Altria Group Inc. (MO) spooked shareholders today when it said cigarette shipments this year may plunge as much as 3.5 percent. The stock fell to a three-month low as investors wondered whether the Marlboro maker’s days as a growth company are behind it.

The company reported quarterly results that beat Wall Street expectations by a penny and affirmed guidance. It should not be regulated to the ash heap just yet. As Bloomberg News notes, "Chief Executive Officer Michael Szymanczyk trimmed discounts and raised prices to counter costs from the spinoff of its international division."

But looming on the horizon is the possibility that the FDA may be able to regulate tobacco as a drug, something activists have sought for years. Members of the House of Representatives passed the bill today despite objections from the White House. The bill stands a good shot at passing the Senate as well.

Of course, there is plenty of election-year politics going on and odds are that there are not enough votes to override a threatened presidential veto. The next administration – particularly if Barack Obama wins – will continue to push the bill hard even though some activists say it goes easy on the tobacco companies

Among the aspects of the legislation it gives the FDA limited authority to monitor smoking products and bad flavored smokes with the exception of menthol-flavored cigarettes, according to the Wall Street Journal. The bills also would prevent the FDA from banning nicotine from cigarettes, leaving that authority to Congress.

Should this bill pass, one of the primary beneficiaries will be Altra. As others have noted, FDA regulations will standardize cigarettes which means that the parent of Philip Morris can have a huge influence over the final cigarette rules. It’s little wonder that Altria’s rivals are fighting the bill tooth and nail.

Jonathan Berr

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