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2017 CAGNY

Investor Presentation
February 22, 2017

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Management Team

Howard Willard Billy Gifford


Chief Operating Officer Chief Financial Officer

Jim Dillard
Murray Garnick
SVP, Research, Development,
Deputy General Counsel
and Regulatory Affairs

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Safe Harbor Statement
Statements, including earnings guidance, in this presentation that are not reported financial results
or other historical information are forward-looking statements within the meaning of Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current
plans, estimates and expectations, and are not guarantees of future performance. They are based
on managements expectations that involve a number of business risks and uncertainties, any of
which could cause actual results to differ materially from those expressed in or implied by the
forward-looking statements. Altria undertakes no obligation to publicly update or revise any forward-
looking statement other than in the normal course of its public disclosure obligations. The risks and
uncertainties relating to the forward-looking statements in this presentation include those described
under Risk Factors in its Annual Report on Form 10-K for the year ended December 31, 2015 and
under Cautionary Factors That May Affect Future Results in its Quarterly Report on Form 10-Q for
the period ended September 30, 2016.

Reconciliations of non-GAAP financial measures included in this presentation to the most


comparable GAAP measures are available on Altrias website at altria.com.

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2016 Adjusted Diluted EPS* Performance

+8.2%
$3.03
$2.80

2015 2016

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: Altria company reports


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Growing Our Dividend

+8.0%
$2.44
$2.26

50th increase in
the last 47 years

Aug-15 Aug-16

Note: Dividend is based on the current annualized dividend (Last increased August 2016).
Dividends are subject to the discretion of the Board.

Source: Altria company reports


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2016 Total Shareholder Return

20.5%

12.0%
8.8%

Altria S&P 500 S&P Food, Beverage & Tobacco

Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date

Source: Bloomberg, 12/31/2015 to 12/30/2016


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Long-Term Financial Goals
Grow adjusted diluted EPS at average annual rate of 7% to 9%

Maintain a target dividend payout ratio of approximately 80% of


adjusted diluted EPS

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Altrias Strategies

Maximize income from core tobacco


businesses over the long term

Grow new income streams with innovative


tobacco products

Manage diverse income streams and


strong balance sheet to deliver consistent
financial performance

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2016 U.S. Dollar Sales in Major Retail Channels
$ in Billions

$83
$71

$34
$28
$22

Tobacco Cigarettes Beer Carbonated Salty


Beverages Snacks

Note: Total US MOC is comprised of Food, Drug, Mass Merchandisers, Club, Dollar, DeCA, Convenience and Walmart classes of trade with ACV of $2MM+ excluding Pharmaceutical sales.
Carbonated Beverage and Beer (including Ale and Cider, not Liquor) exclude on-premise sales.

Source: IRI
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2016 U.S. Dollar Sales in Major Retail Channels
$ in Billions

$83
$71

$34 $34
$28
$22

Tobacco Cigarettes Beer Marlboro


Marlboro Carbonated Salty
Beverages Snacks
Note: Total US MOC is comprised of Food, Drug, Mass Merchandisers, Club, Dollar, DeCA, Convenience and Walmart classes of trade with ACV of $2MM+ excluding Pharmaceutical sales.
Carbonated Beverage and Beer (including Ale and Cider, not Liquor) exclude on-premise sales.

Source: IRI
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Smokeable Products Segment Adjusted OCI*
$ in Billions

+7.6%
CAGR

$8.0
$6.4

2013 2016

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: Altria company reports


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Marlboro Brand Leadership Across the U.S.

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Smokeless Products Segment Adjusted OCI*
$ in Billions

+6.3%
CAGR
$1.2
$1.0

2013 2016

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: Altria company reports


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Copenhagen and Skoal Combined Retail Share

+1.5pp
52.2%
50.7%

2013 2016

Source: IRI InfoScan


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Altrias Strategies

Maximize income from core tobacco


businesses over the long term

Grow new income streams with innovative


tobacco products

Manage diverse income streams and


strong balance sheet to deliver consistent
financial performance

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Innovative Products

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Continuum of Risk

Conventional Cigarettes
Smokeless Tobacco Products

Medicinal Nicotine

Smoking Cessation

Most Harmful Least Harmful

Risk continuum of tobacco products


(directional only not to scale; adapted from Hatsukami et al.)

Source: D.K. Hatsukami et al., Developing the science base for reducing tobacco harm, Nic. & Tob. Res.; vol. 9: S537-S553 (2007)
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Altrias Role in Harm Reduction
Understand adult tobacco consumer preferences

Develop products that meet them

Seek FDA authorization to market and communicate appropriately about them

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Heated Tobacco
Exclusive license to sell IQOS system in U.S.

PM USAs dedicated team is building its commercialization plan

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.

