WEBVTT 00:00:00.000 --> 00:00:02.799 Welcome back to the deep dive. We have a really 00:00:02.799 --> 00:00:05.259 fascinating story for you today. We're going 00:00:05.259 --> 00:00:08.000 inside one of the world's most historically successful 00:00:08.000 --> 00:00:10.919 and I think it's fair to say most controversial 00:00:10.919 --> 00:00:13.980 corporations. This is a story about shedding 00:00:13.980 --> 00:00:17.260 a toxic name making some truly billion dollar 00:00:17.260 --> 00:00:20.500 bets and a long complicated legal battle that 00:00:20.500 --> 00:00:22.980 really forced a fundamental change in how the 00:00:22.980 --> 00:00:25.359 company operates. It really did. We're diving 00:00:25.359 --> 00:00:28.219 into Altria Group Inc. Now for those of you who 00:00:28.219 --> 00:00:30.170 might not recognize that corporate name. This 00:00:30.170 --> 00:00:31.670 is the company that used to be known as Philip 00:00:31.670 --> 00:00:34.390 Morris Companies, Inc. Today, it's this massive 00:00:34.390 --> 00:00:36.469 American corporation behind some huge tobacco 00:00:36.469 --> 00:00:38.990 names, mostly focused here in the U .S. market. 00:00:39.090 --> 00:00:42.189 But its current structure is, well, it's a labyrinth 00:00:42.189 --> 00:00:44.899 of spinoffs and strategic investments. And that 00:00:44.899 --> 00:00:47.060 structure is exactly what makes this deep dive 00:00:47.060 --> 00:00:50.219 so compelling. I mean, its main longest held 00:00:50.219 --> 00:00:53.200 asset is still Philip Morris USA. That's the 00:00:53.200 --> 00:00:56.520 domestic tobacco arm. But Altria is, you know, 00:00:56.520 --> 00:00:58.479 it's no longer just a cigarette company. They 00:00:58.479 --> 00:01:01.060 have these major stakes in the global brewing 00:01:01.060 --> 00:01:04.780 giant AB InBev. They've plunged, what, $1 .8 00:01:04.780 --> 00:01:07.700 billion into the Canadian cannabis market with 00:01:07.700 --> 00:01:10.780 Kronos Group. And with a pretty startling irony, 00:01:10.980 --> 00:01:12.840 they're now investing in specialized medical 00:01:12.840 --> 00:01:15.659 research companies. It's an immense, powerful 00:01:15.659 --> 00:01:18.099 financial entity. It's listed on the S &P 500, 00:01:18.319 --> 00:01:20.959 which is a clear signal of its continued financial 00:01:20.959 --> 00:01:23.120 dominance. Though it's worth noting a little 00:01:23.120 --> 00:01:25.459 historical detail here. It used to be a component 00:01:25.459 --> 00:01:27.920 of the Dow Jones Industrial Average, the DJIA, 00:01:28.120 --> 00:01:30.659 but that was until 2008. The standoffs that year 00:01:30.659 --> 00:01:32.840 were just so vast that it actually forced the 00:01:32.840 --> 00:01:34.840 company's removal from that index. Okay, let's 00:01:34.840 --> 00:01:36.700 unpack this. So we're looking at a company trying 00:01:36.700 --> 00:01:38.920 really desperately to evolve its identity, but 00:01:38.920 --> 00:01:40.760 it's carrying this huge amount of historical 00:01:40.760 --> 00:01:43.200 baggage. We have to understand this. strategy 00:01:43.200 --> 00:01:46.319 for escaping that past. And the name change from 00:01:46.319 --> 00:01:48.180 Philip Morris to Altria, that feels like the 00:01:48.180 --> 00:01:51.780 starting line. That baggage is the central and 00:01:51.780 --> 00:01:55.480 I'd say inescapable tension here. The rebranding 00:01:55.480 --> 00:01:57.819 to Altria happened back in 2003. And you have 00:01:57.819 --> 00:02:00.319 to remember the context. This is right when the 00:02:00.319 --> 00:02:02.980 legal and regulatory pressure against the tobacco 00:02:02.980 --> 00:02:05.579 industry in the U .S. was, I mean, it was reaching 00:02:05.579 --> 00:02:07.980 a fever pitch. Yeah. And when a company with 00:02:07.980 --> 00:02:09.979 a name like Philip Morris, which is globally 00:02:09.979 --> 00:02:13.610 recognized, a multi -billion dollar brand just 00:02:13.610 --> 00:02:16.849 jettisons it. The public reason is never the 00:02:16.849 --> 00:02:19.030 only reason. So what was the official story? 00:02:19.189 --> 00:02:21.250 The stated goal, according to the company, was 00:02:21.250 --> 00:02:23.990 to emphasize diversification. They argued that 00:02:23.990 --> 00:02:26.090 the old name, Philip Morris Companies, Inc., 00:02:26.090 --> 00:02:28.409 it just narrowly defined them as a tobacco business. 00:02:29.150 --> 00:02:30.909 But, you know, at the time they held this enormous 00:02:30.909 --> 00:02:34.110 84 % stake in Kraft Foods on top of their massive 00:02:34.110 --> 00:02:36.949 international operations. So Altrio was supposedly 00:02:36.949 --> 00:02:39.090 created to reflect this bigger, more diverse 00:02:39.090 --> 00:02:41.750 identity. The name itself comes from a Latin 00:02:41.750 --> 00:02:44.460 root meaning high. sort of suggesting lofty values. 00:02:44.599 --> 00:02:46.560 But the timing of it, right in the middle of 00:02:46.560 --> 00:02:48.580 all these escalating lawsuits and public health 00:02:48.580 --> 00:02:50.979 criticism, it just screams that the name change 00:02:50.979 --> 00:02:53.379 was defensive. Was it really designed to mask 00:02:53.379 --> 00:02:56.039 the association with tobacco? The sources we've 00:02:56.039 --> 00:02:58.020 looked at strongly suggest that the external 00:02:58.020 --> 00:03:00.500 perception was, yeah, it was heavily about damage 00:03:00.500 --> 00:03:03.139 control. We actually have documentation from 00:03:03.139 --> 00:03:06.159 the company's own branding consultants. the Worthland 00:03:06.159 --> 00:03:08.759 Group. They noted internally that the name change 00:03:08.759 --> 00:03:11.780 offered the possibility of masking the negatives 00:03:11.780 --> 00:03:15.000 associated with the tobacco business. It was 00:03:15.000 --> 00:03:17.120 an attempt at corporate insulation, trying to 00:03:17.120 --> 00:03:19.300 shield those profitable food and international 00:03:19.300 --> 00:03:23.300 assets from the perpetual political and legal 00:03:23.300 --> 00:03:26.219 attacks aimed at U .S. tobacco. So if the tobacco 00:03:26.219 --> 00:03:28.439 division gets hit with another massive lawsuit, 00:03:28.620 --> 00:03:31.599 this new diversified corporation, Altria, it 00:03:31.599 --> 00:03:34.120 just looks a little cleaner to Wall Street and 00:03:34.120 --> 00:03:36.300 to the public. It's a corporate shield built 00:03:36.300 --> 00:03:38.580 on semantics. That is precisely the motivation. 