Altria Group, Inc. 2013 CAGNY Investor Presentation Boca Raton, - PowerPoint PPT Presentation

Marlboro ’s Retail Share 42.6% 1954 1964 1974 1984 1994 2004 2012 Source: Maxwell; MSAi Shipments; IRI/Capstone – Total Retail Panel; IRP SymphonyIRI Group/Capstone Projected Retail Panel For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Marlboro NXT Distribution NXT Distribution Source: PM USA For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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Marlboro ’s Retail Share +0.6pp 42.6% 42.0% 2011 2012 Source: IRP SymphoneIRI Group/Capstone Projected Retail Panel For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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Black & Mild ’s Tipped Cigarillo Segment Share This space is blank because brand images which appeared 84% in the original presentation have been removed. Tipped Cigarillo Segment Source: SymphonyIRI Group InfoScan Cigar Tobacco Database For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

This space is blank because brand images which appeared in the original presentation have been removed. For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Black & Mild’ s Retail Performance +0.5pp This space is blank because 30.0% 29.5% brand images which appeared in the original presentation have been removed. 2011 2012 Source: SymphonyIRI Group InfoScan Cigar Tobacco Database For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

This space is blank because brand images which appeared in the original presentation have been removed. For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Marlboro’ s Retail Share +0.2pp Avg. Annual This space is blank because 42.6% 42.0% 42.6% 41.9% 41.8% brand images which appeared in the original presentation have been removed. 2008 2009 2010 2011 2012 Source: IRP SymphonyIRI Group/Capstone Projected Retail Panel Database For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Black & Mild’ s Retail Performance 0.0pp This space is blank because 30.0% 30.0% 29.5% brand images which appeared 29.0% in the original presentation have been removed. 2009 2010 2011 2012 Source: SymphonyIRI Group InfoScan Cigar Tobacco Database For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Smokeable Products Segment’s Results Adjusted OCI* Adjusted OCI* ($ in Billions) ($ in Billions) +4.7% +4.2% $6.3 $6.3 CAGR $6.5 $6.5 $6.0 $5.2 $3.0 $3.0 2008 2012 2011 2012 * For reconciliations of non-GAAP to GAAP measures visit www.altria.com Note: 2008 segment data have been recast to conform with the current-period segment reporting. Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Net Revenues/1000* 2008 — 2012 CAGR 5.5% 6% 5.3% 4.9% 0% Altria Smokeable RJRT and Santa Fe Lorillard *Net of FET Note: Domestic Volume ONLY; RJRT and Santa Fe excludes BAT; Lorillard excludes blu e-cigs Sources: Public filings, ALCS Finance and S&BD Estimates For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Adjusted Operating Companies Income Margins 2008 — 2012 10pp +7.4pp +7.3pp +0.1pp 0pp Altria Smokeable RJRT and Santa Fe Lorillard Note: RJRT and Santa Fe excludes BAT; Lorillard excludes blu e-cigs For reconciliation of non-GAAP to GAAP measures visit altria.com Sources: Public filings, ALCS Finance and S&BD Estimates For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Smokeless Products Companies Strategy Moist Smokeless Tobacco Snus (MST) and Snus Increase income by growing volume at or ahead of the category growth rate, while maintaining modest share momentum on Copenhagen and Skoal combined For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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Copenhagen ’s Natural Segment Share 100% This space is blank because brand images which appeared in the original presentation have been removed. 0% Natural Segment Source: SymphonyIRI Group InfoScan Smokeless Tobacco Database (FY 2012 – Retail Share) For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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Copenhagen ’s Retail Share Performance +5.6pp 28.4% 22.8% 2009 2012 Source: Altria company reports; SymphonyIRI Group InfoScan Smokeless Tobacco Database For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Copenhagen Southern Blend Distribution Southern Blend Distribution Source: USSTC For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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Smokeless Tobacco Segments Mint Segment Pouch Segment (Flavor) (Form) Skoal 35% Skoal 53% Source: SymphonyIRI Group InfoScan Smokeless Tobacco Database 2012 For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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Skoal Ready Cut Distribution Skoal Ready Cut Distribution Source: USSTC For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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Skoal ’s Side -label Communications This space is blank because brand images which appeared in the original presentation have been removed. For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Copenhagen and Skoal ’s Performance Combined Volume Combined Retail Share (Cans in Millions) (Percent) +7.6% +1.0pp CAGR Avg. Annual 681 50.6% 546 47.5% 2009 2012 2009 2012 Source: SymphonyIRI Group InfoScan Smokeless Tobacco Database For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Smokeless Products Segment’s Results Adjusted OCI* ($ in Millions) $959 +14.9% CAGR $632 2009 2012 * For reconciliations of non-GAAP to GAAP measures visit www.altria.com Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Ste. Michelle Wine Estates Strategy Wine Grow income by expanding share and distribution of premium wines For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Chateau Ste. Michelle Columbia Crest Stag’s Leap Wine Cellars 14 Hands For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