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IQOS Retail Engagement Japan (PMI)

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IQOS Retail Engagement Italy (PMI)

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PM USA Commercialization of IQOS
Develop robust marketing plans for a U.S. lead market

- Integrated engagement model to educate at retail and in digital

Create opportunities for guided trial using flexible retail concepts

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Regulatory Timing
PMI submitted MRTP application in December 2016

Expects to submit PMTA this quarter

Note: Third-party trademarks are the property of their respective owners and are included for informational purposes only.

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Regulatory Landscape

Substantial equivalence
Applications for newly-deemed products
Fostering innovation

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Substantial Equivalence
Comprehensive submissions to FDA

FDAs review process requiring more


resources

Confident in data and information


provided

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.

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PMTA Cost Estimates (per application)

~$2.5M to $5.0M ~ $117,000 to $466,000

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.

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Fostering Innovation
Advocating to move the predicate date,
which would:

- Provide multiple product pathways

- Significantly reduce regulatory burden


and costs

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Smokeable Products Segment Strategy

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Competitive Landscape

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.

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Smokeable Products Segment Performance
Adjusted OCI* PM USAs Retail Share

in Billions +5.3% +0.1pp


$10 65%

$7.6 $8.0 51.3% 51.4%

$0 0%
2015 2016 2015 2016

*For reconciliation of non-GAAP to GAAP measures visit altria.com; CAGR calculated on actual figures

Source: Altria company reports


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Marlboro Long-Term Retail Share Growth
44.0%

1954 1962 1970 1978 1986 1994 2002 2010 2016

Source: Maxwell; MSAi Shipments; IRI/Capstone Total Retail Panel; IRP IRI Group/Capstone Projected Retail Panel; IRI/MSAi
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Unmatched Brand Equity
Equity among Adult Smokers
70

Marlboros equity score is


at least 14 points higher
than the leading
competitive brands.

30
Marlboro Camel Newport

Source: 2016 TNS Brand Equity Study (Age Group: 21 54), January 2017
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Marlboro Adult Smoker 21 29 Share

50

0
Marlboro Newport Camel

Source: ALCS CATTS 6MM ending September 2016


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Marlboros Growing Menthol Retail Share

+0.8pp
10%
7.6%
6.8%

0%
2013 2016

Source: IRI/MSAi
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Retail Coverage

~240k Retail Stores


~90% Volume Coverage

Source: ALCS
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Digital Engagement

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Marlboro Digital Connections
in Millions

120 +34%

0
2015 2016

Note: Connections defined as the sum of logins, email opens and SMS entries/opt-ins

Source: ATCD and Web Trends as of 12/31/16.


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Marlboro Mobile Engagement
in Millions
Mobile Connections Coupon Redemption

+99% +620%
50 10

0 0
2015 2016 2015 2016

Source: ATCD and Web Trends as of 12/31/16.


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Nat Sherman
Portfolio of super-premium cigarettes and premium cigars

Will benefit from Altrias companies retail distribution, brand management and
adult tobacco consumer engagement capabilities

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Middletons Performance
Shipment Volume Share of Profit Pool
(Sticks in Millions)

+5.4%
CAGR
38%
1,403
32%

1,198

2013 2016 2013 2016

Source: IRI InfoScan Source: ALCS estimates


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Smokeless Segment Strategy

Increase income by growing volume at or ahead of the


category growth rate, while maintaining momentum on
Copenhagen and Skoal combined.

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Smokeless Segment Performance
Volume Growth Copenhagen & Skoal
2013-2016 (3-yr CAGR) Combined Retail Share
+0.5pp
Avg. Annual Growth
~3%
~2.5% 50.7% 52.2%

USSTC Industry 2013 2016

Source: ALCS estimates Source: IRI InfoScan


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Smokeless Segment Adjusted OCI*
$ in Billions

+6.3%
CAGR
$1.2
$1.0

2013 2016

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: Altria company reports


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Copenhagen Retail Share

+2.2pp
33.8%
31.6%

2015 2016

Source: IRI InfoScan


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Skoals Innovative Forms and Varieties

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Smokeless Products Segment Results
Shipment Volume Adjusted OCI* Growth Copenhagen & Skoal Share
(Cans in Millions) (in Billions)

+4.9% +11.0% +0.9pp

$1.2 52.2%
$1.1 51.3%
814 854

2015 2016 2015 2016 2015 2016

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: Altria company reports


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Smokeless Recall Update
USSTC voluntarily recalled products from its Franklin Park facility

Majority of USSTCs products unaffected

Estimated OCI impact of ~$50 to $70 million

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E-Vapor Estimated U.S. Consumer Sales
$ in Billions

~$2.5 ~$2.5
~$2.0
~$1.3
~$0.5

2012 2013 2014 2015 2016

Source: ALCS estimates


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Long Term E-Vapor Opportunity
in Millions
Past 30-Day Users

9.1

5.3
3.6

Adult Vapers Adult Dippers Adult Large Mass Cigar Smokers

Source: ATCT 12MM ending Nov2016, LA+


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MarkTen XL Expansion

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MarkTen National Retail Share

