Dear Shareholder
2008 was a year of significant change for Altria as we completed the spin-off of Philip Morris International Inc. and focused on repositioning the company for future success. Altria successfully completed a significant corporate restructuring that included relocating our headquarters to Richmond, Virginia and integrating John Middleton Co. into the Altria family of companies.

We also announced the strategic acquisition of UST Inc., which we completed in early January of 2009. As a result, Altria gained immediate national scale in the highly profitable and growing moist smokeless tobacco category, completing its transformation from owning the premier cigarette company into establishing the premier tobacco company in the United States.

Our tobacco businesses — cigarettes, moist smokeless tobacco, and machine-made large cigars — are now anchored by four powerful brands: Marlboro, Copenhagen, Skoal and Black & Mild, which we believe will enable Altria to continue delivering value for our shareholders.

Altria also achieved strong business results last year in a challenging economic environment. Altria’s 2008 adjusted diluted earnings per share from continuing operations increased 10% versus the prior year, driven by mid-single digit operating companies income growth and lower expenses. In addition, Altria demonstrated its strong commitment to returning cash to our shareholders by increasing its dividend by 10.3% to an annualized rate of $1.28 per share.

Marlboro and Black & Mild posted strong retail share gains. Marlboro increased its full-year retail share by 0.6 share points to a record 41.6%. Black & Mild’s share increased 2.8 share points to 28.3% as the brand benefited from the support of PM USA’s sales infrastructure.

As part of the UST transaction, Altria acquired Ste. Michelle Wine Estates, one of the fastest growing premium wine producers in the United States. Their collection of premium brands that includes Chateau St. Michelle, Columbia Crest, Stag’s Leap Wine Cellars and Erath, and its strong management team, position the company for future success.

The wine business complements Altria’s continuing 28.5% economic interest in SABMiller plc, whose equity earnings added significant value for our shareholders in 2008. We look forward to learning more about the wine business, as well as evaluating alternatives to maximize long-term value from these holdings in the alcohol beverage industry.

Altria’s aggressive cost management programs continue to deliver shareholder value. Our cost savings initiatives are focused on reducing costs ahead of cigarette volume declines, integrating John Middleton and UST, and leveraging shared services of general and administrative functions, sales and distribution, and marketing services that are provided to our operating companies. Altria Client Services, which provides corporate, general and administrative support to the operating companies, enables Altria to add additional revenue streams in a cost-efficient manner.

In 2007 and 2008, Altria delivered $640 million in cost savings, and we plan to deliver an additional $860 million in cost savings by 2011 for total cost reductions of $1.5 billion versus 2006. Altria and its operating companies continue to be directed by the company’s corporate mission: “To own and develop financially disciplined businesses that are leaders in responsibly providing adult tobacco consumers with superior branded products.” Our corporate culture is guided by five core values: Integrity, Trust and Respect; Driving Creativity; Executing with Quality; Passion to Succeed; and Sharing with Others.

We pursue our mission by focusing our efforts on four core strategies: Invest in Leadership; Align with Society; Satisfy Adult Consumers; and Create Substantial Value for Shareholders. On the following pages of this report, we highlight some of the many steps taken by the Altria family of companies in pursuit of our mission.

While litigation continues to be a challenge, we believe that the legal environment continues to remain manageable. In 2008, for the first time in 16 years, no tobacco case was tried to verdict against any cigarette manufacturer, and, with the exception of the Engle progeny cases, we continued to see declines in the number of personal injury individual and class action suits filed against PM USA. PM USA retains strong defenses against pending claims and has a superior legal team that will continue to vigorously defend it.

2009 will be a challenging year for most companies, but I believe that our businesses are uniquely positioned for success. The economic environment and the significant increases in tobacco excise tax rates present challenges, but Altria began preparing for these issues last year. I believe that careful management of the value equation on Marlboro, Copenhagen, Skoal and Black & Mild, balanced with appropriate cost reductions, position Altria and its companies for continued leadership and growth in 2009 and beyond.

Altria today is a different company than it was a year ago, having completed the spin-off of PMI, the integration of John Middleton and the acquisition of UST. However, we have not deviated from the fundamental commitment of responsibly delivering shareholder return. Altria and its companies have dedicated employees, an increasingly diverse tobacco product portfolio with four leading brands, a growing wine business, a comprehensive and aggressive cost management program, and a structure designed to accommodate revenue growth.

I expect that these strengths, combined with a strong balance sheet and robust cash flow, will enable Altria to continue delivering strong returns to reward you, our shareholders.

I believe our employees are the company’s most important asset. As our cigarette volumes have decreased, we have downsized our workforce to allow us to remain competitive. As part of this process, many long-term employees have left the company. I thank them for their valuable service. I would also like to remind shareholders that it is the hard work and dedication of our employees which produces the results our company achieves. They are extraordinary people.

Michael E. Szymanczyk
Chairman of the Board and Chief Executive Officer
March 31, 2009

Download Altria 2008 Annual Report

PDF format, 5.4MB, 106Pages.

Altria Group, Inc.
6601 W. Broad Street
Richmond, VA 23230-1723
www.altria.com

Our Companies
Altria Group, Inc. is the parent company of Philip Morris USA, U.S. Smokeless Tobacco Company, John Middleton Company, Ste. Michelle Wine Estates and Philip Morris Capital Corporation.

Philip Morris USA
Philip Morris USA is the largest tobacco company in the U.S. with over 50% retail share of the cigarette category.

U.S. Smokeless Tobacco Co.
U.S. Smokeless Tobacco Company is the world’s largest smokeless tobacco manufacturer.

John Middleton Company
John Middleton is a leading manufacturer of machinemade large cigars and pipe tobacco.

Ste. Michelle Wine Estates
Ste. Michelle Wine Estates is the fastest growing premium top-ten wine producer in the United States.

Philip Morris Capital Corporation
Philip Morris Capital Corporation is an investment company whose portfolio consists primarily of leveraged and direct finance lease investments.

Other
As of December 31, 2008, Altria Group, Inc. held a 28.5% economic interest in SABMiller plc, the world’s
second-largest brewer.

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