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For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Wine Segment Results Adjusted OCI* ($ in Millions) +12.5% CAGR $104 $73 2009 2012 * For reconciliations of non-GAAP to GAAP measures visit www.altria.com Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Invest In Premium Brands  Investments in premium brands delivered strong results in 2012  These investments and plans for 2013 position our operating companies well for the future For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Cost Management Strategy  Supports: -Adjusted OCI growth - Investments in our companies’ premium brands For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Cost Reduction Programs  Completed a $1.5 billion program in Q3 2011  Launched a new initiative in Q4 2011 - Expect $400 million in annualized savings by end of 2013  Current program focused on reducing cigarette-related infrastructure  Cost management and process improvement are part of the culture For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Efficient Corporate Structure Tobacco PM USA JMC USSTC Operating • Brand Management • Brand Management • Brand Management • Manufacturing • Manufacturing • Manufacturing Companies Service AGDC Companies • Sales, Distribution and Adult Consumer Engagement ALCS • Includes: Compliance, Finance, HR, Legal, R&D and Regulatory Affairs Note: For illustration purposes only For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Altria’s Balance Sheet  Secures the cash flow generated by its operating companies  Protects Altria’s investment grade credit rating  Supports Altria’s ability to return cash to shareholders -Primarily through dividends For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Altria’s Economic Interest in SABMiller Total Global Beer Profit Pool (~$31.5 Billion) This space is blank because brand images which appeared SABMiller 20% in the original presentation have been removed. Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners. Source: Altria company reports; ALCS SB&D estimates; other public company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Economic Interest in SABMiller  Contributes to: - Income diversification This space is blank because - EPS & dividend growth brand images which appeared in the original presentation have been removed. Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners. For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Altria’s Economic Interest in SABMiller Market Value ($ in Billions) $19.8 $3.4 Jul-02 Dec-12 Source: Altria company reports; Bloomberg closing stock price in GBP converted to USD as of Dec 31, 2012 For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

