Slide 1: 2021 CAGNY Investor Presentation
2021 CAGNY Investor Presentation 1 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements, including earnings guidance, in this presentation that are not reported financial results or other historical information are “forward-looking statements” within the meaning of Private Securities Litigation Reform Act of 1995. Such forward-looking statements are bas
Slide 3: Our 10-Year Vision
Our 10-Year Vision Responsibly lead the transition of adult smokers to a non-combustible future 3 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 4: Pursuing our Vision for Long-Term Sustainability
Pursuing our Vision for Long-Term Sustainability The pursuit of our Vision is about sustainability and businesses that are aligned with the responsibility expectations of our stakeholders 4 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 5: Our Responsibility Focus Areas
Our Responsibility Focus Areas ENVIRONMENTAL SOCIAL GOVERNANCE Billy Gifford Chief Executive Officer Altria Group, Inc. 5 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 6: Minimizing our Environmental Footprint
Minimizing our Environmental Footprint Our 2030 Goals Cut absolute Scope 1 & 2 greenhouse gas emissions by 55% from 2017 base Reduce our carbon footprint by 18% from 2017 base Achieve 100% renewable electricity Reduce waste sent to landfill by 25% compared to 2017 Achieve 100% water neutra
Slide 7: Driving Inclusion and Diversity
Driving Inclusion and Diversity Inside Altria Established Inclusion and Diversity (I&D) aiming points. Includes achieving: gender parity among VP and Director-level employees composition of at least 30% VP and Director-level employees who are Asian, Black, Hispanic or two or more races Estab
Slide 8: The Most Important Social Issues to Address
The Most Important Social Issues to Address 8 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 9: Preventing Underage Tobacco Use
Preventing Underage Tobacco Use Our newest initiatives include: monetary incentives to retailers for age validation technology expect the technology to be installed in over 120,000 stores by the end of 2021, which covers 70% of PM USA cigarette volume investing in marketplace monitoring tools
Slide 10: Adult Tobacco Consumer (ATC) Insights
Adult Tobacco Consumer (ATC) Insights ATC Segmentation Insights Exclusive Non-combustible Product Use We believe tobacco product purchases for 33% ATCs ages 21 to 39 look fundamentally different than older ATCs Reduced social friction and reduced harm are 21% important tobacco product features a
Slide 11: Central Focus on Adult Tobacco Consumer
Central Focus on Adult Tobacco Consumer Consumer Non-combustible Leading U.S. Insights & Product Development Commercialization Activation & Regulatory Infrastructure Engagement Point-of-Sale Purchase Data Retail Trade Partner Feedback Salesforce Insights 11 | For Investor Presentation ONLY | CAG
Slide 12: Internal Realignment to Support our Vision
Internal Realignment to Support our Vision Conversion & Innovative Products These functions will work together to: develop non-combustible product conversion strategies Strategy, Consumer & enhance our consumer communications and engagement Marketplace Insights drive innovative product develop
Slide 13: Deepening Understanding of Adult Tobacco Consumers' Product Adoption of on!
