Despite Pandemic, Stockpiling Boosts Altria’s Cigarette Brands

(Bloomberg) -- A pandemic caused by a respiratory disease hasn’t scared off America’s smokers -- at least not yet.

Altria Group Inc.’s first-quarter sales of smokeable products, like Marlboro cigarettes, jumped 14%. Negative publicity around e-cigarettes helped by pushing older smokers who had adopted vaping back to cigarettes. And lots of bulk purchases -- what the company calls “pantry loading” -- boosted revenue.

Cigarettes have traditionally been recession-proof. And while that appears to be the case in this downturn, there are signs that the category might be less resilient this time. Without pantry loading and other factors, like an extra day in the quarter, shipment volumes of smokeable products fell 5%.

Meanwhile, Altria’s businesses that are helping it diversify away from cigarettes had mixed results. The coronavirus’ impact on its investments in Juul Labs Inc. and Cronos Group wasn’t “material,” but non-cigarette businesses saw impacts from the pandemic across the board, the company said.

IQOS, a heat-not-burn device, is often sold person-to-person in specialty stores and was hurt as locations closed during the economic shutdown to slow the pandemic. That contrasts with cigarettes, which benefited from being distributed in essential retailers, like convenience stores, that have stayed open. The IQOS brand’s planned launch in a third U.S. market, Charlotte, was also delayed.

More than ever, Altria is focused on oral products. The company said it sees e-vapor users who want to stay in the “alternative space” being drawn to it. But to take full advantage, it has to recover from virus-triggered production delays.

The shares fell 1.2% at 12:32 p.m. in New York.

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