00:03:38.800 --> 00:03:41.759 And the irony in the name choice is it's almost 00:03:41.759 --> 00:03:44.439 astounding. Altria claimed it meant high, but 00:03:44.439 --> 00:03:47.990 the renowned linguist Steven Pinker was. let's 00:03:47.990 --> 00:03:50.289 just say highly critical of this attempt at corporate 00:03:50.289 --> 00:03:53.169 spin. He called it an egregious example of phonesthesia. 00:03:53.389 --> 00:03:55.490 Okay, let's pause on that term, phonesthesia. 00:03:55.650 --> 00:03:57.770 For you listening, what exactly does that mean 00:03:57.770 --> 00:04:00.310 in this context? Phonesthesia is the association 00:04:00.310 --> 00:04:03.550 of certain sounds in a word with specific meanings, 00:04:03.789 --> 00:04:06.430 often subconsciously. So think of words that 00:04:06.430 --> 00:04:09.449 start with gluh, like glimmer or gleam. They 00:04:09.449 --> 00:04:11.629 often relate to light. In Altria's case, it has 00:04:11.629 --> 00:04:14.250 the first four letters of altruism, A -L -T -R. 00:04:14.879 --> 00:04:17.259 Pinker's argument was that the company was actively 00:04:17.259 --> 00:04:19.839 trying to exploit this linguistic similarity 00:04:19.839 --> 00:04:22.680 to and I'm quoting here switch its image from 00:04:22.680 --> 00:04:25.220 bad people who sell addictive carcinogens to 00:04:25.220 --> 00:04:27.560 a place or state marked by altruism and other 00:04:27.560 --> 00:04:30.579 lofty values that. is a critical insight so they 00:04:30.579 --> 00:04:32.500 weren't just changing the label on the can they 00:04:32.500 --> 00:04:34.240 were attempting to perform a kind of linguistic 00:04:34.240 --> 00:04:37.379 baptism to wash away decades of controversy hoping 00:04:37.379 --> 00:04:40.439 the new name would imply virtue and that right 00:04:40.439 --> 00:04:42.600 there sets up the whole critical lens for this 00:04:42.600 --> 00:04:45.160 deep dive how much of altria's strategy today 00:04:45.160 --> 00:04:47.660 is genuine evolution and how much is just sophisticated 00:04:47.660 --> 00:04:49.839 corporate spin to keep the core business going 00:04:49.839 --> 00:04:52.860 the name change in 2003 was really just the beginning 00:04:52.860 --> 00:04:55.779 the next big move was this radical almost surgical 00:04:55.779 --> 00:04:58.139 restructuring of the whole corporate body that 00:04:58.350 --> 00:05:02.310 between 2007 and 2008. Altria executed two massive 00:05:02.310 --> 00:05:04.810 spin -offs. Why the immediate and drastic need 00:05:04.810 --> 00:05:06.790 to divide the company? Well, the main driver 00:05:06.790 --> 00:05:09.889 was really two -fold. Legal insulation and, of 00:05:09.889 --> 00:05:12.529 course, maximizing shareholder value. The U .S. 00:05:12.529 --> 00:05:15.189 legal environment was just becoming toxic and 00:05:15.189 --> 00:05:17.810 unpredictable for the tobacco industry. So by 00:05:17.810 --> 00:05:20.170 dividing up the empire, Altria could separate 00:05:20.170 --> 00:05:24.529 its high litigation U .S. core from the potentially 00:05:24.529 --> 00:05:27.290 higher growth, lower regulatory risk international 00:05:27.290 --> 00:05:30.069 and non -tobacco businesses. OK, so let's detail 00:05:30.069 --> 00:05:32.829 that first major spinoff, the divestiture of 00:05:32.829 --> 00:05:35.129 the food giant. Right. That was Kraft Foods Inc. 00:05:35.720 --> 00:05:38.560 In March of 2007, Altria spun off its remaining 00:05:38.560 --> 00:05:42.160 88 .1 % stake. They distributed those shares 00:05:42.160 --> 00:05:44.819 directly to Altria shareholders. This really 00:05:44.819 --> 00:05:47.240 completed a long process of decoupling itself 00:05:47.240 --> 00:05:49.939 from that huge food conglomerate. And the strategic 00:05:49.939 --> 00:05:51.860 reasoning is pretty clear. Kraft was stable, 00:05:51.980 --> 00:05:54.750 valuable, non -controversial. But its stock valuation 00:05:54.750 --> 00:05:57.230 was arguably being dragged down by all the political 00:05:57.230 --> 00:05:59.269 and legal baggage of its parent tobacco company, 00:05:59.449 --> 00:06:01.910 separating them unlocked value for shareholders. 00:06:02.209 --> 00:06:04.310 And the second spinoff, Philip Morris International, 00:06:04.769 --> 00:06:06.670 that was even more pivotal for the future of 00:06:06.670 --> 00:06:09.470 the tobacco industry, right? Absolutely. In March 00:06:09.470 --> 00:06:12.769 2008, the entire international arm, Philip Morris 00:06:12.769 --> 00:06:16.420 International, or PMI, was spun off. Altria basically 00:06:16.420 --> 00:06:21.139 just distributed all of PMI's shares to its existing 00:06:21.139 --> 00:06:24.259 stockholders. This created two completely separate 00:06:24.259 --> 00:06:27.259 publicly traded tobacco giants. And it was, you 00:06:27.259 --> 00:06:29.300 know, a masterstroke of financial engineering. 00:06:29.360 --> 00:06:31.620 It was designed to insulate those lucrative global 00:06:31.620 --> 00:06:34.120 profits from these crippling U .S. litigation 00:06:34.120 --> 00:06:36.680 judgments. That division though, it must have 00:06:36.680 --> 00:06:38.819 had major operational consequences, especially 00:06:38.819 --> 00:06:40.800 for the U .S. workforce and the manufacturing 00:06:40.800 --> 00:06:43.860 base. That's a detail that often gets lost in 00:06:43.860 --> 00:06:45.759 the big financial press releases. The consequences 00:06:45.759 --> 00:06:49.350 were immediate and they were severe. As soon 00:06:49.350 --> 00:06:52.129 as PMI became independent, its former subsidiaries, 00:06:52.250 --> 00:06:54.290 which were massive buyers of U .S. grown and 00:06:54.290 --> 00:06:56.230 manufactured tobacco products, they just stopped 00:06:56.230 --> 00:06:58.569 those purchases. And the loss of that colossal 00:06:58.569 --> 00:07:00.769 international demand, it created an immediate 00:07:00.769 --> 00:07:03.649 glut of capacity in U .S. operations. Wow. That 00:07:03.649 --> 00:07:05.449 sounds like a direct hit to the domestic production 00:07:05.449 --> 00:07:07.449 line. What was the immediate fallout on the ground, 00:07:07.569 --> 00:07:09.709 particularly in the U .S. manufacturing heartland? 