Reducing Harm and Preventing Underage Use - 2020-2021 Corporate Responsibility Progress
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Reducing Harm and Preventing Underage Use 2020–2021 Corporate Responsibility Progress
Altria’s tobacco companies are the undisputed market leaders in the U.S. tobacco industry, with profitable premium products,
iconic brands and a strong American heritage stretching back more than 180 years. As the leader in an evolving industry, we
Introduction have the opportunity to shape a better future for adult tobacco consumers, our employees and shareholders. Our Vision is to
responsibly lead the transition of adult smokers to a smoke-free future.
To achieve our Vision, we will pursue initiatives designed to promote the long-term welfare of our company, stakeholders,
society at large and the environment. We believe the actions we are taking will create a different Altria — and a different tobacco
landscape that we believe will benefit today's adult tobacco consumers, our businesses, and the thousands we employ. Our
responsibility focus areas address the issues we believe are most important to drive this progress.
Reducing Drive
Protect Reduce Harm Prevent Support Our Engage
the Harm of Responsibility
Tobacco the of Tobacco Underage People & & Lead
Through Our
Products Environment Products Use Communities Responsibly
Value Chain
Preventing
Underage Use
Appendices
IS SUED: OCT. 202 1
2
Altria’s Responsibility Focus Areas
Introduction
ENVIRONMENTAL SOCIAL GOVERNANCE
Protect
Drive Drive
Reduce Harm Prevent Support Our Engage
Responsibility Responsibility
the People & & Lead
Environment
Through Our of Tobacco
Through Our Underage Communities Responsibly
Value Chain
Products
Value Chain Use
Reducing
the Harm of Scope Scope
Tobacco
Products Adult smoker transition to smoke-free products Responsible marketing
External conditions for tobacco harm reduction success Underage access prevention
Cessation support Positive youth development
Why it Matters Why it Matters
Most of Altria’s net revenues come from the sale of its tobacco operating The concepts of tobacco harm reduction and underage tobacco
companies’ products. The use of tobacco products, however, is a significant prevention are directly linked, and we remain steadfastly
Preventing public health concern, as underscored by the extensive public health committed to both as we lead the adult smoker transition to
Underage Use authority information on tobacco and health. smoke-free products. We also recognize that our portfolio now
includes a broad range of products intended for adults.
We believe successfully transitioning adult smokers to smoke-free products
represents a substantial opportunity for our adult tobacco consumers,
our businesses, society and our shareholders. With adult smoker demand 2025 Goals
for smoke-free alternatives, innovation and an appropriate regulatory
framework, we have the opportunity to make more progress on harm • Lead the industry in preventing underage use of products
reduction in the next 10 years than we have in the past 50 years. intended for adults 21 and over.
• Contribute to the healthy development of youth ages 12 – 18.
2025 Goals
Appendices
• Accelerate investments in innovation, science and regulatory support
for new smoke-free product platforms.
• Create the conditions for tobacco harm reduction to succeed through
external communications and engagement, science and advocacy.
• Provide access to expert quitting information for those who have
IS SUED: OCT. 202 1
decided to quit.
3
What’s in this report?
Table of Contents In 2020, we completed a materiality assessment that identified key
responsibility focus areas for our businesses. In order to make progress
Introduction Introduction
toward our Vision through 2030, we are committed to Reducing the Harm of
Tobacco Products and Preventing Underage Use of products intended for adult
Moving Beyond Smoking : A Note from Billy Gifford . . . . . . . . . . . . . . . 5
TM
consumers 21 years of age or older.
The Harm Reduction Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The following report details our approach to Moving Beyond SmokingTM and
progress toward our 2025 goals across these two focus areas, where the activity
Reducing the Harm of Tobacco Products and success outcomes are heavily intertwined. This includes Altria’s work to
create the external conditions for tobacco harm reduction success; accelerate
Performance Snapshot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 investments to help transition adult smokers to smoke-free products; support
cessation for adult tobacco consumers who have decided to quit; market
Reducing Our Strategy & Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 responsibly to limit reach to unintended audiences; prevent underage access
the Harm of
through both retail and social sources; and, invest in positive youth development
Tobacco
Products
Supporting Cessation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 programs that reduce youth engaging in risky behaviors, including tobacco use.
Preventing Underage Use What’s not in this report?
This report is not designed to provide a comprehensive review of the progress
Performance Snapshot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
against all our responsibility focus areas. Our website, Altria.com, provides
additional responsibility content including our 2020-2021 Engage and Lead,
Our Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Supporting Our People & Communities reports and Driving Responsibility
Through Our Value Chain reports as well as our 2019 Corporate Responsibility
Our Strategy & Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Progress report. We will provide updates on our remaining focus areas
Preventing throughout the year through a series of individual “focus reports.”
Underage Use
Deepening Our Commitments Across the Framework . . . . . . . . . . . . . 32
Supporting Our People
& Communities
2020–2021
Corporate Responsibility Progress
Appendices
Reporting Disclosure. This disclosure is guided by the Global Reporting Initiative (GRI), the
leading sustainability reporting framework, and the disclosure standards set forth by the Notes:
Sustainability Accounting Standards Board (SASB). You can find our 2020 GRI and SASB Some images in this report feature unmasked employees who are not maintaining 6 feet of
physical distance. These photos were taken prior to the beginning of COVID-19 impacts, which
IS SUED: OCT. 202 1 disclosure indices and tables on Altria.com. began in mid-March, 2020.
4
Moving Beyond Smoking : A Note from Billy Gifford
TM
A lot has changed in the world and our industry: the role of science in public policy has emerged as a key theme from the
pandemic, and we know that social equity must factor into all the work we do.
Introduction
Despite the upheaval over the past year, at Altria we’ve remained laser-focused on our Vision to responsibly lead the transition of "In order to continue making
adult smokers to a smoke-free future. Our teams have continued their commitment to Moving Beyond SmokingTM by deepening
their understanding of adult tobacco consumer preferences, expanding the awareness and availability of our smoke-free product
progress, I believe we need
portfolio and amplifying our voice on harm reduction within the scientific and public health communities. to address four key areas:
I’m optimistic about the future for tobacco harm reduction in the U.S. I see signs of progress every day.
misperceptions about nicotine,
Scientists at the Food and Drug Administration (“FDA”) are reviewing and deciding thousands of applications for novel
tobacco products. FDA is also reviewing several modified-risk tobacco product (or “MRTP”) applications, which would allow equitable harm reduction
manufacturers to communicate critical, science-based information to adult smokers about less harmful products.
