The biggest cigarette company in America has asked the FDA not to spare handmade cigars from regulation. In a letter sent to the U.S. Food and Drug Administration, Altria—the $25 billion company behind Marlboro cigarettes, the parent of Nat Sherman, and the largest tobacco concern in the United States—asked the FDA to not exempt the small, handmade premium cigar industry from its tobacco regulations.
“We agree with FDA that there is ‘no appropriate public health justification to exclude premium cigars from regulation,’” read the letter, sent by Jose Luis Murillo, vice president of regulatory affairs for Altria.
At the top of the letter, dated June 25, Murillo wrote that the note was being sent not only by Altria, but also “on behalf of John Middleton Co. and Sherman Group Holdings LLC and its subsidiaries Nat Sherman.” Middleton is Altria’s machine-made cigar subsidiary, the maker of Black & Mild cigars. Nat Sherman is a company that has several premium cigar brands, including Timeless.
Among the detailed notes in the nine-page letter, Altria also voiced its support for having warning labels on premium cigars. “We agree that ‘premium’ cigars should bear appropriate warnings that take into account unique attributes of their packaging and size.”
Cigar Aficionado reached out to Altria for further comment. “While Altria supports FDA regulation of all tobacco products, we’ve said regulation does not need to be a one-size-fits-all approach. We have urged FDA to take into account the unique aspects and history of different tobacco product categories, including premium cigars, when it decides how to regulate them,” wrote Altria spokesman George Parman.
“Given Altria’s dominant position in the cigarette market and the machine-made cigar industry, it is no small wonder it is against aiding handmade cigarmakers,” said Marvin R. Shanken, editor and publisher of Cigar Aficionado magazine. “Frankly, it’s shameful that this $25 billion company would want to try and harm many of the smaller cigarmakers in order to protect its huge market presence in cigarettes and machine-made cigars. The handmade cigar industry is made up largely of small, family-owned companies. Handmade cigars are completely different from machine-made cigars and cigarettes. They deserve exemption from FDA regulation.”
Altria posted net revenues of $25.6 billion in 2017, with net earnings of $10.2 billion, and its largest subsidiary is Philip Morris USA. According to the company’s website, Philip Morris owns 50.7 percent of the U.S. cigarette market, and Marlboro alone has a 43.3 percent market share.
Altria also owns U.S. Smokeless Tobacco Co., the maker of Skoal and Copenhagen, and Washington state’s Ste. Michelle Wine Estates.
Altria entered the cigar business in 2007, when it acquired John Middleton Co. for $2.9 billion. Middleton is a leading maker of mass-market cigars, in particular the Black & Mild brand. Black & Milds are made by machine, come with plastic, paper or wooden filter tips and are sold in such flavors as wine, apple, cherry and cream. Most come in packs of five. Online, they sell for roughly 46 cents to 85 cents per cigar, depending on style.
In January 2017, Altria bought into the handmade cigar business by acquiring Sherman Group Holdings for undisclosed terms. In addition to the Nat Sherman cigar brands, the acquisition included the Nat Sherman cigarette business as well as the Nat Sherman Townhouse in New York City, a luxurious cigar store. Nat Sherman does not make its own cigars, and owns no cigar factories.