Can on! Help Altria Capture More of the Booming Pouch Market?

Altria’s on! brand is making waves in the nicotine pouch category, with Q2 2025 shipments jumping 26.5% year over year to 52.1 million cans. The brand now commands 8.7% of the U.S. oral tobacco market, capturing a respectable 16.7% share of the rapidly expanding nicotine pouch segment that now represents 52% of the total oral tobacco category.

I’ve watched Altria pour resources into building the on! brand through an aggressive marketing strategy. Their presence at NASCAR races, music festivals, and golf tournaments, coupled with digital campaigns generating 190 million impressions, reached over 170,000 adult tobacco consumers in early 2025. Brand awareness jumped 7 percentage points - not bad, but is it enough given the competition?

The financial impact looks promising. Their oral tobacco segment’s adjusted operating income climbed 10.9% year over year, with margins expanding to 68.7%. Yet I wonder if these numbers mask deeper challenges.

Competition is fierce. Philip Morris International’s ZYN saw 26% U.S. growth and a staggering 43% global volume increase, with expansion into 44 markets. Meanwhile, Turning Point Brands has emerged as a hungry challenger, with Modern Oral sales skyrocketing nearly eightfold to $30.1 million in Q2 2025.

Altria’s stock has outperformed recently, gaining 8.5% in the past month versus the industry’s 3.9%. Trading at a forward P/E of 12.2X (below the industry average of 15.35X), the company looks reasonably valued. Analyst estimates for 2025 and 2026 EPS have inched up slightly to $5.39 and $5.55 respectively.

But I’m skeptical about Altria’s long-term prospects. While on! shows promise, the company remains heavily dependent on declining cigarette volumes. Their competitors seem to be moving faster into global markets and alternative products. The question isn’t whether on! can grow - it’s whether that growth will be enough to offset Altria’s challenges in its core business before competitors lock up the most valuable segments of this emerging market.

Altria currently carries a Zacks Rank #3 (Hold).