We hear more voices in public health coming out in support of harm reduction policies. In fact, 15 tobacco control experts – all
for adult smokers, scientific
Reducing former presidents of the Society for Research on Nicotine and Tobacco – published an article in August 2021 recognizing the engagement between
the Harm of benefits of e-vapor products.
Tobacco
Data from the National Youth Tobacco Survey suggests that underage e-vapor use, while still high, shows signs of decline.
industry and public health,
Products
Underage usage rates for traditional tobacco products remain at historical lows and, in the U.S., the minimum legal age to and underage tobacco use
purchase any tobacco product is now 21, which we supported.
More states are considering and implementing lower taxation rates for FDA-authorized lower risk products.
prevention."
In order to continue making progress, I believe we need to address four key areas: misperceptions about nicotine, equitable harm
reduction for adult smokers, scientific engagement between industry and public health, and underage tobacco use prevention.
First, we must work to correct the deeply held nicotine misperceptions among smokers and key stakeholders. Nicotine, while not
benign, is not the primary cause of disease and death from smoking. It’s the combustion of the tobacco. Today, the concept of the Billy Gifford
risk continuum is embraced by public health, the scientific community, our regulator and many others. However, 73% of people Chief Executive Officer
either incorrectly believe nicotine is the main substance in cigarettes that causes cancer or are unsure, according to a 2016 study
Preventing
analyzing data from the Health Information National Trends Survey. Left unaddressed, widespread nicotine misperceptions could
Underage Use
discourage adult smokers from switching to smoke-free tobacco products that may present lower health risk as compared to
combustible cigarettes.
We also have a responsibility to ensure that harm reduction is equitable. Equity is fundamental to the harm reduction discussion.
A comprehensive approach to harm reduction means that all adult smokers, regardless of background, demographics or financial
means, have equitable opportunities to reduce the harms of smoking.
I believe we must advocate for real and meaningful scientific engagement between industry and public health. We face an
unprecedented opportunity for America to lead the way in shifting millions of smokers away from cigarettes if we follow the science,
support innovation and clearly communicate scientifically-accurate information. Tobacco policies should be made by public health
experts using the best available science and evidence. This requires more than just well-designed studies or lab work. It requires
peer-to-peer engagement, review and open-minded inquiry. We remain committed to rigorous research and engagement on
Appendices
scientific issues. We stand by our science and make it a point to welcome good-faith scrutiny.
Finally, a top priority for Altria is remaining vigilant that harm reduction is an off-ramp for adult cigarette smokers and not an on-ramp
for underage tobacco use. Youth smoking rates are at historic and generational lows. And we have some promising early data that
suggests raising the legal age of purchase to 21 in the U.S., which we actively supported, is helping to drive down underage e-vapor
use. We remain committed to playing our role in the important work of preventing underage use.
We’ve taken significant steps toward achieving our Vision to transition adult smokers to a smoke-free future. I invite you to learn
IS SUED: OCT. 202 1 more in this report. I am confident that we can make a lot more progress Moving Beyond Smoking.TM
5
The Harm Reduction The percentage of U.S. adult
cigarette smokers has been
Introduction
Opportunity For Adult declining for more than 50
years. Today, 14% of adults ages
Tobacco Consumers
18 and over are current smokers
(34.1 million people), according to 14.0%
the Center for Disease Control's
Today’s adult smokers are seeking new options, including those that reduce ("CDC") latest National Health
risk. In fact, as of September 2020, our research estimates 12 million adult Interview Survey (2019).
tobacco consumers ages 21-54 are interested in switching from cigarettes to a
different tobacco product.1 Tobacco companies are responding with innovative,
Reducing
the Harm of smoke-free products. The Food and Drug Administration (“FDA”) is evaluating
Tobacco the science and authorizing those products that have met stringent criteria to
Products
demonstrate they are “appropriate for the protection of public health.” And it’s
requiring robust post-marketing surveillance to monitor that those products
continue to meet authorization standards.
Now is the time to realize the opportunity of harm reduction for adult tobacco
consumers. Adult smokers are interested in alternatives. Innovative products
are available. Science exists to support harm reduction, and there is a robust
regulatory framework designed to protect public health.
Preventing We are building a diversified business model with smoke-free products to
Underage Use further our harm reduction goals and achieve our Vision to responsibly lead
the transition of adult smokers to a smoke-free future. Importantly, we will
work within the framework that government, public health, and regulatory
bodies have established to communicate about reduced harm choices. And
for any tobacco consumer who wants to quit, we offer access to a breadth of
information from experts on how to do so successfully.
The actions we are taking will create a different Altria – and a different
landscape that we believe will benefit today's adult tobacco consumers, our
business, and the thousands we employ. That's why we're focused on Moving
Appendices
Beyond SmokingTM by providing more potentially reduced harm alternatives.
IS SUED: OCT. 202 1
Tobacco Landscape 2.0 Study, Q3 2020
1
6
FDA’s Regulatory Authority Over
Tobacco Products
Regulatory Pathways for FDA Authorization of New
Introduction The success of tobacco harm reduction in the
Tobacco Products and Modified Risk Claims
United States hinges on a regulatory framework
that allows manufacturers to provide adult A new tobacco product is either a product commercially
tobacco consumers with potentially reduced- marketed in the United States after February 15, 2007,
risk tobacco products and communicate or any modification to a tobacco product commercially
accurate health information about them. This marketed after February 15, 2007. If a predicate product
includes the ability to make reduced-harm existed as of February 15, 2007, applicants can apply via
claims about products that are proven to be the Substantial Equivalence ("SE") regulatory pathway.