Deepening Understanding of Adult Tobacco Consumers’ Product Adoption of on! Adult Dipper Example A Adult Dipper Example B Adult Smoker Example 100% 100% 100% 0% 0% 0% Week 0 Weeks Weeks Weeks Weeks Week 0 Weeks Weeks Weeks Weeks Week 0 Weeks Weeks Weeks Weeks 1 -13 14- 26 27 -39 40 -52 1 -13 14 -26
Slide 14: Risk Cliff Between Combustible & Non-Combustible Tobacco
Risk Cliff Between Combustible & Non-Combustible Tobacco1 Higher Combustible Risk Tobacco Products Lower Risk Non-Combustible Tobacco Products 1 Adapted from Nutt, et. al Estimating the Harms of Nicotine-Containing Products Using the MCDA Approach. Eur. Addict Res 2014; 20:218-225. Evaluation criter
Slide 15: Amplifying our Voice on Harm Reduction
Amplifying our Voice on Harm Reduction “We are investing in science to arrive at the Established the position of Chief Scientific Officer right insights, guide product development and to amplify our voice within the scientific and public generate the data needed to really push the health communiti
Slide 16: Scientific-Based Reduced Harm Framework
Scientific-Based Reduced Harm Framework For Developing and Evaluating New Tobacco Products Our Framework for Reduced Harm Tobacco Products Constituent Reduction Risk Reduction Individual Harm Reduction Population Chemical & Toxicology & Perception & Risks & Benefits Product Design Studies in Adult P
Slide 17: Compelling Oral Tobacco Portfolio
Compelling Oral Tobacco Portfolio 17 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 18: on! Continues Retail Store Expansion
on! Continues Retail Store Expansion Retail Store Count in thousands 78 By Mid-Year 2021, Helix Expects: unconstrained capacity for the U.S. market 55 39 on! to be in stores representing ~90% of oral tobacco volume and ~80% of cigarette 26 volume 15 9 Q3 '19* Q4 '19 Q1' 20 Q2 '20 Q3 '20 Q4 '20 A
Slide 19: on! Growing Shipment Volume & Retail Share
on! Growing Shipment Volume & Retail Share Shipment Volume Cumulative Share of Oral Tobacco Category¹ 13wm 2.4 2.1 1.7 1.5 Q3 Promotions Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Q1' 20 Q2 '20 Q3 '20 Q4 '20 YTD YTD YTD YTD on!’s shipment volume has steadily grown to keep pace with consumer demand &
Slide 20: on! Potential with Adult Smokers & Dippers
on! Potential with Adult Smokers & Dippers Tobacco Basket Volume Prior to Category Representation of Women Consumers First on! Purchase E-Vapor ~50% Competitive Oral Nicotine Pouch MST & Snus ~ 25% 77% Cigarettes ~ 5% April 2019 - Dec. 2020 Oral Nicotine MST Cigarettes Pouches There are now ~1 milli
Slide 21: IQOS & Marlboro HeatSticks
IQOS & Marlboro HeatSticks First-Mover Advantage & Expansion 2020 PM USA & AGDC Accomplishments Launched a third lead market in Charlotte Introduced devices in select Charlotte convenience stores Developed creative digital tools to enhance consumer engagement Communicated with adult smokers
Slide 22: Marlboro HeatSticks Retail Volume Growth & Traction with Competitive Adult Smokers
Marlboro HeatSticks Retail Volume Growth & Traction with Competitive Adult Smokers Marlboro HeatSticks Retail Volume Growth¹ IQOS Purchasers’ Cigarette Brand Across Atlanta, Richmond & Charlotte Markets PM USA Brands Other Direct Retail Direct Retail Charlotte Pause Re-Open Market Launch 39% 61% Jan
Slide 23: Disciplined IQOS & Marlboro HeatSticks Expansion Approach with Lead Market Learnings
Disciplined IQOS & Marlboro HeatSticks Expansion Approach with Lead Market Learnings 2020 Lead Market Learnings: many adult smokers aren’t aware of the full range of benefits of switching to the product from cigarettes adult smokers appreciate flexible engagement options some adult smokers hes
Slide 24: Strong Adult Smoker Switching Interest to Products with a Reduced Exposure Claim
Strong Adult Smoker Switching Interest to Products with a Reduced Exposure Claim % of Adult Smokers Interested in Switching to a Product Based on a Reduced Exposure Claim 36% Reduced Exposure Claim Shown: 23% 16% 13% 12% “Switching completely significantly reduces your body’s exposure to harmful or
Slide 25: Flexible Consumer Engagement & Virtual Support
