Altria Group, Inc., through its subsidiaries, manufactures and sells cigarettes, smokeless products, and wine in the United States. It offers cigarettes primarily under the Marlboro brand; cigars principally under the Black & Mild brand; and moist smokeless tobacco products under the Copenhagen and Skoal, Red Seal, and Husky brands. The company also produces and sells varietal and blended table wines, and sparkling wines under the Chateau Ste. Michelle, Columbia Crest, and 14 Hands names; and imports and markets Antinori, Torres, and Villa Maria Estate wines, as well as Champagne Nicolas Feuillatte in the United States. In addition, it provides finance leasing services primarily in aircraft, electric power, railcar, real estate, and manufacturing industries. The company sells its tobacco products primarily to wholesalers, including distributors; large retail organizations, such as chain stores; and the armed services. Altria Group, Inc. was founded in 1919 and is headquartered in Richmond, Virginia.
Business Analysis of Altria Group
The Consumer Goods Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Altria Group compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Altria Group to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Altria Group with an interactive chart.
- Revenue Growth: Altria Group reported a revenue growth of 1.2% year-on-year during 2016. Tobacco Industry grew at 2.7% in the same period
- COGS share of Revenues: As a percentage of revenue, Altria Group spent 55.0% of its total revenues on COGS. Tobacco industry average (COGS share of revenue) in the same period was 68.5%
- R&D share of Revenues: Altria Group R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Altria Group spent 10.3% of its total revenues on Sales, Marketing, and General Administration (SG&A). Tobacco industry average SG&A spending in the same period was 9.8%
- Inventory share of Revenues: As a percentage of revenue, Altria Group spent 8.0% of its total revenues on Inventories. Tobacco industry average Inventory spending in the same period was 10.1%
- Accounts Payable share of Revenues: As a percentage of revenue, Altria Group invested 6.3% of its total revenues on Accounts Payable (A/P) Tobacco industry average Accounts Payable investment in the same period was 4.6%
- Accounts Receivable share of Revenues: As a percentage of revenue, Altria Group invested 0.6% of its total revenues on Accounts Receivable (A/R). Tobacco industry average Accounts Receivable investment in the same period was 4.1%
- PP&E share of Revenues: As a percentage of revenue, Altria Group invested 7.6% of its total revenues on Property, Plants, and Equipments (PP&E). Tobacco industry average PPE investment in the same period was 8.5%
- Intangibles share of Revenues: As a percentage of revenue, Altria Group invested 67.3% of its total revenues on Intangibles. Tobacco industry average Intangibles investment in the same period was 61.1%
- Net Margins: Altria Group Net Margins in the year 2016 were 55.3%. Tobacco industry average Net Margins in the same period were 22.8%
Sector and Industry Association of Altria Group
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Altria Group is associated with Consumer Goods Sector and Tobacco Industry.
Consumer Goods sector is comprised of the following industries: Beverages; Personal Goods; Food Products; Diversified Food; Household Goods & Home Construction; Food Distribution; Tobacco; Toys and Games. The definitions for each of the industries is as follows:
- Beverages industry consists of: Brewing Companies - manufacturers of cider or malt products such as beer, ale and stout; Distillers and Vintners Companies - blenders and shippers of wine and spirits such as whisky, brandy, rum, gin or liqueurs; and Soft Drinks Companies - manufacturers, bottlers and distributors of nonalcoholic beverages, such as soda, fruit juices, tea, coffee and bottled water.
- Personal Goods industry includes: Clothing & Accessories Companies - manufacturers and distributors of all types of clothing, jewellery, watches or textiles, sportswear, sunglasses, eyeglass frames, leather clothing and goods, and processors of hides and skins; Footwear Companies - manufacturers and distributors of shoes, boots, sandals, sneakers and other types of footwear; and Consumer Packaged Goods Companies - makers and distributors of cosmetics, toiletries and personal-care and hygiene products, including deodorants, soaps, toothpaste, perfumes, diapers, shampoos, razors and feminine hygiene products.
- Food Products industry includes: Farming & Fishing companies - companies that grow crops or raise livestock, operate sherries or own non-tobacco plantation; Food Products Companies - food producers, including meatpacking, snacks, fruits, vegetables, dairy products and frozen seafood. It also includes producers of pet food and manufacturers of dietary supplements, vitamins and related items.
- Diversified Food industry includes companies that offer a diverse portfolio of food products across agricultural, animal and dairy product categories.
- Household Goods & Home Construction industry includes companies that offer: Durable Household Products - Manufacturers and distributors of domestic appliances, lighting, hand tools and power tools, hardware, cutlery, tableware, garden equipment, luggage, towels and linens; Nondurable Household Products - Producers and distributors of pens, paper goods, batteries, light bulbs, tissues, toilet paper and cleaning products such as soaps and polishes; Furnishings - Manufacturers and distributors of furniture, including chairs, tables, desks, carpeting, wallpaper and office furniture; Home Construction - constructors of residential homes, including manufacturers of mobile and prefabricated homes intended for use in one place.
- Food Distribution industry includes companies that distribute food, beverage and consumer goods to restaurants, healthcare, educational facilities, lodging establishments; equipment and supplies for the foodservice and hospitality industries.
- Tobacco industry includes Manufacturers and distributors of cigarettes, cigars and other tobacco products. It also includes tobacco plantations.
- Toys and Games industry consists of manufacturers and distributors of toys and video/computer games, including such toys and games as playing cards, board games, stuffed animals and dolls.
Industry Ranking of Altria Group
With $25.7 billion revenues, Altria Group ranked number 2 of all the companies in the US Tobacco industry. There were a total of 8 public companies in the US Tobacco industry that had revenues greater than $50 million during 2016.
The top companies in the US Tobacco industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.