Reducing
lower risk than cigarettes. The FDA acts as PMTA: A premarket tobacco application (“PMTA”) is an
the Harm of the arbiter of this framework, with authority application that must be reviewed and authorized by
Tobacco over nearly all aspects of the manufacturing, the FDA before a new tobacco product can be legally
Products
distribution and marketing of tobacco products. marketed in the United States.
With the FDA’s expansive authority to define MRTP: A “modified risk tobacco product” is a legal
the tobacco marketplace, this agency is in the designation in the U.S. for a tobacco product that poses
leading position to create a mature, regulated lower health risks to individual users and benefits the
tobacco marketplace that successfully reduces population as a whole when compared to existing
the harm caused by cigarettes by: products on the market such as cigarettes and for which
timely scientific review and authorization of the FDA has authorized a modified risk claim.
Preventing potential reduced-risk tobacco products;
Underage Use
monitoring manufacturers' post-market surveillance data and quickly
identifying and remediating emerging issues (e.g., uptick in underage use
of a newly authorized product);
helping to correct nicotine misperceptions and communicate the relative
risks of different products to encourage adult smoker transition to
smoke-free products; and
investing in proven tactics to prevent and reduce underage tobacco use.
Appendices
The FDA is the only federal agency with the Congressional mandate,
authority and resources to advance tobacco harm reduction. That’s why this
agency’s ability to coordinate federal strategy and drive efficient resource
allocation towards these efforts is crucial for reducing the death and disease
associated with cigarettes.
IS SUED: OCT. 202 1
7
Nicotine Misperceptions & the “Risk Cliff” The millions of U.S. adult smokers seeking less harmful alternatives to
cigarettes deserve to be informed about the role of nicotine and the
Persistent misperceptions regarding the role of nicotine and the relative risks of relative risks of different tobacco products. The FDA, the public health
Introduction different tobacco products prove to be a significant obstacle to adult smokers community and tobacco manufacturers all have a role to play in addressing
switching to potentially reduced-harm products. For example, a study from misinformation that hinders progress on harm reduction. We believe it
the Health Information National Trends Survey found “a high prevalence is our responsibility to help create the conditions for harm reduction to
of incorrect beliefs about the relationship between nicotine and cancer.” 1 succeed – through education, awareness and advocacy – as we build a
Specifically, the study found “Most people (73%) either incorrectly believed that strong portfolio of smoke-free products that satisfy adult smokers’ evolving
nicotine is the main substance in cigarettes that causes cancer or were unsure interests and preferences.
about the relationship between nicotine and cancer.” 2
While nicotine is addictive, it's the smoke from combustion – not nicotine –
Reducing that causes smoking-related disease. Smoke from the burning of tobacco
the Harm of contains thousands of chemicals that are directly linked to smoking-related
Tobacco
diseases such as lung cancer, heart disease and emphysema. FDA and Higher Combustible
Products Risk Tobacco Risk Cliff Between Combustible
other public health authorities agree that there is a broad “continuum of & Smoke-free Tobacco
Products
risk” among tobacco products, with cigarettes at the highest end of that
spectrum and complete cessation at the lowest end.3 In fact, when FDA
announced its Comprehensive Plan in 2017, then-FDA Commissioner Gottlieb
stated FDA policy should be used as a vehicle to “move addicted smokers
down that continuum of risk to these less harmful [innovative] products.” 4
The then-Commissioner also shared his concerns regarding the widespread
misperceptions around nicotine among the American public.
Preventing
Lower Smoke-free
Underage Use While there may be differences in risk profiles between specific smoke-free
Risk Tobacco Products
products, it will take years of epidemiology to quantify those differences.
The body of evidence does, however, indicate a profound risk differential Adapted from Nutt, et. al. Estimating the Harms of Nicotine-Containing Products Using the MCDA
between combustible and smoke-free product categories. Data suggest that Approach. Eur. Addict Res 2014; 20:218-225.
a two-dimensional "Risk Cliff" model is a useful description of the relative risk 1 O'Brien, E. K., Nguyen, A. B., Persoskie, A., & Hoffman, A. C. (2016). U.S. adults' addiction and harm
between combusted products (such as cigarettes and cigars) and smoke-free beliefs about nicotine and low nicotine cigarettes. Preventive Medicine, 96, 94-100. doi:10.1016/j.
ypmed.2016.12.048
products (such as moist smokeless tobacco, heated tobacco, e-vapor and oral 2 Id.
nicotine pouches). 3 “… we must acknowledge that there’s a continuum of risk for nicotine delivery. That continuum ranges
from combustible cigarettes at one end, to medicinal nicotine products at the other.” Remarks by Scott
Gottlieb, M.D., Protecting American Families: Comprehensive Approach to Nicotine and Tobacco (June
28, 2017), available at https://www.fda.gov/news-events/speeches-fda-officials/protecting-american-
Appendices families-comprehensive-approach-nicotine-and-tobacco-06282017.
4 Id.
IS SUED: OCT. 202 1
8
Introduction
Reducing
the Harm of
Reducing the Harm of
Tobacco Products
Tobacco
Products
Preventing
Underage Use
Appendices
IS SUED: OCT. 202 1
9
2020 – Q2 2021 Performance Snapshot
Introduction
Accelerating Investments Creating the Conditions
Regulatory & Scientific Engagements in 2020
IQOS heated tobacco system
• FDA issued a Modified Risk Granted Order 59 engagements on the topic Engagement Topics
authorizing a reduced exposure claim, including of tobacco harm reduction and
regulatory compliance with the FDA
“Scientific studies have shown that switching
and public health stakeholders
completely from conventional cigarettes
Reducing
the Harm of to the IQOS system significantly reduces 28 external posters and
Tobacco your body’s exposure to harmful or presentations
Products
potentially harmful chemicals.” 23 scientific and policy
• 2020 – Launched in Charlotte, North Carolina; conferences
in 2021, added boutique in Northern Virginia 7 panel discussions 87%
Smoke-free
(D.C. suburb) and expanded statewide in 16 publications tobacco products 8% 5%
Combustible Agronomy
GA, VA, NC and SC tobacco products
• Q2 2021: Marlboro HeatSticks retail sales volume
Through the first half of 2021, with elected officials and policy
increased by nearly 40% compared to Q1
Preventing
181 engagements across 42 makers on harm reduction for adult
Underage Use states in which Altria has engaged tobacco consumers*
* Tracking began in 2021
On! oral nicotine pouches
Supporting Cessation
• Full global ownership of on!, acquired remaining 20% interest in Helix
• Achieved unconstrained manufacturing
capacity for the U.S. market
• Submitted Pre-Market Tobacco QuitAssist 2020 site visits –
Applications (PMTAs) to FDA for ~339,000; 248% increase
Appendices on! portfolio from 2019 baseline
• Distribution in ~78,000 retail stores • 2020 Goal: Increase 50%
as of December 2020; ~105,000 from 2019 baseline
as of June 2021 (~97,500 visits)
IS SUED: OCT. 202 1
10Our Strategy
Introduction
& Approach
2025 Goals:
Accelerate investments in innovation, science and
regulatory support for new smoke-free product platforms.