Flexible Consumer Engagement & Virtual Support % of IQOS Purchases via Mobile Retail¹ Virtual Guided Tutorials & Expert Video Chat 64% 46% Purchases Prior Purchases After to March 2020 June 2020 Awareness Engagement Trial Purchase Conversion ¹Mobile retail includes expert kiosks, educational vehicle
Slide 26: Flexible IQOS Purchasing Bundles Driving Trial & Purchase
Flexible IQOS Purchasing Bundles Driving Trial & Purchase IQOS % of Bundle Purchases by Channel IQOS Device Penetration % First 6 months in market Atlanta Charlotte Charlotte Lending Device June 2020 Penetration Deluxe Bundle % nearly 3x introduction 61% 5-Pack Bundle Atlanta 10-Pack Bundle or Devic
Slide 27: IQOS & Marlboro HeatSticks State Expansions
IQOS & Marlboro HeatSticks State Expansions Georgia, Virginia, North Carolina & South Carolina Device & Heatsticks Distribution Expansion Expand HeatSticks and devices statewide within Georgia, Virginia, North Carolina and South Carolina in April Expand to the next metro market in Northern Virgi
Slide 28: Making Significant Progress Toward our Vision
Making Significant Progress Toward our Vision Investing in non- combustible product Expanding availability research & development & awareness of our Re-aligning the portfolio of non- organization combustible products 28 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 29: Tobacco Space Estimated Volume
Tobacco Space Estimated Volume Equivalized Volume in Billions Combustible Oral Tobacco E-Vapor (1.0)% CAGR 16.8 16.5 16.2 16.1 15.9 15.9 ~16% ~22% 2015 2016 2017 2018 2019 2020 Note: Volume for Heated Tobacco products rounded to 0.0 billion for 2019 and 2020 Sources: AVI Strategy, Consumer & Marketp
Slide 30: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI Growth & Margins Growth* +5.5% CAGR $10.1 $9.2 $8.5 $8.4 $7.7 $8.0 Smokeable Adjusted Products OCI Adjusted Margins Growth OCI 2015-2020 in billions +9.2 points 47.2% to 56.4% 2015 2016 2017 2018 2019 2020 Industry 0.0% Cigarette (0.5)% (2.5)% Volume (4.0)% (4
Slide 31: Marlboro Continues to Lead Cigarette Category
Marlboro Continues to Lead Cigarette Category 31 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
Slide 32: Oral Tobacco Products Segment
Oral Tobacco Products Segment Adjusted OCI & Margins Growth* +9.0% CAGR 1749 $1.7 Oral 1606 $1.6 $1.5 1464 Tobacco 1362 $1.4 Products 1234 $1.2 1112 $1.1 Adjusted OCI in billions Adjusted 2015 2016 2017 2018 2019 2020 OCI Margins 64.1% +7.6 percentage points 71.7% 32 | For Investor Presentation ONLY
Slide 33: Alcohol Assets
Alcohol Assets Beer and wine assets have served us well over-time and provide us with diverse income streams Original investment of $230 million in SABMiller in 1970 has now grown to an investment in ABI, the largest global beer company with a carrying value of ~$16.7 billion* Most of our ABI
Slide 34: U.S. Cannabis Market A Significant Opportunity for Adjacent, Long-Term Growth
U.S. Cannabis Market A Significant Opportunity for Adjacent, Long-Term Growth % of Americans that Support Federal Legalization 80% 68% 40% 0% 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 Source: Gallup Poll Social Survey, October 2020 34 | For Investor Presentation ONLY | CAGNY 2
Slide 35: Altria Supports a Federally Legalized U.S. Cannabis Market
Altria Supports a Federally Legalized U.S. Cannabis Market In support of our investment in Cronos, Altria is committed to supporting a comprehensive, federal regulatory framework that: advances science creates quality and safety standards prevents underage use and takes significant steps to
Slide 36: Capital Allocation
Capital Allocation We remain focused on returning cash to shareholders and maintaining a strong balance sheet Cash Returned to Shareholders Maintain long-term target dividend payout ratio of ~80% of $33 B adjusted diluted earnings per share Shares Repurchased $6 B In January 2021, the Board auth
Slide 37: 2021 Adjusted Diluted EPS Guidance
2021 Adjusted Diluted EPS* Guidance We reaffirm our full-year 2021 adjusted diluted EPS* guidance of $4.49 to $4.62. This range represents a growth rate of 3% to 6% from a 2020 adjusted diluted base of $4.36. 37 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021 * For reconciliation of non-GA
Slide 38: For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021
38 | For Investor Presentation ONLY | CAGNY 2021 | 2.17.2021