00:07:09.910 --> 00:07:12.569 The immediate result was painful. Starting around 00:07:12.569 --> 00:07:16.129 2007, it led directly to the closure of a modern, 00:07:16.189 --> 00:07:18.829 newly renovated plant. in North Carolina. And 00:07:18.829 --> 00:07:21.129 across the board, Altria's U .S. manufacturing 00:07:21.129 --> 00:07:25.089 capacity saw about a 50 % reduction. This triggered 00:07:25.089 --> 00:07:28.670 huge layoffs, induced early retirements, a massive 00:07:28.670 --> 00:07:30.750 workforce reduction that affected thousands of 00:07:30.750 --> 00:07:32.910 employees and contractors in Richmond and North 00:07:32.910 --> 00:07:35.870 Carolina. The human cost of that spinoff was 00:07:35.870 --> 00:07:38.230 substantial. It's the price of division, essentially. 00:07:38.389 --> 00:07:40.649 They paid for their legal and financial insulation 00:07:40.649 --> 00:07:43.189 with American manufacturing jobs. And meanwhile, 00:07:43.430 --> 00:07:45.529 they also finalized the move of the corporate 00:07:45.529 --> 00:07:47.829 headquarters. Yes. The headquarters officially 00:07:47.829 --> 00:07:50.689 relocated in 2008 from Midtown Manhattan, New 00:07:50.689 --> 00:07:53.910 York City to Henrico County, Virginia. The timing 00:07:53.910 --> 00:07:56.009 was strategic. They consolidated their executive 00:07:56.009 --> 00:07:58.410 function right next to their massive operational 00:07:58.410 --> 00:08:00.949 footprint. The company claimed this was a pure 00:08:00.949 --> 00:08:03.629 cost -saving measure. Was that the main driver 00:08:03.629 --> 00:08:06.569 or was there more to it? Cost savings were certainly 00:08:06.569 --> 00:08:09.370 paramount. A spokesperson at the time estimated 00:08:09.370 --> 00:08:11.730 the move would save the company over $60 million 00:08:11.730 --> 00:08:15.569 a year just by trading expensive New York City 00:08:15.569 --> 00:08:18.050 corporate infrastructure for lower -cost Virginia 00:08:18.050 --> 00:08:21.170 operations. But it also reflected a practical 00:08:21.170 --> 00:08:24.009 reality. The vast majority of their operational 00:08:24.009 --> 00:08:26.949 research and manufacturing staff had been based 00:08:26.949 --> 00:08:30.329 in or around Richmond for decades. Moving the 00:08:30.329 --> 00:08:33.049 executive core there to streamline decision making 00:08:33.049 --> 00:08:35.710 and reinforce the corporate ID with the tobacco 00:08:35.710 --> 00:08:38.350 heartland. And the sheer physical footprint they 00:08:38.350 --> 00:08:40.549 have in the Richmond area is substantial. That 00:08:40.549 --> 00:08:42.710 makes the move seem pretty logical. It's still 00:08:42.710 --> 00:08:44.970 massive. The headquarters is in Henrico County. 00:08:45.190 --> 00:08:47.389 More importantly, they have the Altria Center 00:08:47.389 --> 00:08:49.629 for Research and Technology in downtown Richmond. 00:08:49.850 --> 00:08:53.059 That's a vast 400. 150 ,000 square foot, $350 00:08:53.059 --> 00:08:56.559 million facility that houses roughly 600 scientists 00:08:56.559 --> 00:08:59.360 and engineers. Plus the manufacturing center 00:08:59.360 --> 00:09:02.000 in South Richmond, which despite those closures 00:09:02.000 --> 00:09:04.519 we just mentioned, is still a critical operational 00:09:04.519 --> 00:09:07.539 hub. So the immediate result of this division 00:09:07.539 --> 00:09:10.159 is maybe the most telling metric. When these 00:09:10.159 --> 00:09:12.580 two corporate entities, Altria and Philip Morris 00:09:12.580 --> 00:09:15.700 International emerged, which one did the market 00:09:15.700 --> 00:09:18.779 judge to be the bigger financial force? The global 00:09:18.779 --> 00:09:22.669 arm, PMI. proved immediately dominant. Just two 00:09:22.669 --> 00:09:25.549 years after the split, in 2010, the remaining 00:09:25.549 --> 00:09:28.470 domestic company, Altria Group, was ranked at 00:09:28.470 --> 00:09:31.850 fortune number 137. Its former asset, Philip 00:09:31.850 --> 00:09:34.070 Morris International, ranked significantly higher 00:09:34.070 --> 00:09:37.110 at 94th. So this shows that while Altria kept 00:09:37.110 --> 00:09:39.769 the brand heritage in the U .S., the truly massive 00:09:39.769 --> 00:09:42.590 growth potential and operational value unencumbered 00:09:42.590 --> 00:09:46.000 by U .S. litigation risks went with... PMI. So 00:09:46.000 --> 00:09:48.620 Altria kept the legal risk and the domestic market, 00:09:48.700 --> 00:09:50.580 while PMI took the financial engines and the 00:09:50.580 --> 00:09:53.340 global market potential. The strategy was crystal 00:09:53.340 --> 00:09:56.100 clear. Compartmentalize the risk by severing 00:09:56.100 --> 00:09:58.519 the operation. This corporate shuffling, the 00:09:58.519 --> 00:10:01.120 rebrand to Altria, the splitting of assets. It 00:10:01.120 --> 00:10:02.879 was all happening against the backdrop of this 00:10:02.879 --> 00:10:05.539 intensifying legal nightmare. Let's move to the 00:10:05.539 --> 00:10:07.600 core of that legal reckoning now and the findings 00:10:07.600 --> 00:10:09.820 of civil fraud. Right. And this is where we move 00:10:09.820 --> 00:10:12.919 from corporate structure to corporate deception. 00:10:13.659 --> 00:10:15.720 The pressure really culminated in that powerful 00:10:15.720 --> 00:10:18.960 2006 federal court ruling. It didn't just find 00:10:18.960 --> 00:10:21.840 them. It established guilt. Altria, along with 00:10:21.840 --> 00:10:24.019 R .J. Reynolds and others, was found guilty of 00:10:24.019 --> 00:10:26.919 civil fraud and racketeering. Racketeering. That's 00:10:26.919 --> 00:10:28.940 a serious charge usually reserved for organized 00:10:28.940 --> 00:10:31.840 crime. What specific acts of sustained deception 00:10:31.840 --> 00:10:34.500 did the court identify to warrant that kind of 00:10:34.500 --> 00:10:36.860 finding? Well, the finding covered decades of 00:10:36.860 --> 00:10:38.779 systematic denial about the health effects of 00:10:38.779 --> 00:10:41.379 smoking and secondhand smoke. But one specific, 00:10:41.580 --> 00:10:44.320 highly publicized element involved the fraudulent 00:10:44.320 --> 00:10:46.840 marketing of light and low -tar cigarettes. The 00:10:46.840 --> 00:10:49.259 idea being that the public was deceived into 00:10:49.259 --> 00:10:50.919 thinking these products were safer, correct? 