Create the conditions for tobacco harm reduction
Reducing to succeed through external communications and
the Harm of engagement, science and advocacy.
Tobacco
Products
We believe reducing harm for adult smokers can only be successful
if these consumers find potentially reduced-risk products
“satisfying” – a term with a wide-ranging definition based on the
diversity of adult smokers’ interests. Our strategy is to deliver a
compelling portfolio of smoke-free products that offer a range of
satisfying product choices for adult smokers and to responsibly lead
Preventing them to these alternatives.
Underage Use
Our Product Platforms
Our companies focus on developing, manufacturing and marketing
products and brands that meet three important consumer expectations:
superior sensory experiences and nicotine satisfaction;
reduced health risks and accurate relative risk information; and
Appendices
the ability to avoid social friction associated with cigarettes, such as
smoke odor, ash and social isolation.
Our portfolio approach expands choice for adult tobacco consumers
across three of the most promising smoke-free product platforms with the
IS SUED: OCT. 202 1
potential to reduce harm: oral tobacco, heated tobacco and e-vapor.
11Smoke-Free What is its harm reduction
Our Products potential? Regulatory Progress
Platform (which must be determined by FDA)
Introduction
Oral Tobacco – U.S. Smokeless Tobacco From a scientific perspective, based on decades U.S. Smokeless Tobacco Company submitted an MRTP application for Copenhagen Snuff in
Smokeless Company is the most profitable of epidemiology, it is now accepted by most March 2018. The application contained the results of research that we believe demonstrates
Tobacco moist smokeless tobacco public health researchers that smokeless tobacco, the modified risk claim we’re seeking – “IF YOU SMOKE, CONSIDER THIS: Switching
(“MST”) company, anchored by while not safe, is a far less risky way to use nicotine completely to this product from cigarettes reduces risk of lung cancer” – is supported by
Copenhagen, the leading MST than cigarette smoking. According to our analysis science and understood by adult tobacco consumers.
brand, Skoal, Red Seal and Husky. of government data, when looking at all causes of
In February 2019, an FDA scientific advisory committee reviewed our research and
mortality, we believe smokeless tobacco use is at
overwhelmingly supported the scientific accuracy of our proposed claim. More than two
least 96% less risky than cigarette smoking.1
years later, the Copenhagen Snuff MRTP application is still under review by the FDA. We
await FDA’s decision on whether it will authorize the modified risk claim for consumer
communications.
Reducing
the Harm of
Oral Tobacco – On! has a premium portfolio of Because on! products are tobacco leaf free, Helix submitted PMTAs for the on! portfolio of products – including multiple varieties and
Nicotine product offerings across a variety of they have lower levels of harmful and potentially nicotine strengths – in May 2020. They are still in review.
Tobacco
Pouches flavors and nicotine strengths. On! is harmful constituents than combustible tobacco
Products Separately, Helix intends to file a Modified Risk Tobacco Product Application for on!.
widely distributed in over 100,000 products and traditional oral tobacco products
stores that cover over 80% of total such as snus and MST. We have included this
U.S. oral tobacco volume. information in our PMTAs filed with FDA for review.
Heated IQOS is the only FDA-authorized PMI’s research demonstrates that IQOS reduces In July 2020 the FDA issued a Modified Risk Granted Order for the IQOS 2.4 Tobacco
Tobacco heated tobacco system. In April 2019, levels of 18 harmful and potentially harmful Heating System, including three variants of HeatSticks. FDA has authorized the
Products the FDA authorized the IQOS PMTAs constituents identified by the FDA by over 90% marketing of this version of the IQOS Tobacco Heating System with a reduced
as appropriate for the protection and reduces levels of 15 known carcinogens by exposure claim, including that switching completely from conventional cigarettes to
Preventing of public health. We have exclusive more than 95% versus conventional cigarettes. the IQOS system significantly reduces your body’s exposure to harmful or potentially
Underage Use rights to commercialize IQOS and harmful chemicals.
three Marlboro HeatStick variants –
In December 2020, the FDA authorized commercialization of the next generation of the
one non-menthol and two menthol
IQOS tobacco heating system device, IQOS 3.0, in the U.S. FDA is currently considering
– in the U.S. through our agreement
whether the previously-authorized modified risk claim can also be used with the IQOS
with Philip Morris International (“PMI”).
3 device.
E-Vapor We participate in the e-vapor E-Vapor heats e-liquid consisting of tobacco In July 2020, JUUL submitted a PMTA for the JUUL System, including the JUUL Device and
space through our 35% economic derived nicotine, humectants and flavors and JUULpods in Virginia Tobacco and Menthol flavors at nicotine concentrations of 3.0% and
interest in JUUL, the leading e-vapor does not produce many of the harmful and 5.0% As part of Altria’s investment, ALCS provided regulatory and scientific support for those
manufacturer. potentially harmful chemicals that combustible submissions. FDA’s regulatory decision is pending.
cigarettes do. The National Academies of
Sciences, Engineering and Medicine completed
Appendices a comprehensive study in 2018 on health
effects of e-cigarettes with conclusive evidence
that completely substituting e-cigarettes for
combustible tobacco cigarettes reduces users’
exposure to numerous toxicants and carcinogens
present in combustible tobacco cigarettes.
