• by Steve Ellwanger , May 2, 2023

Altria Group is expanding its self-described “aspirational” Marlboro brand with a lower-priced offering to offset inflation-induced downtrading among cigarette smokers.

Altria is rolling out Marlboro Black Gold Pack to keep smokers in the Marlboro family amid not only downtrading, but a continued decline in U.S. cigarette sales.

“Downtrading is the worst we’ve seen since 2009, driving Marlboro’s price gap to elevated levels,” investment firm TD Cowen noted in a report last week after Altria Group’s Q1 earnings release.

(The year 2009 was noteworthy not only for the impact of the Great Recession but also an increase in the federal excise tax on tobacco products.)

“The cigarette industry experienced a higher rate of volume decline beginning in the second quarter of 2022 as smokers shifted their purchasing behavior as a result of widespread inflation and the rapid increase in gas prices,” Altria Group CEO Billy Gifford said on last week’s earnings call.

“Moving into the first quarter of 2023, the cumulative effects of inflation over the past several quarters continued to impact tobacco consumers’ discretionary income and tobacco industry volumes.”

Available this month nationwide, Marlboro Black Gold Pack and increased marketing support for the Marlboro Black line are “intended to provide additional support for price-sensitive Marlboro smokers,” said CFO Sal Mancuso.

According to Gifford, when pandemic-related, governmental financial assistance provided smokers with extra discretionary income, “Marlboro share actually went up. So it shows that Marlboro is an aspirational brand in that category.”

Asked by Stifel analyst Matt Smith to explain the rationale for Marlboro Black Gold Pack, Gifford said “We know that the consumer aspires to be Marlboro.

“If consumers had felt the need to trade out because they were under economic pressure, it gives them a space within the Marlboro franchise where they can reengage—or if a consumer comes under pressure, it gives them a space to continue to engage with Marlboro.”

Altria Group’s overall cigarette sales volume was down 11% in the first quarter.

According to the Centers for Disease Control and Prevention, cigarette smoking among adults hit an all-time low last year—to roughly 11% from about 12.5% in both 2020 and 2021.