00:10:51.200 --> 00:10:53.899 Precisely. For example, a lawsuit claimed this 00:10:53.899 --> 00:10:56.559 marketing constituted fraudulent misrepresentations 00:10:56.559 --> 00:10:59.600 under the Maine Unfair Trade Practices Act, or 00:10:59.600 --> 00:11:02.799 MUTPA. The core finding was that the companies 00:11:02.799 --> 00:11:05.179 knew these products were not safer. In fact, 00:11:05.179 --> 00:11:06.940 because of the way smokers changed their behavior, 00:11:07.139 --> 00:11:09.659 you know, taking deeper drags or smoking more 00:11:09.659 --> 00:11:11.879 often to get the nicotine dose they needed, the 00:11:11.879 --> 00:11:14.279 risk was often the same or even higher. But the 00:11:14.279 --> 00:11:17.129 truly shocking revelation. The thing that exposed 00:11:17.129 --> 00:11:19.769 the calculated nature of the addiction wasn't 00:11:19.769 --> 00:11:22.490 just about marketing lies. It was about the fundamental 00:11:22.490 --> 00:11:25.590 chemistry of the product itself. This is where 00:11:25.590 --> 00:11:27.549 we need to get into the technical details uncovered 00:11:27.549 --> 00:11:29.830 in that ruling. This is the most crucial takeaway 00:11:29.830 --> 00:11:32.669 from the 2006 case. The court found evidence 00:11:32.669 --> 00:11:35.389 of a deliberate, highly sophisticated strategy 00:11:35.389 --> 00:11:38.409 of chemical manipulation and was designed specifically. 00:11:39.049 --> 00:11:41.730 to maximize product dependence. How exactly was 00:11:41.730 --> 00:11:44.490 that articulated in the court findings? The findings 00:11:44.490 --> 00:11:47.190 stated, and I'm quoting here, that the defendants, 00:11:47.250 --> 00:11:49.690 quote, altered the chemical form of nicotine 00:11:49.690 --> 00:11:52.470 delivered in mainstream cigarette smoke for the 00:11:52.470 --> 00:11:54.690 purpose of improving nicotine transfer efficiency 00:11:54.690 --> 00:11:57.370 and increasing the speed with which nicotine 00:11:57.370 --> 00:12:00.600 is absorbed by smokers. So this wasn't about 00:12:00.600 --> 00:12:02.980 adding flavor or making the tobacco burn better. 00:12:03.059 --> 00:12:05.500 It was about engineering the drug delivery mechanism 00:12:05.500 --> 00:12:07.720 itself. Wait, they were engineering the speed 00:12:07.720 --> 00:12:09.580 of the high? They were essentially optimizing 00:12:09.580 --> 00:12:11.879 the rush that creates addiction? How did they 00:12:11.879 --> 00:12:14.279 do that? How did they achieve that faster absorption 00:12:14.279 --> 00:12:16.820 rate? The mechanism was manipulating the smoke's 00:12:16.820 --> 00:12:19.659 pH. And they did this by adding a common chemical 00:12:19.659 --> 00:12:22.659 compound ammonia to the tobacco. In chemistry, 00:12:22.820 --> 00:12:26.049 this process is known as freebasing. That term, 00:12:26.090 --> 00:12:29.070 freebasing, it carries instant connotations of 00:12:29.070 --> 00:12:31.570 increasing the potency and delivery speed of 00:12:31.570 --> 00:12:34.669 controlled substances. Explain exactly how adding 00:12:34.669 --> 00:12:37.289 ammonia does this in a cigarette. So nicotine 00:12:37.289 --> 00:12:40.610 exists in two forms, a salt form and a freebase 00:12:40.610 --> 00:12:43.330 form. The nicotine in its natural salt form, 00:12:43.490 --> 00:12:46.110 which is what you find in raw tobacco, is less 00:12:46.110 --> 00:12:48.509 volatile. It's absorbed pretty slowly by the 00:12:48.509 --> 00:12:51.570 body. By adding ammonia, you increase the alkalinity, 00:12:51.769 --> 00:12:54.710 you raise the smoke pH. This chemical shift converts 00:12:54.710 --> 00:12:57.029 the nicotine into its highly volatile freebase 00:12:57.029 --> 00:12:59.690 form. And what does that freebase form do once 00:12:59.690 --> 00:13:02.110 it hits the lungs? Freebase nicotine is far more 00:13:02.110 --> 00:13:03.690 easily absorbed through the membranes of the 00:13:03.690 --> 00:13:05.990 lungs and the respiratory tract. It hits the 00:13:05.990 --> 00:13:08.110 bloodstream much, much faster and reaches the 00:13:08.110 --> 00:13:10.309 brain more quickly. The court found that this 00:13:10.309 --> 00:13:13.009 manipulation caused smokers to be exposed to 00:13:13.009 --> 00:13:15.070 higher internal nicotine doses and become more 00:13:15.070 --> 00:13:17.470 addicted to the product. It's an artificially 00:13:17.470 --> 00:13:20.450 enhanced rapid dose delivery system. This is 00:13:20.450 --> 00:13:23.529 the aha moment that was revealed in court. And 00:13:23.529 --> 00:13:25.950 the timeline here is critical for that racketeering 00:13:25.950 --> 00:13:28.750 charge. When did the company know this manipulation 00:13:28.750 --> 00:13:32.710 maximized addiction and who authorized it? Internal 00:13:32.710 --> 00:13:35.110 documents that came out during litigation showed 00:13:35.110 --> 00:13:36.990 that these companies have been researching the 00:13:36.990 --> 00:13:39.629 effects of ammonia additives since the 1970s 00:13:39.629 --> 00:13:42.350 and 80s. They were documenting its impact on 00:13:42.350 --> 00:13:45.009 nicotine uptake and addictiveness. The court 00:13:45.009 --> 00:13:48.490 found this was a calculated, long -term strategy. 