IS SUED: OCT. 202 1
1
Fisher MT, Tan-Torres SM, Gaworski CL, Black ML and Sarkar MA. Smokeless tobacco mortality risks: an analysis of two contemporary nationally representative longitudinal mortality. Harm Reduction Journal. 2019; 16:27
12Tobacco Consumer Insights
Based on the regulatory framework in place and our deep understanding
Introduction of U.S tobacco consumer preferences and behaviors, we believe we can
accelerate the pace of harm reduction over the next 10 years. Consumer
dynamics support this belief and our opportunity. First, our data indicate
purchases for consumers ages 21 through 39 look fundamentally different
from older consumers. One-third of tobacco consumers age 21 to 29 are
exclusive smoke-free product users, the highest percentage of exclusive use
across age cohorts.
We also believe it’s critically important to understand the consumer
Reducing
motivations behind their tobacco product selection. Based on our research,
the Harm of adult tobacco consumers consider reduced social friction and the possibility
Tobacco of reduced harm as important product features. Additionally, smoke-free
Products
products interest both male and female tobacco consumers, although the
specific purchase drivers vary by gender, ethnicity, socio-economic status
and age. We also know that many consumers are open to using smoke-free
products but have not found the right product to meet their needs. As we
pursue our Vision, we want to make sure that all adult smokers, regardless
of background, demographics or financial means, have equitable access to
products, information and opportunities that may reduce their health risk.
Preventing As tobacco consumer preferences continue to evolve, we will continue to use
Underage Use tobacco consumer insights and science to inform our smoke-free product
development, regulatory engagement and marketing plans
One-third of tobacco consumers age 21 to 29
are exclusive smoke-free product users, the highest
percentage of exclusive use across age cohorts.
Appendices
IS SUED: OCT. 202 1
13Science, Research & Development
E M P L O Y E E S P O T L I G H T
Science is at the core of Altria’s approach to tobacco harm reduction. Our
Introduction investment in research and technology supports our smoke-free product Advancing the Science;
development and the science needed for product applications submitted to Making a Difference
the FDA.
Maria Gogova
Our regulatory science team, led by our Chief Scientific Officer, generates the Vice President Regulatory Sciences
scientific evidence needed to demonstrate that smoke-free tobacco products and Chief Scientific Officer, Altria
result in lower exposure to harmful and potentially harmful constituents and/ Client Services
or are lower risk when compared to conventional cigarettes. We’ve been at
Science drives our efforts to realize our
the forefront of developing new methodologies to assess the health impact of
Vision to responsibly lead the transition
Reducing potentially reduced-risk tobacco products.
of adult smokers to FDA-authorized,
the Harm of
Tobacco
We follow a rigorous scientific framework for evaluating potentially reduced-risk smoke-free products. To lead these
Products tobacco products and supporting product applications to FDA. This framework efforts, we announced Maria Gogova as + Hear more on this topic
from Dr. Gogova
enables us to evaluate tobacco products from product design to individual Altria's Chief Sicentific Officer. Dr. Gogova in this video on altria.com
product risk assessments to overall population impact. plays critical roles in shaping Altria's
Our regulatory affairs team applies this rigorous framework to substantiate pursuit of harm reduction and representing Altria in the scientific and public
candidate products demonstrating protection of public health in order to bring health community.
new reduced-risk products to adult tobacco consumers.
Preventing
Underage Use Constituent Reduction Individual Risk Reduction Population Harm Reduction
Product Design & Chemical & Physical Toxicology & Studies in Adult Perception & Risks & Benefits to
Control Characterization Risk Assessment Human Subjects Behavior Assessment the Population
• Ingredients and material • FDA's defined list of • Toxicological and • Abuse liability • Risk perceptions and • Population modeling
qualification harmful and potentially risk assessment of assessment likelihood of use • Post-market surveillance
• Manufacturing standards harmful constituents ingredients and other • Short- and long-term • Actual use studies
and quality controls • Other targeted constituents switching studies • In-market studies
• Product stability constituents • Biological activity (in-vitro • Cross-sectional studies
• Product instruction and
(e.g., metals) and in-vivo studies)
Appendices • Failure mode and hazard comprehension studies
assessments • Non-targeted analysis
• Physical assessment (e.g.,
particle size, aerosol)
The Product Exposure & Health Risk Impact on the Population
IS SUED: OCT. 202 1
14We are committed to ongoing, transparent communication of the results of our
research. We regularly update Altria’s Science website with data we present or E M P L O Y E E S P O T L I G H T
publish, and we actively engage with members of the scientific community and
Introduction
share our research through conferences, meetings and other forums. The Critical Importance of
Engagement with the
Insights-Driven Product Development Public Health and Scientific
Altria’s scientists, engineers, product developers and consumer researchers Communities
are accelerating our investments to build unique intellectual property and
a robust pipeline of differentiated, innovative smoke-free tobacco products. Greg Wilson
We are combining our deep knowledge of adult smokers, data analytics and Vice President Regulatory
behavioral science to better understand what would motivate and then help Engagement, Altria Client Services
adult smokers transition to smoke-free products. Achieving our Vision requires engaging
Reducing
the Harm of Meanwhile, countless employees across our organization – from procurement with the scientific and public health
Tobacco and manufacturing, to marketing and sales – are working to gain new insights communities on our science and
Products + Read Greg's full story
that will support future product development, as they work to bring our research. While some seek to exclude
on altria.com
existing, premium smoke-free brands to market, and support adult smokers’ the tobacco industry from these
transition to a smoke-free future opportunities, we believe successful
harm reduction for adult tobacco consumers requires our ongoing
For instance, over the recent decades we have maintained a robust adult
commitment to the scientific principles of transparency, unbiased data
tobacco consumer database and have developed unique consumer
review, direct researcher engagement and open dialogue with
connections through loyalty programs. We are enhancing these tools by
all stakeholders.
working with our retail trade partners to increase the depth and breadth
Preventing of point-of-sale purchase data. These tools enable deeper understanding
Underage Use of purchasing behaviors and consumer journeys that inform product
development to best meet the needs of adult tobacco consumers.
