firms' imports be prohibited, NJOY said that it will "consider further litigation activity." (The court dismissed the majority of the complaint in January.)
The FDA Contributes to the Defense of Cigarettes
For some years, the FDA Center for Tobacco Products (CTP) has been involved in a tug-of-war with independent vaping companies, namely those who produce and distribute disposable vaporizers and e-liquid.
The government has sent hundreds of violation letters, directing producers and merchants to take goods from the American market, and then pursued repeat violators for hefty "civil money penalties" (fines). The Department of Justice has sometimes assisted the FDA in closing down tiny vape shops.
The FDA has detained shipments of disposable Elf Bar as well as Esco Bar products without conducting an inspection, and the agency has confiscated them at airports.
Only seven e-cigarettes have received FDA approval; they are all produced by businesses that are either controlled by Japan Tobacco (Logic), Reynolds (Vuse), or Altria (NJOY). No bottled e-liquid or non-tobacco flavor vape items, nor any open-system (refillable) products, have received marketing authorization from the agency.
