Altria Gives Up on "Safer" Cigarettes, Sticking With Cancer Sticks

Amidst news that cigarette sales are continuing to decline (apparently people aren’t willing to spend $8 a pack on a product that kills them–who knew?), the WSJ reports that Philip Morris has given up trying on a healthier ultra-filtered cigarette.

WSJ: The nation’s largest cigarette maker, Altria Group Inc.’s Philip Morris USA, has failed in yet another attempt to sell Americans on a potentially safer cigarette, pulling the plug on Marlboro Ultra Smooth, a version of Marlboro that used a high-technology filter.

The product failure highlights the U.S. cigarette giant’s challenges in finding a source of growth to offset a worsening decline in U.S. cigarette sales. In the past, Altria could offset revenue decreases in the U.S. business with growth overseas, but Altria recently spun off its Philip Morris International operations.

Now Altria derives virtually all its revenue from Philip Morris USA, whose sales volume fell 4.6% last year, worse than the 4% decline in the overall U.S. cigarette market. (The company says “underlying” sales volume for 2007, adjusted for calendar differences and other factors, declined by 3.6%.) Philip Morris USA executives say they expect cigarette sales overall to decline at an annual rate of between 2.5% and 3% in coming years.

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