Appendices
IS SUED: OCT. 202 1
15Accelerating Investments in Oral
Communicating about the Health Effects of Tobacco Use
Nicotine Pouches and Heated Tobacco
Introduction
Congressionally-mandated health warnings have been on cigarette
packs since 1966 and cigarette brand advertising since 1972. Similar
On! Progress 2019 – 2021
warning requirements have been in place since 1986 for smokeless
tobacco products and since 2000 for the cigars John Middleton sells.
~78,000 stores to 105,000 stores Additionally, our tobacco companies provide certain reports, such as
(2020, 5x 2019) (Q2 2021) ingredient disclosures and information about harmful or potentially
harmful constituents in tobacco products to various federal and state
agencies, including the FDA.
For more information about product ingredients and how our tobacco
Reducing
the Harm of
companies communicate about the health effects of their products
Tobacco visit Philip Morris USA's, U.S. Smokeless Tobacco Company's and
Products Oral Nicotine Pouches: On! John Middleton's corporate websites.
In April 2021, we announced another important milestone on Altria’s journey.
We acquired the remaining 20% global interest in our Helix subsidiary, for
full global ownership of the novel oral nicotine pouch product, on! Since
August 2019, Helix has been focused on accelerating availability of on! for
E M P L O Y E E S P O T L I G H T
adult tobacco consumers. There are now approximately one million U.S. oral
nicotine pouch consumers and we’re excited about Helix’s progress to meet Our Science-based Approach
the growing demand. to New Tobacco Products
Preventing
In the second quarter of 2021, Helix achieved unconstrained manufacturing Kurt Gottfried
Underage Use
capacity. By the end of June 2021, on! was available in approximately Director Regulatory Affairs,
105,000 retail stores, representing 80% of total U.S. industry oral tobacco Altria Client Services
volume and 70% of U.S. cigarette volume. On! can be purchased through We follow a rigorous scientific framework
its premium-branded website with a robust age verification platform – the for evaluating potentially reduced
same comprehensive age verification practice we employ for all our tobacco risk products in our applications that
product branded websites. On! is also available for purchase on third-party enables us to assess them from design,
e-commerce websites. For those third-party vendors with which we have to individual risk, to overall population
contractual agreements, we require age verification prior to purchase. impact. I never cease to be amazed by + Read Kurt's full story
Helix filed PMTAs for the on! portfolio in May 2020, which we believe makes a the sheer brain power of our scientists on altria.com.
Appendices
compelling case to FDA that the broad on! product offering is appropriate for and researchers. From Analytical and
the protection of public health. For example, our research shows that when Population Sciences to Clinical and Pre-Clinical, we have a world class team
comparing the levels of harmful/potentially-harmful constituents (“HPHCs”), that's laser focused on moving the science of harm reduction forward and
the on! mint-flavored pouches containing 4 mg of tobacco-derived nicotine using those insights to meet adult smokers where they are with satisfying,
have significantly lower HPHCs as compared to General snus smokeless smoke-free alternatives.
IS SUED: OCT. 202 1
16tobacco products, which have been granted both market orders and
authorization to be marketed with a reduced risk claim. E M P L O Y E E S P O T L I G H T
The on! PMTA also provides strong evidence of its appeal to adult smokers. In
Introduction Our Focus on Responsibility
a study we conducted, adult smokers and dippers used on! for 6 weeks after
Before and After FDA
a screening and trial period. These consumers were provided the product
Authorization
in various nicotine levels and flavor varieties. At the end of the study, more
than a quarter of the adult smokers completely switched to on! products and Patty Miller
over 70% of the adult dippers did the same. Additionally, we observed that Managing Director Premarket
women were just as likely as men to switch to on! at the end of the study. Tobacco Applications, Altria Client
While these results must be considered in the context of study limitations, the Services
data illustrate the promise offered by on!. The research supports our belief
We work in a highly regulated industry.
Reducing that various nicotine levels and flavor options are important to adult tobacco
the Harm of Having smoke-free products for
consumers looking to switch to potentially less harmful products.
Tobacco cigarette smokers to switch to is key
Products Our in-market retail data support the findings from our PMTA research, + Read Patty's full story
to our Vision. But we can't have those
on altria.com
showing that on! continues to primarily source from adult smokers and products on the market, accessible to
dippers. We also continue to learn. Female smokers are more engaged with adult smokers who want to switch to
oral nicotine pouches than with traditional moist smokeless tobacco, making smoke-free products, until we get approved by our regulator. It's necessary
up approximately 25% of oral nicotine pouch consumers as opposed to to get FDA permission to be on the market and it's necessary to satisfy the
only 5% of MST consumers. With enhanced distribution and in-store visibility, post-authorization compliance requirements to stay on the market.
consumers of competitive oral nicotine pouch brands are showing increasing
interest in on!. We believe its unique packaging further differentiates on! from
Preventing traditional smokeless tobacco and competitive oral nicotine pouch products
Underage Use
and has broader adult tobacco consumer appeal.
We’re excited about the PMTA research and marketplace results. And, as we Smokers interested in switching
await FDA’s decision related to the Helix PMTA submissions, our regulatory
and science teams are now planning a modified risk application for on!. 55% to a product based on an authorized
reduced exposure claim
Source: Altria Client Services research study, February 2021
Appendices
IS SUED: OCT. 202 1
17Adult Smoker Awareness, Engagement & Trial of IQOS
Introduction
Heated Tobacco: IQOS
Our IQOS consumer journey framework focuses on the adult smoker
IQOS has been the most successful next generation product for transitioning from awareness to switching, responsibly. At every stage, teams of trained
adult smokers globally, and, according to PMI, approximately 14.7 million adult Experts begin by taking steps to limit IQOS's reach to adult smokers
smokers have stopped smoking and switched to IQOS. 21+. Read more about IQOS's responsible marketing practices in the
In April 2019, the FDA authorized the sale of the IQOS heated tobacco system Underage Prevention chapter of this report.
in the U.S. market. After evaluating the submitted PMTA, the FDA determined
Awareness
that marketing these products is appropriate for the protection of public
health. We're using multiple channels to generate adult smoker awareness for
Reducing
the Harm of
IQOS, including paid media, communications using our adult tobacco
On July 7, 2020, the FDA also granted authorization to use a modified risk
Tobacco consumer database, and retail touch points at both our boutiques and
Products claim on the IQOS Tobacco Heating System 2.4 with three HeatStick variants.
trade partner stores.
