Billy Gifford
Chief Executive Officer at Altria Group
Thanks, Mac. Good morning, and thank you for joining us. Our highly profitable traditional tobacco businesses were resilient in a dynamic operating environment during the third quarter and first nine months, providing fuel for a business transformation and significant cash returns to our shareholders. We grew adjusted diluted earnings per share by 3.3% for the first nine months and returned more than $5.7 billion to shareholders through dividends and share repurchases.
We continue to balance maximizing profitability from our smokeable and moist smokeless tobacco businesses with investments to realize our vision of responsibly leading the transition of adult smokers to a smoke-free future. This morning, I will focus on our progress with NJOY, the state of the e-vapor category and the encouraging third quarter results from on!. I'll then turn it over to Sal, who will provide an update on consumer and industry dynamics, further detail on our financial results and outlook for the remainder of the year.
Let's begin in the e-vapor category. In our first full quarter of ownership, our teams executed NJOY's business plans with speed and focus to lay the foundation for Enjoy's long-term success. To date, NJOY ACE remains the only pod-based e-vapor product with a marketing authorization from the FDA. We're actively working to bring this compelling smoke-free alternative for more smokers and across the United States.
We believe that the long-term success in e-vapor will be influenced by our actions in the near term, and we're executing in the marketplace to grow the business responsibly and sustainably. First, while already strong, strengthening NJOY's supply chain was a necessary step to begin the initial phase of our expansion with ACE. Our teams worked diligently to solidify the entire supply chain from sourcing directerials through the shipment to retail.
As a result, we do not anticipate capacity constraints as we execute our initial expansion plan. Next, during the third quarter, our teams prioritized closing inventory gaps at retail and expanding distribution of ACE. Prior to the acquisition, NJOY had a small-scale sales force, resulted in inventory volatility and significant distribution gaps at retail. Upon completion of the NJOY transaction, we immediately unleashed our sales force to focus on closing the inventory gaps in stores that already had distribution. We improved inventory conditions in stores and are actively working to close remaining gaps at retail.
For expansion, ACE distribution grew to approximately 42,000 stores during the third quarter and is now distributed in all of the top 25 convenience store chains by e-vapor volume. In addition, we began to amplify visibility with new point-of-sale and fixture signage at retail. During the fourth quarter, we continue to expect ACE expansion to reach a total of 70,000 stores by year-end.
Representing approximately 70% of e-vapor volume and 55% of cigarette volume sold in the U.S. multi-outlet and convenience scanner. As we continue to expand distribution and close inventory gaps, we expect to further enhance visibility and product fixture space at retail. Last month, NJOY unveiled its first retail trade program. Retail partners can sign up for the program at various levels with merchandising options designed to position NJOY strategically and responsibly to tobacco consumers while creating further awareness of the brand.
And as we move to our next phase of e-vapor consumer engagement, we are beginning to test a variety of promotional plans and anticipate more disruptive execution at retail in the fourth quarter. Moving into 2024. We will continue to refine our promotional plans, implement NJOY's retail trade program, further expand distribution and evolve our consumer engagement strategy.
Our strategies will focus on informing adult vapors and smokers of the attributes of ACE, such as battery capacity and pods relative to other leading brands, generating trial and growing brand loyalty. In addition, plans for a new brand equity campaign are well underway. We expect the equity campaign to further amplify the brand's presence at retail and drive consumer engagement with the brand. We're excited to share more on this campaign and the next phases of our growth plans in the near future.
Looking more broadly at the e-vapor category, the current state of the market is intolerable for both legitimate manufacturers and consumers. As we have noted repeatedly four months, the regulated market is being overrun by illegal flavored disposable e-vapor products made and distributed by companies violating virtually every rule and guidance FDA has issued since 2016.
Regulation not in force is indistinguishable from no regulation at all. Illegal e-vapor products circumvent the actions of regulators, responsible manufacturers and retailers by evading scientific review, quality manufacturing controls, marketing oversight and legal aids or purchase restrictions. Despite recent actions by the FDA, enforcement has been inadequate and ineffective. We believe the FDA has good tools necessary to bring order to the market.
For our part, we are actively engaged with regulators state and federal lawmakers and trade partners and other stakeholders to build awareness of these serious issues and drive marketplace enforcement. We have also taken more targeted but necessary action and initiated litigation in the United States District Court in California against 34 organizations, including manufacturers, distributors and online retailers related to the sale of unlawful products.
A strong course correction is needed to protect the tobacco farm reduction opportunity for the 30 million adult smokers in the U.S. Turning to oral tobacco. The nicotine pole category experienced sizable growth once again, resulting in an estimated 5% increase in total U.S. oral tobacco volumes over the past six months. Full nicotine cultures grew nearly 10 share points year-over-year and now represent more than 32% and the U.S. oral tobacco category. on! participated in the category growth as third quarter reported shipment volumes increased nearly 37% versus the year ago period.
During the quarter, Helix focused on continued volume growth while improving profitability. Helix applied its evolving analytical resources to be more flexible with its promotions in the marketplace. As a result, Barn's retail price increased 33% per can sequentially and 52% versus the prior year, closing the gap in by over $1 year-over-year.
Encouragingly, we continue to see increasing level of both trial and adoption of the brand with repeat purchases up more than 35% year-over-year despite the substantial increase in retail price. In addition, on's! retail share of the oral tobacco category was 6.9%, up 1.7 share points versus the prior year and stable sequentially.
Internationally, on! PLUS began its test launch in Sweden, one of the largest modern oral tobacco markets in the world. And consumers are engaging with the brand through both e-commerce and select retail locations. While still early days, we are encouraged by the feedback we've received from consumers. Initial consumer data showed that on! PLUS performed well in the areas of comfort, flavor and overall satisfaction.
We believe that on! PLUS' long-lasting flavor system and proprietary software material are differentiators in the category. We are at an exciting period in our history. We have an unprecedented opportunity to responsibly lead the transition of adult smokers to our smoke-free future. Our smoke-free portfolio is compelling, and I am encouraged by our initial progress with Enjoy and on's! strong performance. I believe we have the appropriate strategy, on! people in place to execute our growth plans. I continue to believe that we can achieve our vision and create long-term value for our shareholders.
I'll now turn it over to Sal to provide more detail on the business environment and our results.
