Billy Gifford
Chief Executive Officer, Director at Altria Group
Thanks, Mac. Good morning, and thank you for joining us. It was an exciting year for Altria as our businesses delivered strong financial performance, and we continued to strategically invest toward our vision. We grew our adjusted diluted earnings per share by 5% and our tobacco businesses remained resilient and successfully executed their strategies.
We also returned significant cash to shareholders through dividends and share repurchases. Last year, we returned more than $8.4 billion to shareholders, outpacing our record returns from 2021, and representing the largest single year cash return since 2002. Our vision guided our actions and we believe we made meaningful progress on our journey toward moving beyond smoking. Our teams took several steps forward during the year including accelerating the growth of on! nicotine pouches, creating long-term optionality for our inhalable smoke-free product portfolio, enhancing our digital consumer engagement, and continuing to advocate for tobacco harm reduction. Helix grew on! reported shipment volume to 82.5 million cans during its first full-year of unconstrained manufacturing capacity, an increase of more than 70% versus the prior year.
At retail, on! share momentum continued in the fourth quarter as the brand reached 5.9% of the total oral tobacco category and 24% on the nicotine pouch category. This impressive performance was driven by continued increases in brand awareness and adoption by smokers and dippers. Additionally, we believe Helix effectively managed on! promotional spend as the year progressed and reduced on! promotional spend per can by approximately 15% during the second half of the year compared to the first half.
In oral tobacco product development, we are excited to announce we have finalized the new product design, which will provide tobacco consumers more smoke-free options within our portfolio. We also began regulatory preparations for the product and we are encouraged by the initial research results and the response we have received from dippers and nicotine pouch users. We look forward to sharing more details and unveiling this innovative product at our Investor Day next month.
Turning to our inhalable smoke-free portfolio. We created long-term optionality in the heated tobacco and E-Vapor spaces. Internally, we have not yet finalized the design of our heated tobacco capsule product. But our teams continue to make progress. The consumer remains the focal point of our innovation system and our change of tailoring the product to appeal to smokers who have not yet found a satisfying alternative to cigarettes. We also look forward to unveiling this exciting new product at our Investor Day next month as well. And in October, we announced a strategic partnership with JT Group including a joint venture for the U.S. commercialization of heated tobacco stick product. We are encouraged by the initial collaboration between our teams and the pace at which they are operating.
Horizon is optimizing chain for the U.S. market and plans to begin regulatory preparations later this year. We're excited about the opportunity and are working diligently to bring Ploom to smokers in the U.S. In E-Vapor, we previously announced, we elected to be released from the non-compete obligations related to our JUUL investment. We retain our economic stake in JUUL. E-Vapor remains the largest smoke-free category in the U.S. and the most successful category in transitioning U.S. smokers away from cigarettes. We believe the category can play an important role in harm reduction and we're continuing to evaluate all options to best compete in the category.
Next, let's discuss the progress we made to enhance our digital consumer engagement. We launched a new digital trade program last spring and we believe this program [Technical Issue] our ongoing commitment to responsible retail. The program includes multiple participation options for retailers. For those participating at the highest level, we introduced incentives for retailers to include age and identity verification solutions in their digital platforms, and once the consumer is verified, retailers can then provide offers and messaging from our brands within the retailers app. I'm excited to share that we implemented these solutions in more than 33,000 stores exceeding the goal we outlined last year at CAGNY.
Currently, consumers can view offers from our smokable and more smokeless tobacco brands. But going forward, we expect to expand the program to include on! and other smoke-free brands. As we continue to broaden our digital reach, data will help us better understand each smoker's journey and help them successfully transition to other smoke-free alternatives in our portfolio.
Moving to the regulatory environment, we remain optimistic about the future harm reduction in the U.S. We believe we have an unprecedented opportunity to lead the way in shifting millions of smokers to smoke-free alternatives, if we follow the science and foster innovation, with the support of reasonable regulation. In December the Reagan Udall Foundation published its operational evaluation of the FDA's Center for Tobacco Products. We were among the stakeholders who provided input into this evaluation. Among its recommendation, the report urges the FDA to clearly define product pathways and accelerate PMTA [Phonetic] decision-making. Take enforcement actions against manufacturers and products in violation of the law and address the need for risk communications to tobacco consumers. We agree these are important opportunities and believe that the FDA should direct its focus for implementing a framework to advance harm reduction rather than focusing on prohibition policies that we believe will further expand the illicit market and create other unintended consequences.
Let's now move to the operating environment. We estimate that total equivalized tobacco volumes declined 6% for the year and 1.7% over the past five years on a compounded annual basis. Combustible volumes declined by an estimated 7.8% last year as smokers faced increasing economic challenges. We are encouraged that smoke-free volumes were stable compared to the prior year at 3.8 billion equivalized units and now represent an estimated 26% of the total tobacco space. E-Vapor has been a major contributor to the growth of smoke-free products over the five-year period. Although volumes declined by an estimated 1% year-over-year amid considerable regulatory uncertainty, such as the FDA's marketing denial order and subsequent temporary stay on JUUL products, which caused market disruptions for both consumers and retailers. In oral tobacco, volumes grew by an estimated 1.5% driven by the continued adoption of oral nicotine pouches.
Turning to our financial outlook, our plans for 2023 include a continuation of our strategy to balance earnings growth and shareholder returns with strategic investments towards our vision. For 2023, our planned investment areas include continued smoke-free product research, development and regulatory preparations, digital consumer engagement, and marketplace activities in support of our smoke-free products. We believe the external environment will remain dynamic in 2023. We will continue to monitor the economy, including the impact of high inflation, tobacco consumer dynamics and regulatory and legislative developments. Considering these factors, we expect to deliver 2023 full-year adjusted diluted EPS in a range of USD4.98 to USD5.13. This range represents an adjusted diluted EPS growth rate of 3% to 6% from a $4.84 base in 2022.
Before I turn it over to Sal, I would like to send a sincere thank you to our employees. I continue to be impressed by the talent within our companies and our ability to adapt and overcome challenges in a dynamic operating environment. The passion and dedication of our employee base is evident and I am confident in our ability to execute our vision because of you.
Also, I'd like to honor the memory of Leo Kiely, the longstanding member of our Board, who recently passed away. Leo served on our Board since 2011 and made many contributions to Altria including as Chair of the Compensation and Talent Development Committee and as a member of the Innovation Committee. We will miss his leadership, guidance and friendship. I'll now turn it over to Sal.