Specifically, FDA authorized the marketing of the IQOS Tobacco Heating
System with the following reduced exposure claim: Engagement & Trial
Available Evidence to Date: We have a number of unique consumer touch points to drive
The IQOS system heats tobacco but does not burn it. engagement and trial. Our flagship boutiques and nearby mall kiosks are
designed to generate adult smoker awareness and provide them with the
This significantly reduces the production of harmful and potentially opportunity to engage fully with the brand. IQOS mobile infrastructure,
harmful chemicals. which includes corners and education vehicles, allows the IQOS team
Preventing to meet the adult smokers in different locations, such as at meet-up
Underage Use Scientific studies have shown that switching completely from
conventional cigarettes to the IQOS system significantly reduces your locations or outside retail stores. IQOS Corners, which are set up within
body’s exposure to harmful or potentially harmful chemicals. select retail stores, engage adult smokers where they normally purchase
their cigarettes. Finally, we have a network of over 500 trained IQOS
The FDA’s review and authorization of a reduced exposure claim for IQOS Experts who can provide guided trials across these and other locations.
are important milestones for this heated tobacco system to realize its harm
Through our marketing efforts, we've found that more than half of adult
reduction potential for adult smokers.
smokers who engaged with IQOS continue to the guided trial process.
While many smokers recognize that IQOS addresses many of the social We know that guided trial is critical for explaining how to use the IQOS
friction experiences they have with smoking, such as no ash and less odor, device, its reduced exposure MRTP claim, its non-health benefits and its
they have low awareness of reduced exposure to HPHCs when smokers taste profile.
Appendices
completely switch from cigarettes. Last July, upon the FDA’s Modified Risk
Grant Order, Philip Morris USA ("PM USA") quickly began to communicate the
reduced exposure claim through its digital engagement platforms, direct mail,
at boutiques and mobile retail.
IS SUED: OCT. 202 1
18We believe smokers’ understanding of the harm-reduction benefits of smoke- We’ve learned that providing flexible options for smokers to engage with
free products relative to cigarettes will be an important factor in their decision the product was especially critical during the pandemic. Prior to boutiques
to switch. And PM USA continues to strongly and responsibly reinforce this closing in March 2020, more than half of device purchases were made from
Introduction
important message with smokers. a boutique. As stores reopened in June, device purchases shifted primarily to
mobile retail, accounting for nearly two-thirds of device purchases through
In November 2020, PM USA began a national
the end of the year. These options allowed smokers to engage with our
digital campaign to grow adult smoker
teams in convenient and socially distant settings. Further, PM USA developed
awareness of the IQOS system and its reduced
online guided tutorials and mobile video chat capabilities to support age-
exposure designation. The digital advertising
verified smokers in their IQOS journeys.
was served to adult smokers whose age is
verified against public or government records
prior to receiving the ad. This campaign was Expansion
Reducing expanded through print advertising in 2021.
the Harm of
These campaigns are executed in compliance HeatSticks grew across all
Tobacco
Products with all regulatory and legal requirements, metro markets in 2020:
including the FDA’s review and post-marketing Richmond, VA
surveillance requirements, as well as our Richmond, VA
Charlotte, NC
marketing policies – with the intention to
Atlanta, GA
minimize reach to unintended audiences.
Charlotte, NC
PM USA worked with Altria Group Distribution Company’s sales force to
expand product availability for adult smokers. In 2020 and the first half of 2021,
SC Statewide expansions of
PM USA:
Atlanta, GA HeatSticks
Preventing
Underage Use launched IQOS and Marlboro HeatSticks in two new metro markets and and devices across GA, VA, NC
across four states; and SC in 2020
developed creative digital tools to enhance consumer engagement; Expanded into the Northern VA
metro market in Q2 2021
communicated with smokers using the FDA-authorized reduced exposure
claim about the benefits of switching completely from cigarettes; and
Performance
provided extensive post-marketing information to FDA related to its
marketing, advertising, consumer research and related matters.
40% of IQOS purchases sourcing
Appendices PM USA continues to maximize the product’s organic growth potential by focusing from competitive smokers
first on densely populated metro areas, and then expanding outwards as the user Source: CAGNY
base grows. As IQOS expands distribution, PM USA is evolving its plans based on
learnings from the lead markets.
40% Marlboro HeatSticks Q2 total
retail sales volume increased nearly
40% compared to Q1 2021
IS SUED: OCT. 202 1 Source: Q2 Earnings
19As we have expanded into new markets and channels, we have learned that
On December 7, 2020, the U.S. FDA authorized commercialization of the some smokers are hesitant to purchase IQOS based on the initial cost of a
next generation of the IQOS tobacco heating system device, IQOS 3, in device and HeatSticks options, particularly in the indirect retail channel where
Introduction
the U.S. IQOS 3 offers several enhancements to the IQOS 2.4 currently we have the broadest reach to a diverse smoker population. To address these
being sold in select U.S. markets, including longer battery life, faster concerns and encourage product trial, PM USA introduced more device
recharging time, a side opening mechanism, and magnetic closure. purchasing options. Initially launched in Charlotte, a five-pack option provides
a lower cost choice for smokers who are hesitant about buying a ten-pack
bundle. PM USA also established a lending program for consumers to try
the IQOS device for two weeks at a low introductory cost prior to making
As we pursue our Vision, we the decision to purchase. Purchases from these new bundle options and the
want to make sure that all lending program accounted for over 60% of Charlotte device sales in 2020
Reducing adult smokers, regardless of and the lending program has accounted for approximately 10% of sales
the Harm of background, demographics or across all markets, with an impressive trial to purchase rate of 87% through
Tobacco Q2 2021. We are encouraged by the results. And we believe these options will
Products financial means, have equitable
opportunities to reduce the make IQOS more affordable for a broader range of adult smokers seeking a
harm of smoking. For example, reduced harm alternative.
