How Will Altria’s Move to the Near West End Affect the Local Economy?

Altria Group, the parent company of Philip Morris USA, will relocate to the Near West End in the near future as part of a cost saving measure. As Altria struggles to cut costs and remain viable as cigarette use decreases, what will this mean to the Near West End’s economy? More jobs? Construction? Expansion if Altria develops alternate sucessful products?

Altria Group is relocating its headquarters from New York to the Philip Morris USA campus on West Broad Street in Henrico County.

Altria Group Inc. is planning additional cost reductions, as the parent company of cigarette maker Philip Morris USA seeks to build its U.S. business after the spinoff of its international sister company.

The cost-cutting is part of a strategy to meet financial targets as U.S. cigarette consumption slowly declines, executives said yesterday.

“We are optimistic about our future,” Philip Morris USA CEO Michael E. Szymanczyk told investors and analysts at a conference in New York. He said the company’s strategy includes gaining market share in cigarettes and capitalizing on its Marlboro brand, while also expanding its business into products such as smokeless tobacco and cigars.

Szymanczyk will become chairman and chief executive of Altria Group after the company spins off Philip Morris International on March 28. Without the international unit, Altria will own its domestic cigarette company, Henrico County-based Philip Morris USA, and a 28.6 percent stake in Britain-based beer maker SABMiller PLC.

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The company projected that cigarette volume in the United States will fall between 2.5 percent to 3 percent in the next few years, but Szymanczyk said Altria is well-positioned to expand, citing its 50 percent share of the U.S. cigarette market, and its ventures in growing categories such as smokeless tobacco and cigars.

Asked whether the company foresees a bottom to the U.S. cigarette market or even its eventual disappearance, Szymanczyk said he couldn’t answer that.

“I know it is a big business, and it is a profitable business,” he said. “What we do is compete for a share of that market as it exists, and we seem to be pretty successful.”

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