Jennifer Maloney: But in California, your sales went down, although you did see some share gain as menthol smokers switched over to Marlboro.
Billy Gifford: That is correct.
Jennifer Maloney: And if the draft rule were adopted as a final rule, would you — do you intend to by a legal challenge, if that is — if that final rule is published?
Billy Gifford: I think it’s too early to tell. We certainly anticipate that there would be legal challenges, but it’s too early to tell whether we would be involved. We would like to be able to understand the rule as it’s published finally and then make that decision, and we’ll share it with you when we have anything to share.
Jennifer Maloney: One last question on modern oral nicotine products. Are they a risk to young people? And do you — and what flavors and marketing approaches do you think are appropriate for that category?
Billy Gifford: Yes. I think there could be a risk for underage if not marketed and sold responsibly. So we actually sent a letter to the FDA many months ago, that they should encourage them to issue marketing guidelines for the category. So that regardless of authorizations or not, be able to have marketing guidelines for that category so that all industry members could follow so that we can protect the harm reduction for adults without exposing underage users to the category. We haven’t seen any action by the FDA. But certainly, we, as our approach to the marketplace has very minimal under interaction with our brand.
Jennifer Maloney: So what would those marketing guidelines look like ideally, in your view, would it entail labor restrictions? Would it entail restrictions on social media, marketing and influencers?
Billy Gifford: Well, I won’t get into the details because we shared that with the FDA, and we haven’t seen any action at this point. But certainly, what would be considered a responsible approach to the marketplace.
Operator: [Operator Instructions] We’ll go next to [indiscernible] with Thomson Reuters.
Unidentified Analyst: My first one is around the successful challenges to the FDA’s marketing denial orders for some vapes, which have started to put some pressure on the agency and also increased the likelihood of a case going to the Supreme Court. I wondered whether Altria would want to participate in any Supreme Court case. And if so, how it’s preparing for that possibility?
Billy Gifford: Yes. I think you certainly highlight that the circuit courts have taken different positions on the approach by the FDA in the e-vapor market when we certainly are closely monitoring these cases. But I think when you step back from it, we’re in a unique position. We’re the only cloud-based product that has received authorization from the FDA. So if you think about other major competitors in the cloud segment, they have not received authorization. Our authorization was in the tobacco flavored pods and our application from the menthol version of the same product is pending with the FDA. And we really feel like looking at those court cases in both instances where the courts have taken different positions. We believe that we should get a marketing order for this menthol product, whether you look at the holdings on either of those instances of the second quarter. So we’ll monitor those, but we’re in a unique position.
Unidentified Analyst: Just a follow-up to an earlier question around the sustainability of the financial model for the smokeable segment in particular. Obviously, the industry has for some time now effectively used pricing increases to offset volume declines. The last couple of quarters, it seems that that’s been a bit more difficult, given the down trading and the promotional environment that you flagged. So I’m wondering whether the ability to offset declines with pricing in the smokeable segment is kind of disappearing or you feel that, that will return when the economic environment improves and promotions sort of fees a little bit.
Billy Gifford: Yes, I’ll be careful not to talk about future pricing, but I’ll describe how we think about pricing. It’s certainly an important part of the algorithm. I think you’ve seen us take pricing. I know people are focused on fourth quarter price realization. I tried to express that if you’re going to look at it on a short-term basis, at least look at comps versus prior year, we look at price realization over the long-term. And when we think about the strategy in combustibles, it really is to maximize profitability over the long-term while balancing appropriate investments in Marlboro with the areas that are growing. And when you look at that and look through history and see the price realization, you see the data analytics and the revenue growth management capabilities kicking in.
Marlboro has been steady, is growing its share of premium, and we continue to compete what we feel like very effectively and efficiently fulfilling what our strategy is for the category through time.
Unidentified Analyst: So you’re kind of confident that the smokeable segment can return to revenue growth in the future?
Billy Gifford: I think when you look at it, we’ll continue to execute against our strategy, which is to maximize profitability over the long-term.
Operator: There appears to be no further questions at this time. I’d like to turn the call back over to Mac Livingston, for any closing remarks.
Mac Livingston: Thanks, everyone, for joining us today. Please feel free to contact the Investor Relations team if you have any further questions. Have a great day. Thanks.
Operator: This concludes today’s call. Thank you for your participation. You may disconnect at any time.