IQOS is focused on equitable With a particular focus on the four states where IQOS is currently available
tobacco harm reduction. One and in consideration of future expansion, PM USA intends to maximize its
of the main drivers of initial first mover advantage while responsibly positioning the U.S. heated tobacco
awareness of IQOS across category for long-term growth and profitability.
all demographic groups is
hearing about the product
Preventing
Underage Use from a fellow smoker. Our IQOS
In May 2021, an International Trade Commission (ITC) Administrative Law
Experts over-index among the
Judge (ALJ) found that the IQOS system infringes two plaintiff's patents
Black and Hispanic population
and recommended imposition of a ban on the importation of the IQOS
compared to the markets we
system. In July 2021, the ITC accepted review of the ALJ's findings and
operate in, which has led to an
recommendations on certain issues, including issues related to the
even higher word-of-mouth
patent infringement claims and potential remedies. On September 29,
awareness among non-white smokers. Another critical component of these
2021, the ITC issued an order imposing an importation ban on the IQOS
awareness-building activities is developing an understanding and credibility
device and Marlboro HeatSticks into the U.S., and a cease and desist
of the reduced exposure MRTP claim. We have translated the MRTP claim to
order on the marketing and sale of product already imported into the
Spanish to help Spanish-speaking smokers have an accurate understanding of
Appendices U.S. The ITC’s order is subject to review by the Administration’s U.S. Trade
the science behind IQOS.
Representative, which is expected to last 60 days. PM USA expects to
continue marketing and selling IQOS in its current geographies through
this 60-day review period, and is working with PMI on contingency plans
and considering legal options.
IS SUED: OCT. 202 1
20Creating the Conditions for Harm in transforming this industry for the better – including our shareholders,
employees, business partners, communities, and adult consumers.
Reduction Success Through Advocacy &
We also regularly engage with the scientific, public health, and regulatory
Introduction
Engagement communities through face-to-face meetings, regulatory filing, publishing in
scientific journals and participating at scientific conferences where we present
A key strategy for achieving our Vision is to lead in the external environment our research. We listen to and welcome feedback on our work.
through communications, engagement and science-based policy and
regulatory solutions. We believe this is an important aspect of creating Altria's Vision sets the direction for all our legislative and regulatory efforts. For
the conditions for making progress in harm reduction for adult tobacco us, Moving Beyond SmokingTM means advocating for a harm reduction future
consumers. where the entire industry is operating within science-based federal regulation,
where underage tobacco use continues to decline, and where adult smokers
This commitment to Altria’s Vision means engaging actively and responsibly who don't quit are switching to FDA-authorized less harmful products.
Reducing with policy makers at all levels of government. We engage to share who
the Harm of
we are, where we are headed, and the vital role legislation and regulation Transformational changes in recent years have made this future more possible
Tobacco
Products play in shaping the future of our industry. Participating in the democratic than ever. Today we see:
process is vital to our business and to the many stakeholders with an interest Generational lows in underage use of all traditional tobacco products.
A national minimum age of 21 driving underage use down further for all
product categories.
E M P L O Y E E S P O T L I G H T
Scientists agreeing that while nicotine is addictive, it’s smoke that causes
Engaging with Policy Makers most tobacco-related harm.
on the Science of Potentially-
Preventing
Reduced Harm Tobacco Manufacturers innovating new, smoke-free products with the potential to
Underage Use reduce harm.
Phil Park
Vice President Government Affairs, The FDA regulating the industry and authorizing reduced harm products
Altria Client Services based on science.
The issue of tobacco harm reduction Our goal in our engagement with regulatory and policy stakeholders is to
and the FDA’s regulatory framework advance our Vision by supporting policies and regulations necessary for harm
for tobacco products is complex. It’s reduction to succeed.
my team’s job to engage with federal
policy makers to talk about what + Read Phil's full story on
altria.com
Appendices
tobacco harm reduction is, educate
them about innovative new tobacco
products, and the process by which FDA will authorize them – that is to say,
helping introduce FDA-reviewed tobacco products, with the potential for less
harm, to adult tobacco consumers.
IS SUED: OCT. 202 1
21Key Legislative & Regulatory Priorities
Encouraging FDA's Role as Regulator of Ingredients & Flavors
Introduction
Legislators engaged on tobacco issues should start with understanding
the central role the FDA plays in regulating the industry – and the scientific
capabilities and extensive resources it applies to the job.
Correcting Nicotine Misperceptions
FDA should commit resources and expertise to correct the deeply entrenched
public misperceptions regarding the health risks of nicotine.
Reducing Urging Foundational Rules for SE, PMTA, and MRTPA
the Harm of
Tobacco Congress established specific pathways to market for new or modified
Products tobacco products and a process for seeking FDA authorization to make
modified risk claims.
Supporting FDA-Authorized, Smoke-Free Flavored Products as Critical
Supporting Science-Based FDA Regulation to Harm Reduction
Harm reduction can’t succeed without effective, comprehensive federal Published data demonstrate that flavors are critical in adult smokers’ trial and
regulation of tobacco products. adoption of smoke-free products.
Preventing
Underage Use Advocating for Legislation Preventing Underage Use Opposing Ban on Menthol Cigarettes or Flavored Cigars Not Supported
by Science and Evidence
Harm reduction starts with preventing underage use of all tobacco products.
We believe that the better way to reduce harm is to offer adult smokers
Endorsing Tax Policy That Gives Less Harmful Products a appealing smoke-free tobacco products such as IQOS and on! instead of
Better Chance imposing prohibition-type bans that rarely work and have significant collateral
consequences.
Tax classifications written many decades ago make little sense today given
the science showing major risk differences between combustible and non-
Promoting Access to Better Choices for Adult Smokers 21+
combustible products.
Adult smokers who don’t quit should be encouraged to switch to FDA-
Appendices
Protecting the Legal, Regulated Market from Illegal Trade regulated less harmful products.
A thriving underground market in tobacco products is a serious threat to
effective regulation and public health. To learn more about our leadership in the external environment and
how we communicate our Vision to stakeholders in the scientific,
public health and regulatory communities, visit the Communications
& Engagement page of the Altria Science website.
IS SUED: OCT. 202 1
22You can also read