SABMiller  Low tax basis of under $500 million  Any sale would be taxed at corporate tax rate of ~35%  Regularly evaluate interest and currently believe maintaining investment is in best interests of shareholders For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Balance Sheet Actions August 2012:  Completed a tender offer, repurchasing high coupon debt  Issued new, lower cost debt  These actions: -Reduced 2018 and 2019 debt maturity towers -Lowered future interest expense -Reduced weighted average coupon rate For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Weighted Average Coupon Rate (1.9)pp 9.1% 7.2% 2009 Dec-12 Source: ALCS Finance For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Debt Maturities Associated annual interest payments of $160 million $0.5 Feb 2014 Nov 2013 $1.5 Debt Maturities Source: ALCS Finance For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Pension Plan Contribution  In January 2013, voluntary $350 million pension contribution -Approximately 82% funded on a Projected Benefit Obligation basis For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Altria’s Capital Expenditures 5-yr History $273 $241 $168 $125 - $150 $124 $105 2008 2009 2010 2011 2012 2013e Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Return Cash to Shareholders Dividend Payout Ratio – Food, Beverage and Tobacco Index 80% MO 79% RAI 74% LO 65% PM 59% HNZ 53% K 53% PEP 52% HSY 51% KO 49% GIS Note: Payout ratio ranks companies in the Food, Beverage and Tobacco Index in these respective categories as of Jan 31, 2013. Payout Ratios have been calculated using each company’s current annualized dividend rate / 2012 Consensus Adjusted EPS estimate. HNZ and GIS consensus estimates are comprised of the fiscal quarters most closely resembling the 2012 calendar year. KRFT is excluded due to lack of 2012 FY EPS estimates. Source: Bloomberg and Thomson Reuters For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Altria’s Dividend History  Long history of dividend payments and increases  Increased the dividend 46 times in the past 44 years For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Dividends ($ in Billions) $18.0 $3.6 $20.0 $14.4 $0.0 Dividends Share Repurchases Total Note: Data through March 28, 2008 through January 31, 2013 Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Altria’s Dividend Increases Since PMI Spin -off +8.7% CAGR $2.00 * 7.3% $1.76 7.9% 8.6% 2.9% 6.3% 10.3% * $1.16 $0.00 2008 Aug-08 Aug-09 Feb-10 Aug-10 Aug-11 Aug-12 2012 Note: 5-year CAGR assumes the post-PMI spin-off dividend of $0.29 per common share was the end of 2007 dividend rate * Annualized rate Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Dividend Growth Objective Annualized Dividend  Altria aims to increase its dividend in line with adjusted diluted EPS +7.3% growth $1.76 $1.64 Aug-11 Aug-12 Note: All dividends are subject to the discretion of Altria’s Board of Directors Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Dividends and Share Repurchases ($ in Billions) $18.0 $3.6 $20.0 $14.4 $0.0 Dividends Share Repurchases Total Note: Data from March 28, 2008 through January 31, 2013 Source: Altria company reports For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Current Share Repurchase Program  Repurchased shares valued at $1.1 billion in 2012  As of January 31, 2013, $57 million remained under current $1.5 billion program  Expect to complete by end of Q2 2013  Timing of share repurchase depends upon marketplace conditions and other factors  Program remains subject to the discretion of Altria’s Board For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Altria’s Core Strategies  Demonstrable progress over the last several years  Remain focused on strategies to create value in the future For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

External Environment  Has posed challenges for many years  History of success managing challenges in the external environment  Regulation, taxes and litigation continue to present risks  Highly developed capabilities to deal with risks For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

FDA Regulation  Focus areas include: -Compliance -Engagement Note: Trademarks used for discussion purposes only. All third party trademarks remain the property of the respective owners. For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Substantial Equivalence  FDA reviewing reports on products that were modified or introduced in market within statutory time period  While only FDA can determine its schedule, we expect continued progress in 2013 For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Modified Risk Tobacco Products  Opportunity related to product innovation  Law expressly recognizes the potential role of modified risk tobacco products  Advocating for scientific standards  FDA report due to Congress in April -Innovative products including modified risk tobacco products For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Tobacco Constituent Reporting  PM USA and USSTC completed first submission on constituents  By April 2013, FDA required to: -Issue regulations on timing of future reporting -Make public harmful and potentially harmful constituent information For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Other FDA Matters  Proposed regulations on other tobacco products  Potential changes to smokeless tobacco warning labels  Report on menthol cigarettes For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Weighted State Excise Tax - Cigarettes 9.7% - CAGR 3.0% - CAGR $1.75 $0.75 $0.82 $0.88 $0.99 $1.09 $1.19 $1.31 $1.37 $1.39 $0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 Note: Full Year SET is volume weighted by State Source: STARS Geo Aggregate Database For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

California Ballot Initiative  In June 2012, California voters defeated a ballot initiative For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

State Cigarette Excise Taxes  Tobacco products remain a target of excise tax increases  Our companies will continue to advocate against excessive tax increases For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

Tobacco and Health Litigation Environment  In 2012, we continued to achieve substantial success in managing litigation, though significant challenges remain For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013

For Investor Relations Purposes Only – CAGNY Conference, Feb. 19, 2013