CEO Q&A: Altria Boss on Getting Into Weed, Taking Risks
March 23 2019 - 12:31AM
Dow Jones News
By Jennifer Maloney
Howard Willard, a two-decade veteran of Altria Group Inc., took
over as CEO of the Marlboro maker last year and quickly struck two
deals that have upended the company: investing in e-cigarette
startup Juul Labs Inc. and in Canadian cannabis grower Cronos
Group. He sat down with The Wall Street Journal in February for an
interview. Here are edited excerpts:
On getting into the cannabis market:
I would say that over the two years prior to me becoming CEO we
had, a number of times, done a deep analysis of the cannabis
business.
I was surprised in the course of a year how I went from
believing it was going to be a long time, or maybe never that it
was going to be legal, to being convinced that it becoming
federally legal in the U.S. was highly likely or even
inevitable.
We went out and we met with most of the large Canadian
companies, and we very quickly became convinced that the world-wide
opportunity was quite attractive. There was an increasing number of
countries around the world that were legalizing it both medically
and recreationally, and so it was an interesting opportunity even
beyond the U.S. market.
On changing the corporate culture:
For our business, for a long time, we had a pretty stable
business, and we had a somewhat risk-averse culture. We sort of
ingrained that in people. So they have to, in some respects, keep
the best of that, but leave a lot of it behind and be more
innovative. Frankly, just to be more welcoming to all
employees.
We've picked up speed because I believe now that the pace of
change in the tobacco business has accelerated. The benefit you can
get from having a diverse and inclusive workforce is even greater.
I think it's well-proven that diverse teams make better decisions,
faster decisions, and are more willing to challenge the status quo
and innovate, and that's going to be critical to our success.
On investing in Juul and shutting down Altria's e-cigarette
business:
In the first three-quarters of 2018 it became pretty clear that
Juul was a unique and compelling product and that compared to our
existing e-cigarette products, we were not going to beat them in
the marketplace.
Then we had to start talking about well, could we leapfrog them,
and the challenge we faced was that because any new product had to
be approved by the FDA, there was probably a three- to five-year
delay before an entirely new or evolved product could be placed in
the market.
It was a fairly clear-cut decision, but I think it was an
emotional decision for us because we had put our best people to
work on the e-vapor organic effort. They have developed very
satisfying products that early on were converting adult cigarette
smokers. It just so happened that in the end Juul came up with a
more compelling product and started to grow more rapidly.
On the FDA and youth vaping:
We've been working with the FDA for quite some time. We were the
only major tobacco company that supported regulation of the
industry by the FDA, and we've been regulated by them since 2009,
and we worked very hard to be a responsible player in the
industry.
[FDA chief Scott Gottlieb] was quite influential at convincing
us to change our position on the minimum age of purchase of all
tobacco products. We've traditionally supported 18, we're now
supporting 21, and we're trying to accomplish that not only at the
federal level but also at the state level. I believe that's
probably the single biggest thing we can do to help drive down
youth usage of e-vapor products.
(END) Dow Jones Newswires
March 23, 2019 00:16 ET (04:16 GMT)
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