Altria at Barclays Conference Notes

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William Gifford

Thoughts on FDA proposal to decrease nicotine

“At the same time the FDA raised the concept of the nicotine product standards. Of course product standard are not new, they’ve been on the regulatory tables since the FDA took jurisdiction over cigarettes, we’re prepared for it, we’re ready to engage in it, but a couple of things should be kept in mind. First, all the FDA did was to raise the concept of nicotine product standards. The FDA didn’t come forward with a proposal, let alone the rule. And second, in order to convert concept into a rule, the FDA is going to have to undergo the regulatory process which is very long process it will take years, any final rule have to be based on science and evidence and be subject to judicial review. So this is proving to be a very long and uncertain process.”

Consumer trends

“We certainly saw to your point, we saw that recovery of our consumer in 2015 and that’s where we saw industry volume almost flat through the year. As we progressed we feel like there is economic factors that we launched are still a tailwind for our consumer just not to the extent from a competitive standpoint that they were in 2015, so the factors are still pointing in the right direction.

We get a lot of questions about the low end. A lot of people ask well we see if you buy the cheapest cigarette in the store that share is growing and that is correct but we really break the industry into two segments premium and discount. And then – so when you look at that discount category in total, it’s flat to slightly down thus far through the first part of the year, within that discount category, the cheapest thing in the store what we call deep discount is growing but is offset by branded discount like L&M, Pall Mall, Maverick those types of brands.”