00:13:48.809 --> 00:13:50.929 And the racketeering charge comes from the fact 00:13:50.929 --> 00:13:52.830 that they implemented this sophisticated chemical 00:13:52.830 --> 00:13:55.909 strategy to maximize dependence while at the 00:13:55.909 --> 00:13:58.090 same time engaging in these public disinformation 00:13:58.090 --> 00:14:00.649 campaigns, stating under oath that they were 00:14:00.649 --> 00:14:02.850 just selling a legal product and disputing the 00:14:02.850 --> 00:14:05.690 science linking smoking and disease. They knew 00:14:05.690 --> 00:14:08.149 their public statements were false. The sophistication 00:14:08.149 --> 00:14:10.269 of the fraud is what's so stunning. They weren't 00:14:10.269 --> 00:14:12.409 just neglecting to warn people. They were actively 00:14:12.409 --> 00:14:14.059 and chemically engineering the fraud. their product 00:14:14.059 --> 00:14:17.500 to ensure maximum rapid addiction right up to 00:14:17.500 --> 00:14:19.080 the point where they tried to rebrand themselves 00:14:19.080 --> 00:14:22.139 as Altria, suggesting altruistic values. The 00:14:22.139 --> 00:14:25.299 duality is staggering. The legal finding confirms 00:14:25.299 --> 00:14:28.240 a deliberate, hidden, chemically optimized product 00:14:28.240 --> 00:14:31.399 designed for dependence running in direct opposition 00:14:31.399 --> 00:14:33.779 to the lofty values they claim the corporate 00:14:33.779 --> 00:14:36.919 rebrand represented. This historical foundation 00:14:36.919 --> 00:14:39.500 is crucial for understanding the high risk decisions 00:14:39.500 --> 00:14:41.759 they're making today. With the public health 00:14:41.759 --> 00:14:44.139 landscape shifting so dramatically, litigation 00:14:44.139 --> 00:14:46.379 costs soaring and their international engine 00:14:46.379 --> 00:14:50.839 now totally separate. Altria had to pivot. Aggressively 00:14:50.839 --> 00:14:53.600 toward new revenue streams. And this has resulted 00:14:53.600 --> 00:14:56.179 in a series of extremely high stakes, volatile 00:14:56.179 --> 00:14:58.799 acquisitions in what they call next generation 00:14:58.799 --> 00:15:01.820 nicotine and related markets. Right. Their early 00:15:01.820 --> 00:15:04.000 diversification attempts before the massive e 00:15:04.000 --> 00:15:06.860 -cig push focused on consolidating adjacent markets. 00:15:06.899 --> 00:15:10.139 So in 2009, they bought UST Inc. This was key 00:15:10.139 --> 00:15:12.340 because it ended any internal competition and 00:15:12.340 --> 00:15:14.440 brought the dominant smokeless tobacco brands 00:15:14.440 --> 00:15:17.320 Copenhagen and Skoll under their U .S. smokeless 00:15:17.320 --> 00:15:19.710 tobacco company banner. It cemented their domestic 00:15:19.710 --> 00:15:22.169 dominance in that sector. It also included their 00:15:22.169 --> 00:15:24.049 wine business, Chateau Saint -Michel, which was 00:15:24.049 --> 00:15:26.809 a nice non -controversial asset. But their internal 00:15:26.809 --> 00:15:29.809 attempts to catch the e -cigarette wave, they 00:15:29.809 --> 00:15:32.169 failed. They couldn't innovate successfully in 00:15:32.169 --> 00:15:34.659 -house. That's a crucial failure point. Altria 00:15:34.659 --> 00:15:36.759 launched its own e -cigarettes, the Mark 10 and 00:15:36.759 --> 00:15:39.059 Green Smoke brands, but they really struggled 00:15:39.059 --> 00:15:40.840 to gain any market share against the emerging 00:15:40.840 --> 00:15:43.320 competitors. They eventually just discontinued 00:15:43.320 --> 00:15:46.980 both brands in December of 2018. And that failure 00:15:46.980 --> 00:15:49.299 set the stage for one of the most volatile financial 00:15:49.299 --> 00:15:51.929 decisions in recent corporate history. Which 00:15:51.929 --> 00:15:56.230 brings us to the famous or maybe infamous JUL 00:15:56.230 --> 00:15:59.090 Labs acquisition. This was the moment Altria 00:15:59.090 --> 00:16:00.929 decided that if they couldn't build it, they 00:16:00.929 --> 00:16:02.690 would just buy the fastest growing player in 00:16:02.690 --> 00:16:05.889 the space. In December 2018, Altria finalized 00:16:05.889 --> 00:16:09.049 the acquisition of a 35 % minority stake in JUL 00:16:09.049 --> 00:16:13.450 Labs for a colossal $12 .8 billion. And to put 00:16:13.450 --> 00:16:15.269 that number in perspective for you, that was 00:16:15.269 --> 00:16:17.549 more than the entire gross domestic product of 00:16:17.549 --> 00:16:20.129 several small nations at the time. It was a staggering 00:16:20.129 --> 00:16:22.769 bet that the e -cigarette market would just continue 00:16:22.769 --> 00:16:25.570 its exponential unregulated growth forever. That 00:16:25.570 --> 00:16:28.110 valuation was clearly the high watermark for 00:16:28.110 --> 00:16:30.190 the company's market cap, which was valued at 00:16:30.190 --> 00:16:33.789 over $118 billion that same month. They were 00:16:33.789 --> 00:16:37.250 riding the euphoria of disruption. But the speed 00:16:37.250 --> 00:16:39.950 of the subsequent collapse of that value is truly 00:16:39.950 --> 00:16:44.950 astonishing. The investment aged poorly and instantaneously. 00:16:45.340 --> 00:16:48.259 Regulatory scrutiny driven largely by concerns 00:16:48.259 --> 00:16:51.179 over youth vaping and flavored products intensified 00:16:51.179 --> 00:16:54.120 almost immediately after the deal closed. Less 00:16:54.120 --> 00:16:57.059 than a year later, in November 2019, Altria was 00:16:57.059 --> 00:17:00.419 forced to take a massive $4 .5 billion write 00:17:00.419 --> 00:17:03.139 -down on that investment. A $4 .5 billion paper 00:17:03.139 --> 00:17:05.400 loss in under 12 months. That just shows you 00:17:05.400 --> 00:17:08.079 how volatile and regulatory dependent this modern 00:17:08.079 --> 00:17:10.339 nicotine market really is. And it kept falling. 00:17:10.559 --> 00:17:13.200 By July of 2022, the investment was reported 00:17:13.200 --> 00:17:16.180 to be worth only 5 % of the original $12 .8 billion. 00:17:16.750 --> 00:17:19.329 They essentially lit over $12 billion on fire 00:17:19.329 --> 00:17:21.849 in less than four years. This wasn't just a bad 00:17:21.849 --> 00:17:23.829 investment. It was a crisis of valuation and 00:17:23.829 --> 00:17:26.150 market timing, stemming from the fact that Altria 00:17:26.150 --> 00:17:28.990 completely misjudged the coming regulatory hammer. 00:17:29.190 --> 00:17:31.930 Despite that staggering near -total loss, did 00:17:31.930 --> 00:17:35.450 Altria just walk away? Or did they maintain the 00:17:35.450 --> 00:17:37.769 belief that e -cigarettes were essential to their 00:17:37.769 --> 00:17:40.809 future? They maintained their commitment, at 00:17:40.809 --> 00:17:42.589 least for a while. They announced they would 00:17:42.589 --> 00:17:44.869 continue supporting Juul and avoid investing 00:17:44.869 --> 00:17:47.230 in competing products. It was a signal of their 00:17:47.230 --> 00:17:49.690 dedication to see the investment through the 00:17:49.690 --> 00:17:52.569 regulatory challenges. But eventually, you know, 00:17:52.609 --> 00:17:54.809 market necessity forced their hand. And they 00:17:54.809 --> 00:17:57.210 pivoted to what they hope will be the new guard. 