Core Viewpoint - Constellation Brands and Altria are both considered stable blue chip stocks, but Altria has outperformed Constellation significantly over the past three years, raising questions about future investment potential [1][2]. Constellation Brands - Constellation Brands generates most of its revenue from its beer business, with popular brands like Modelo and Corona, and a smaller portion from wine and spirits [4]. - The company faces three major challenges: declining beer consumption among younger consumers, decreasing sales of lower-end wines, and increased costs due to tariffs on imported Mexican beers [5][6]. - Analysts expect Constellation's revenue to decline from $10.2 billion in 2024 to $9.9 billion in 2027, while its earnings per share (EPS) is projected to grow at a compound annual growth rate (CAGR) of 7% [8]. - Despite a low valuation at 14 times forward earnings and a forward yield of 2.5%, the lack of near-term catalysts makes it an unappealing investment [9]. Altria - Altria primarily generates revenue from its Marlboro cigarettes and has a strong domestic focus, which protects it from tariffs and foreign-exchange issues [10][11]. - The company has been countering declining smoking rates by raising cigarette prices, cutting costs, and expanding its smokeless product portfolio through investments and acquisitions [12]. - Following a setback with its investment in Juul, Altria acquired Njoy for $2.8 billion in 2023, which is expected to boost EPS starting in 2026 [13]. - Analysts predict Altria's revenue will dip slightly from $20.4 billion in 2024 to $20.2 billion in 2027, but its EPS is expected to grow at a steady CAGR of 5% from 2025 to 2027 [14][15]. - Altria's stock is considered cheap at 12 times forward earnings, with a substantial forward yield of nearly 7%, making it a more stable investment compared to Constellation [15]. Investment Recommendation - Altria is viewed as the better investment option due to its more stable business model, larger dividend, and lower valuation multiple compared to Constellation Brands [16].

Summary of the Conference Call on Oral Tobacco Market Industry Overview - The oral tobacco market, particularly nicotine pouch products, is experiencing rapid expansion, with the U.S. market growing 300 times from 2016 to 2021 and seven times from 2019 to mid-2022, indicating high industry vitality. The global market size is expected to reach $20-30 billion by 2030 [1][4] Key Insights and Arguments - The production threshold for oral tobacco is relatively low, but high-quality product development requires significant R&D investment. Philip Morris International (PMI) plans to invest $1.5 billion in R&D by 2025, focusing on raw material processing, formula design, nicotine release technology, and flavor optimization [1][5] - The oral tobacco industry participants are mainly pharmaceutical companies and e-cigarette firms. Pharmaceutical companies like Jingcheng Rundu and Henuo have advantages in release technology and nicotine supply, while e-cigarette companies rely on overseas channels for market coverage [1][6] - The cost structure of oral tobacco products includes low costs for cellulose, nicotine, and flavoring agents, totaling approximately 0.5-0.9 RMB per box, while packaging and labeling costs are higher, around 1 RMB per box. The technology content of non-woven fabric affects taste and nicotine release [1][8] Market Pricing and Cost Distribution - The retail price of oral tobacco products ranges from $5 to $10, with brand manufacturers' ex-factory prices around $2-3 and contract manufacturers' prices between $0.7 and $1. The material cost is approximately $0.2-0.3 [1][8] Regulatory Environment - Global regulations on oral tobacco vary. In the U.S., the FDA regulates it, requiring PMTA certification; European countries have different policies, with some regulated as food and others as tobacco. China currently has a relatively lenient regulatory environment, making it easy to purchase through e-commerce platforms [3][9] Market Share and Competitive Landscape - Large traditional tobacco companies dominate the global vaping and oral tobacco market, holding an 80% market share, with PMI accounting for 50% and British American Tobacco for 20%. The concentration in the oral tobacco market is higher than in the vaping market, with large companies having advantages in scale and R&D [3][10] Growth Trends and Future Outlook - The oral tobacco market is projected to grow at a compound annual growth rate (CAGR) of 30% in the coming years, with recent growth rates around 50%. Despite the current small market size, it shows significant potential compared to the $1 trillion traditional tobacco market [4][12] - PMI is the only nicotine pouch supplier in the U.S. that has passed FDA review, with total sales of 1 billion cans in 2024, of which nicotine pouches account for about 60%, achieving a 50% year-on-year growth [13] Domestic Market Developments - Domestic companies like Jingcheng Rundu are beginning to ramp up production, with expectations to reach 1-10 million boxes in the latter half of 2025. The rapid growth in overseas demand is increasing orders for domestic contract manufacturers [14][15] Conclusion - The oral tobacco market is characterized by high growth potential, significant R&D investment requirements, and a competitive landscape dominated by large traditional tobacco companies. The regulatory environment varies globally, impacting market dynamics. The focus should be on how domestic manufacturers can penetrate the overseas market and the overall supply capacity to meet rising demand [16]