+6pp
11%

5%

MarkTen XL

Q4 2015 MarkTen XL
Q4 2016

Source: IRI Projected Database MOC as of 01/01/17 (Totals may not foot due to rounding)
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MarkTen XL in #2 Position Where Sold

50%

32%

21%

8%

0%
Vuse MarkTen
MarkTenXL blu

*Volume Sales: 1 Disposable Unit = 1 Cartridge = 1 Kit w/ 1 Cartridge = 1mL E-Liquid

Source: IRI Masked Store Level Database as of we 1-1-17


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Improving Economic Conditions
US Consumer Confidence Unemployment Rate US Housing Starts
(in Millions)

150 10% 1.4


1.2
1.1
7.4% 1.0
98 100 0.9
87 6.2%
5.3%
73 4.8%

0 0% 0.0
2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016

Sources: The Conference Board, full-year average


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Cigarette Category Decline Rate Estimates

(0.5)%

(2.5)%
(3.5)%
(4.0)%

2013 2014 2015 2016

Source: ALCS estimates rounded to nearest 0.5%


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2016 Category Volume Growth

~10%

~3%

Smokeless Machine-made Large Cigars

Source: ALCS estimates rounded to nearest 0.5%


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Cigarette SET Environment
Weighted average $ per pack

$1.49 $1.51 $1.57


$1.44

2013 2014 2015 2016

California and Pennsylvania SET increases expected to


have an approximate 1% impact on industry volume in 2017.

Source: ALCS estimates


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Smokeable Products Segment Performance
Net Revenue per 1000* Adjusted OCI Margins*

+4.6% +6.0pp
CAGR

$133.54 48.2%
$116.60 42.2%

2013 2016 2013 2016


Note: Net of FET

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: ALCS Finance


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Smokeless Products Segment Adjusted OCI Margins*

+2.1pp

62.3% 64.4%

2013 2016

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: Altria company reports


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Cost Discipline
$300 million productivity initiative

- SG&A Infrastructure
- Leaner organization
- Reinvesting some savings in brand building, harm reduction and regulatory
capabilities

$50 million manufacturing consolidation plan

Source: Altria company reports


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Altrias Alcohol Assets

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.

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Consistent Financial Performance
Adjusted Diluted EPS* Dividend Per Share Growth
+8.0% +8.6%
CAGR CAGR

$3.03
$2.44

$1.51
$1.16*

2007 2016 2007 2016

* For reconciliations of non-GAAP to GAAP measures visit altria.com. Note: Dividend is based on the current annualized dividend (Last increased August 2016);
* First declared dividend post-spin
Source: Altria company reports
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Ste. Michelle Wine Estates Growth
in Millions
Adjusted OCI* Reported Shipment Volume
+12.3% +5.4%
CAGR Cases CAGR
$200 10 9.3
$167 8.0

$118

$0 0
2013 2016 2013 2016

* For reconciliations of non-GAAP to GAAP measures visit www.altria.com

Source: Altria company reports


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Altrias Strong Balance Sheet

A-

A3

BBB+

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.
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Dividend Growth

+8.0%
$2.44
$2.26

Aug-15 Aug-16

Note: Dividend is based on the current annualized dividend (Last increased August 2016).
Dividends are subject to the discretion of the Board.

Source: Altria company reports


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Share Repurchase Program
Repurchased over $1 billion in shares in 2016

Expanded and extended share repurchase program in October

- $1.9 billion remaining in $3 billion program at the end of 2016

- Expect to complete program by the end of Q2 2018

Note: Share repurchases are subject to the discretion of the Board.

Source: Altria company reports


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Returning Cash To Shareholders
$ in Billions

$28.2
Share Repurchase

Dividend

2011-2016

Source: Altria company reports


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2017 Guidance
Altria reaffirms our expectation to deliver 2017 adjusted diluted EPS in a
range of $3.26 to $3.32, representing a growth rate of 7.5% to 9.5% from our
adjusted diluted EPS base of $3.03* in 2016.

We also expect that our 2017 earnings growth will be higher in the second
half of the year, due primarily to lag accounting effects on our ABI equity
investment in the fourth quarter last year.

*For reconciliation of non-GAAP to GAAP measures visit altria.com

Source: Altria company reports


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Altrias Strategies

Maximize income from core tobacco


businesses over the long term

Grow new income streams with innovative


tobacco products

Manage diverse income streams and


strong balance sheet to deliver consistent
financial performance

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Five-Year Total Shareholder Return

187%

98% 92%

Altria Group S&P 500 S&P Food, Beverage and


Tobacco
Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date

Source: Bloomberg, 12/31/2011-12/30/2016


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Regulation G Disclosure
For reconciliations and further
explanations of non-GAAP
financial measures, visit:
altria.com

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