00:17:57.470 --> 00:17:59.869 Exactly. They returned to the e -cigarette market 00:17:59.869 --> 00:18:04.130 by acquiring NJJY Holdings, Inc. They completed 00:18:04.130 --> 00:18:07.950 that deal on June 1st, 2023. This marks a strategic 00:18:07.950 --> 00:18:10.740 shift. They're focusing on products that have 00:18:10.740 --> 00:18:13.039 potentially stronger regulatory positioning in 00:18:13.039 --> 00:18:15.420 the U .S. market. It demonstrates that e -vapor 00:18:15.420 --> 00:18:17.680 is still a fundamental, irreplaceable part of 00:18:17.680 --> 00:18:20.279 their diversification strategy, regardless of 00:18:20.279 --> 00:18:22.079 how much the initial failure costs them. And 00:18:22.079 --> 00:18:24.400 beyond e -cigarettes, Altria is also betting 00:18:24.400 --> 00:18:27.019 aggressively on entirely new, less traditional 00:18:27.019 --> 00:18:29.880 nicotine delivery systems, specifically heated 00:18:29.880 --> 00:18:32.039 tobacco and branching out into the completely 00:18:32.039 --> 00:18:34.700 non -nicotine areas. The heated tobacco segment 00:18:34.700 --> 00:18:38.480 is their long -term wager. In October 2022, Altria 00:18:38.480 --> 00:18:41.359 entered a joint venture with Japan Tobacco, creating 00:18:41.359 --> 00:18:44.859 a company called Horizon Innovations LLC. Altria 00:18:44.859 --> 00:18:48.640 has a 75 % stake, Japan Tobacco 25. And their 00:18:48.640 --> 00:18:51.299 primary goal with Horizon Innovations is to tackle 00:18:51.299 --> 00:18:53.859 the U .S. market with plume -heated tobacco sticks. 00:18:54.180 --> 00:18:57.500 What's the expected timeline for this? The timeline 00:18:57.500 --> 00:18:59.559 really illustrates the complexity of dealing 00:18:59.559 --> 00:19:02.450 with the FDA. They anticipate needing FDA approval, 00:19:02.609 --> 00:19:05.309 which was expected to take until 2025. This means 00:19:05.309 --> 00:19:07.470 customer sales aren't even projected to begin 00:19:07.470 --> 00:19:11.130 until 2027. It's a six to nine year plan from 00:19:11.130 --> 00:19:13.549 inception to widespread sales, which signals 00:19:13.549 --> 00:19:15.529 how serious they are about transitioning away 00:19:15.529 --> 00:19:17.930 from traditional combustibles, but also how slow 00:19:17.930 --> 00:19:20.150 that transition will be. OK, now let's look at 00:19:20.150 --> 00:19:22.410 the completely non -nicotine diversification, 00:19:22.690 --> 00:19:25.109 which ranges from recreational substances to 00:19:25.109 --> 00:19:27.900 serious medical research. Altria maintains substantial 00:19:27.900 --> 00:19:30.680 minority stakes in these controversial or adjacent 00:19:30.680 --> 00:19:33.460 fields. The largest non -nicotine investment 00:19:33.460 --> 00:19:37.720 was in 2018 when they acquired a 45 % stake in 00:19:37.720 --> 00:19:40.380 the Canadian cannabis company Kronos Group for 00:19:40.380 --> 00:19:44.440 $1 .8 billion. This gives them exposure to the 00:19:44.440 --> 00:19:46.539 North American recreational and medical cannabis 00:19:46.539 --> 00:19:48.819 market, positioning them for potential future 00:19:48.819 --> 00:19:51.789 U .S. federal legalization. And finally, the 00:19:51.789 --> 00:19:54.549 most darkly ironic element of their diversification, 00:19:54.869 --> 00:19:57.789 the investment in companies dedicated to treating 00:19:57.789 --> 00:20:00.230 the conditions that their core product exacerbates. 00:20:00.329 --> 00:20:02.470 This is the ultimate expression of the Altria 00:20:02.470 --> 00:20:06.309 duality. As of 2024, they've invested in science 00:20:06.309 --> 00:20:08.269 and medical companies that develop products for 00:20:08.269 --> 00:20:11.329 conditions caused or aggravated by smoking. For 00:20:11.329 --> 00:20:13.529 instance, they're invested in Lexaria Bioscience, 00:20:13.690 --> 00:20:16.069 which is a developer of proprietary drug delivery 00:20:16.069 --> 00:20:19.160 technology called Dehydratech. So their core 00:20:19.160 --> 00:20:21.920 business is based on chemically optimizing nicotine 00:20:21.920 --> 00:20:23.839 delivery into the bloodstream for addiction. 00:20:24.119 --> 00:20:26.200 And now they're investing in optimizing drug 00:20:26.200 --> 00:20:28.099 delivery technology for therapeutic purposes. 00:20:28.519 --> 00:20:32.519 Yes. They also invested in Micreos, a biotech 00:20:32.519 --> 00:20:35.039 company focused on recombinant proteins for chronic 00:20:35.039 --> 00:20:38.160 dermatology and oncology conditions. The company 00:20:38.160 --> 00:20:39.980 that was federally convicted of racketeering 00:20:39.980 --> 00:20:42.640 for chemically enhancing addiction is now investing 00:20:42.640 --> 00:20:45.240 in potential cancer treatments. It's a closed 00:20:45.240 --> 00:20:47.880 -loop system of profit and purpose that just... 00:20:47.880 --> 00:20:51.259 defies easy categorization. To understand how 00:20:51.259 --> 00:20:53.579 Altria can fund a multi -billion dollar cannabis 00:20:53.579 --> 00:20:57.539 stake, a failed $12 .8 billion e -cigarette bet, 00:20:57.720 --> 00:21:00.319 and continue to operate a freely litigated core 00:21:00.319 --> 00:21:02.480 business, we have to look at the foundational 00:21:02.480 --> 00:21:04.930 financial power of the company. I mean, historically, 00:21:05.150 --> 00:21:07.170 Altria and its predecessors were noted as among 00:21:07.170 --> 00:21:08.970 the best performing publicly traded companies 00:21:08.970 --> 00:21:11.890 of the entire 20th century. This gives them immense 00:21:11.890 --> 00:21:14.509 stability and, you know, very deep pockets. Despite 00:21:14.509 --> 00:21:16.289 the massive write downs and all the corporate 00:21:16.289 --> 00:21:18.230 surgery, what does that financial picture look 00:21:18.230 --> 00:21:20.549 like today? Is the core tobacco business still 00:21:20.549 --> 00:21:22.869 generating enough cash to fuel these erratic 00:21:22.869 --> 00:21:26.029 high risk bets? Oh, yeah. The core business is 00:21:26.029 --> 00:21:28.890 still an enormous cash cow. If we review the 00:21:28.890 --> 00:21:32.069 key 2024 financials, the scale of profitability 00:21:32.069 --> 00:21:36.549 is clear. Revenue was $24 .02 billion, operating 00:21:36.549 --> 00:21:39.829 income was $11 .24 billion, and net income was 00:21:39.829 --> 00:21:43.549 $11 .26 billion. These are immense figures that 00:21:43.549 --> 00:21:46.049 speak to the consistent, stable, and highly profitable 00:21:46.049 --> 00:21:48.799 nature of the domestic tobacco market. But those 00:21:48.799 --> 00:21:50.880 stable figures hide the incredible volatility 00:21:50.880 --> 00:21:53.019 that the diversification strategy introduced, 00:21:53.319 --> 00:21:55.900 especially with the JUL failure. We need to zero 00:21:55.900 --> 00:21:58.819 in on how that financial shockwave actually manifested. 