Altria Group Inc., maker of Marlboro cigarettes, said a ban on flavored tobacco in California is hurting sales more in that state, as consumers turn to the illicit market or add their own menthol to products.
(Bloomberg) — Altria Group Inc., maker of Marlboro cigarettes, said a ban on flavored tobacco in California is hurting sales more in that state, as consumers turn to the illicit market or add their own menthol to products.
“We’re seeing some consumers self-mentholating,” Chief Executive Officer Billy Gifford said on a conference call Thursday announcing the company’s first-quarter results.
The cigarette business is already under pressure from what the company described as the “cumulative impact” of inflation over time. Menthol bans are making the situation worse in California, he said, reporting that some consumers are crossing state lines to get menthol products or getting cards or drops that infuse regular cigarettes with the minty flavor. They’re also buying flavored tobacco products from other companies that are still on shelves.
“We saw other flavor products renamed. The enforcement is necessary if they want to achieve the purpose of the law,” Gifford said on the call. Cigarette shipments were down around 19% in California year-over-year in the first quarter, the company said.
The state’s ban on all vape and tobacco products flavored with menthol went into effect in December in an attempt to keep the addictive products away from youths. Altria has opposed such bans, which have also been catching on in other states, saying that “harm reduction” — or moving cigarette smokers to vape products or oral tobacco products — is a better way to deal with tobacco’s public health costs. Menthol has been used for years to market cigarettes as the flavor has been shown to help make tobacco more addictive.
Altria shares were up 0.5% to $46.93 at 1:08 p.m. in New York. The stock was up 2.1% this year through Wednesday, trailing the 5.6% rise of the S&P 500 Index.
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