Altria (MO) edged higher in Monday trading as investors reacted to the FDA decision on December 19 to issue Marketing Granted Orders for six on! Plus moist nicotine pouches, including mint, tobacco, and wintergreen flavors in 6 mg and 9 mg strengths, as part of a pilot program. The FDA decision is seen as representing a significant regulatory milestone for Altria’s (MO) Helix division and for the U.S. oral nicotine category overall.
By granting the products legal marketing status, the FDA effectively endorses a scientific conclusion that, under prescribed use and marketing conditions, the likely benefits of adult smokers switching or completely transitioning to these pouches can outweigh the risks, including potential youth uptake. Altria (MO) on! Plus becomes just the third flavored nicotine product, along with NJOY disposable vapes and ZYN, to receive market-granted orders.
Looking ahead, the development reduces regulatory overhang around at least part of Altria’s (MO) pouch portfolio and gives retailers and distributors more confidence to support on! Plus with wider distribution and merchandising, particularly in key growth states and convenience channels.
“Under this pilot program, we would anticipate British American Tobacco’s Velo Plus (moist), Philip Morris/Swedish Match’s ZYN Ultra (moist), and other dry/moist nicotine pouch products to have decisions released over the near term, which we believe will be beneficial to retailers/consumers alike to have more legal options that are less harmful than combustible cigarettes,” advised Bank of America analyst Lisa Lewandowski. The firm thinks that flavors will pay a key part in getting cigarette smokers to switch to the lower harm smoke-free products.
Altria (MO) was up 1.2% in late morning trading, while Philip Morris International (PM) rose 2.3% and British American Tobacco (BTI) gained 1.0%.