00:21:59.160 --> 00:22:01.279 The net income figures perfectly illustrate the 00:22:01.279 --> 00:22:04.259 corporate roller coaster. So in 2018, before 00:22:04.259 --> 00:22:07.039 the full impact of the JUL investment hit, net 00:22:07.039 --> 00:22:10.500 income was a very healthy $6 .95 billion. But 00:22:10.500 --> 00:22:12.799 look at what happens in 2019. The company reported 00:22:12.799 --> 00:22:16.259 a massive net loss of negative $1 .3 billion. 00:22:16.880 --> 00:22:20.099 A loss that year after decades of almost ceaseless 00:22:20.099 --> 00:22:23.079 profit. That negative $1 .3 billion is the direct 00:22:23.079 --> 00:22:25.319 financial consequence of this spectacular failure 00:22:25.319 --> 00:22:28.519 to value JUL correctly. It is the absolute clear 00:22:28.519 --> 00:22:31.779 indicator of the cost of that failure. It confirms 00:22:31.779 --> 00:22:34.460 that a single strategic misstep in diversification 00:22:34.460 --> 00:22:37.640 can wipe out more than a year's worth of profit 00:22:37.640 --> 00:22:40.720 and temporarily derail the entire financial picture. 00:22:41.359 --> 00:22:43.680 But the stability of the legacy business quickly 00:22:43.680 --> 00:22:46.920 cushioned the blow. By 2020, they had rebounded 00:22:46.920 --> 00:22:50.890 dramatically to a net income of 4 .4%. This just 00:22:50.890 --> 00:22:53.609 shows the company's massive risk appetite. They 00:22:53.609 --> 00:22:56.009 can sustain losses that would bankrupt most other 00:22:56.009 --> 00:22:58.369 companies and still return to profitability within 00:22:58.369 --> 00:23:01.029 a year, funded entirely by the cash flow from 00:23:01.029 --> 00:23:03.450 combustible tobacco products. And that wealth 00:23:03.450 --> 00:23:06.369 translates directly into immense political influence. 00:23:06.670 --> 00:23:08.750 Their engagement in Washington isn't supplemental. 00:23:09.009 --> 00:23:11.470 It's existential. When your product is chemically 00:23:11.470 --> 00:23:13.410 engineered for addiction and you face constant 00:23:13.410 --> 00:23:16.029 regulatory threats, you have to become an influential 00:23:16.029 --> 00:23:18.750 force in policy just to survive. And to ensure 00:23:18.750 --> 00:23:20.990 your future products, like e -cigs and heated 00:23:20.990 --> 00:23:24.589 tobacco, face a favorable regulatory path. Let's 00:23:24.589 --> 00:23:26.730 quantify that lobbying power for you listening. 00:23:26.950 --> 00:23:28.849 What kind of resources are we talking about here? 00:23:28.930 --> 00:23:31.680 The figures are staggering. The Center for Public 00:23:31.680 --> 00:23:34.039 Integrity documented that Altria spent approximately 00:23:34.039 --> 00:23:38.079 $101 million lobbying the U .S. government between 00:23:38.079 --> 00:23:42.640 1998 and 2004 alone. That expenditure made them 00:23:42.640 --> 00:23:45.640 the second highest lobbying spender of any organization 00:23:45.640 --> 00:23:48.680 nationally during that specific critical period. 00:23:48.920 --> 00:23:52.099 That speaks to a dedicated, systematic application 00:23:52.099 --> 00:23:54.380 of capital aimed at influencing legislation. 00:23:54.990 --> 00:23:57.369 And this influence goes far beyond just tobacco 00:23:57.369 --> 00:24:00.410 laws. They delve into shaping the entire scientific 00:24:00.410 --> 00:24:02.549 and political climate. For instance, tell us 00:24:02.549 --> 00:24:04.710 more about their funding of climate change denial 00:24:04.710 --> 00:24:07.309 groups. Altria notably funded the Advancement 00:24:07.309 --> 00:24:09.890 of Sound Science Coalition. Now, on its face, 00:24:09.950 --> 00:24:12.069 that name sounds neutral, but it was a lobbying 00:24:12.069 --> 00:24:14.470 organization created to push back against the 00:24:14.470 --> 00:24:17.089 scientific consensus on anthropogenic climate 00:24:17.089 --> 00:24:19.509 change. Why would a tobacco company spend money 00:24:19.509 --> 00:24:21.950 fighting climate science? How does that connect 00:24:21.950 --> 00:24:24.109 to selling cigarettes? It's a deeply strategic 00:24:24.109 --> 00:24:26.910 move. By funding groups that question climate 00:24:26.910 --> 00:24:29.289 science, Altria contributes to a larger political 00:24:29.289 --> 00:24:32.190 ecosystem that's dedicated to promoting skepticism 00:24:32.190 --> 00:24:34.410 about all government -backed or consensus -driven 00:24:34.410 --> 00:24:37.009 science, especially when that science leads to 00:24:37.009 --> 00:24:39.920 restrictive regulations. If they can sow doubt 00:24:39.920 --> 00:24:42.420 about climate findings, it makes it easier to 00:24:42.420 --> 00:24:44.420 sow doubt about public health findings regarding 00:24:44.420 --> 00:24:47.220 smoking, disease, or the addictive properties 00:24:47.220 --> 00:24:50.279 of nicotine. It's an exercise in regulatory preemption 00:24:50.279 --> 00:24:52.960 and general scientific distrust. They also maintain 00:24:52.960 --> 00:24:55.420 extremely close ties with powerful conservative 00:24:55.420 --> 00:24:58.039 legislative organizations that focus on state 00:24:58.039 --> 00:25:00.700 -level policy. Correct. Daniel Smith represents 00:25:00.700 --> 00:25:02.960 Altria on the private enterprise board of the 00:25:02.960 --> 00:25:05.740 American Legislative Exchange Council, or ALICI. 