Altria Pauses Heated Tobacco Rollout

Indicators also point to smokers trading down on cigarette brands during economic turmoil.

May 01, 2020

RICHMOND, Va.—While registering robust tobacco product sales, Altria Group has halted the expansion of IQOS, its new heated tobacco product due to the coronavirus pandemic, the Wall Street Journal reports. The tobacco firm also said that while cigarette sales have remained steady, it predicts smokers will be trading down to less expensive brands as the unemployment ranks swell.

“The degree of down-trading will depend on several factors, including the depth and duration of higher unemployment and the severity of COVID-19 impacts,” the company said. The switch to cheaper smokes could be mitigated by low pump prices, government stimulus payments and high unemployment benefits.

This month, Altria reopened its cigarette facility after a two-week shutdown because two workers had tested positive for COVID-19. In 2019, Altria introduced IQOS in the United States via a venture with Philip Morris International in Richmond and Atlanta. But in March, the company shuttered its standalone IQOS stores, and yesterday said it would push back its planned debut in Charlotte, N.C.

For the first quarter of 2020, Altria said that cigarette and cigar shipments jumped 6.2%, driven by a 6.7% increase for Marlboro cigarettes.