00:25:06.170 --> 00:25:08.970 This is not a passive membership. ELISA -IC is 00:25:08.970 --> 00:25:10.829 highly influential because it functions as a 00:25:10.829 --> 00:25:13.049 body that drafts and promotes model legislation 00:25:13.049 --> 00:25:15.809 that conservative state lawmakers can then introduce 00:25:15.809 --> 00:25:18.450 in their own state capitals. By being on this 00:25:18.450 --> 00:25:21.049 board, Altria directly influences the drafting 00:25:21.049 --> 00:25:23.869 of favorable, pro -business legislation across 00:25:23.869 --> 00:25:26.829 dozens of states at once, making sure local regulatory 00:25:26.829 --> 00:25:29.759 threats are minimized. And their engagement reaches 00:25:29.759 --> 00:25:32.319 the absolute highest levels of U .S. governance. 00:25:32.619 --> 00:25:35.720 It does. For instance, Altria was recently listed 00:25:35.720 --> 00:25:38.240 as a major donor, funding the White House's East 00:25:38.240 --> 00:25:40.359 Wing demolition and the planned building of a 00:25:40.359 --> 00:25:44.460 new ballroom in 2025. These are high -profile 00:25:44.460 --> 00:25:47.119 access -granting donations that just underscore 00:25:47.119 --> 00:25:49.200 their persistent effort to maintain relationships 00:25:49.200 --> 00:25:52.579 and influence at the very apex of U .S. political 00:25:52.579 --> 00:25:55.119 activity. So in short, their political footprint 00:25:55.119 --> 00:25:57.960 is an elaborate defense system. It shields the 00:25:57.960 --> 00:26:00.759 highly profitable core business, it combats adverse 00:26:00.759 --> 00:26:03.180 public health science, and it clears the path 00:26:03.180 --> 00:26:05.380 for their highly regulated new generation of 00:26:05.380 --> 00:26:07.559 products like heated tobacco and e -cigarettes. 00:26:07.839 --> 00:26:10.339 It is a necessity of their business model. After 00:26:10.339 --> 00:26:12.599 being federally charged with racketeering, the 00:26:12.599 --> 00:26:14.980 only way to pivot into new highly regulated markets 00:26:14.980 --> 00:26:17.039 is by making sure you have a highly sophisticated, 00:26:17.319 --> 00:26:19.720 multi -million dollar political defense mechanism 00:26:19.720 --> 00:26:22.529 running continuously in the background. So. Let's 00:26:22.529 --> 00:26:24.670 synthesize the journey of Altria Group for you. 00:26:24.769 --> 00:26:26.990 We've tracked a company that attempted to chemically 00:26:26.990 --> 00:26:29.470 enhance addiction for decades, then tried to 00:26:29.470 --> 00:26:31.569 shed its controversial past with a strategic 00:26:31.569 --> 00:26:34.549 rebrand, moving from Philip Morris to Altria, 00:26:34.690 --> 00:26:38.349 hoping to evoke lofty values. And this transition 00:26:38.349 --> 00:26:40.589 was financed by the surgical spinoff of major 00:26:40.589 --> 00:26:43.670 assets, including Kraft and that massive international 00:26:43.670 --> 00:26:47.569 engine, PMI. That new identity, however, could 00:26:47.569 --> 00:26:50.630 not outrun the past. The 2006 legal reckoning 00:26:50.630 --> 00:26:53.349 revealed a shocking level of deliberate, chemically 00:26:53.349 --> 00:26:56.089 sophisticated product design. The use of ammonia, 00:26:56.309 --> 00:26:58.849 the freebasing process, aimed specifically at 00:26:58.849 --> 00:27:00.789 maximizing nicotine transfer and speeding up 00:27:00.789 --> 00:27:02.789 addiction, all while maintaining public disinformation 00:27:02.789 --> 00:27:06.049 campaigns. The modern Altria, therefore, is defined 00:27:06.049 --> 00:27:08.630 by its massive, high -risk financial bets on 00:27:08.630 --> 00:27:10.750 non -traditional tobacco and adjacent markets. 00:27:11.049 --> 00:27:13.490 We saw the profound financial turbulence from 00:27:13.490 --> 00:27:26.529 the disastrous $12 .8 billion And through all 00:27:26.529 --> 00:27:28.210 this financial volatility, the company maintained 00:27:28.210 --> 00:27:31.029 its foundational status as a powerhouse, capable 00:27:31.029 --> 00:27:34.009 of sustaining multi -billion dollar losses. And 00:27:34.009 --> 00:27:36.109 it continues to project its substantial political 00:27:36.109 --> 00:27:39.309 influence across scientific policy, state legislation 00:27:39.309 --> 00:27:43.029 via groups like ALX, and national politics, ensuring 00:27:43.029 --> 00:27:45.029 the survival of its ability to to market and 00:27:45.029 --> 00:27:47.549 sell nicotine. It's a company that has strategically 00:27:47.549 --> 00:27:50.150 divided itself, chemically optimized its product, 00:27:50.269 --> 00:27:52.230 and diversified into the most forward -looking 00:27:52.230 --> 00:27:55.109 yet controversial sectors cannabis and, most 00:27:55.109 --> 00:27:57.329 ironically, medical research focused on treating 00:27:57.329 --> 00:28:00.009 chronic illnesses. And this leads us back to 00:28:00.009 --> 00:28:02.269 the inherent foundational conflict we discussed 00:28:02.269 --> 00:28:04.730 right at the start, connecting all the threads 00:28:04.730 --> 00:28:07.930 for you as we close this deep dive. Altria operates 00:28:07.930 --> 00:28:10.549 worldwide. and is a major producer of tobacco, 00:28:10.769 --> 00:28:13.289 cigarettes, and products chemically engineered 00:28:13.289 --> 00:28:16.069 for addiction. Yet it's now investing heavily 00:28:16.069 --> 00:28:18.490 in medical products and biotech companies designed 00:28:18.490 --> 00:28:20.589 for the treatment of chronic illnesses, including 00:28:20.589 --> 00:28:23.650 those caused by tobacco. If we connect this to 00:28:23.650 --> 00:28:25.490 the bigger picture, it raises an important question. 00:28:25.849 --> 00:28:28.470 As the company expands its portfolio to include 00:28:28.470 --> 00:28:30.690 potentially therapeutic or wellness -focused 00:28:30.690 --> 00:28:33.210 investments, can a business fundamentally known 00:28:33.210 --> 00:28:35.410 for creating and chemically engineering addiction 00:28:35.410 --> 00:28:38.329 successfully pivot its entire corporate purpose 00:28:38.329 --> 00:28:41.450 and public perception? Or is the original core 00:28:41.450 --> 00:28:44.069 conflict between profit and public health an 00:28:44.069 --> 00:28:47.069 inescapable part of its corporate DNA? A profound 00:28:47.069 --> 00:28:49.130 question about corporate ethics and the limits 00:28:49.130 --> 00:28:51.210 of rebranding. Thank you for joining us for The 00:28:51.210 --> 00:28:52.529 Deep Dive. We'll see you next time.