Billy Gifford
Chief Executive Officer at Altria Group
Thanks, Matt. Good morning, and thank you for joining us. We are off to a strong start and believe our businesses are on-track to deliver against full year plans. Our tobacco businesses performed well in a challenging macroeconomic environment and we announced exciting progress toward our vision. Highlights from our first quarter included strong adjusted diluted earnings per share growth of 5.4%. Resilient end-market performance from our leading brands including Marlboro and Copenhagen and continued volume and share growth from on!. On! announcements made at our Investor Day, including updates on our pending acquisition of NJOY, the unveiling of our exciting smoke-free products in development, and the introduction of our 2028 enterprise goals.
Let's now review first-quarter results in more detail. Beginning with the macroeconomic environment and its impact on industry cigarette volumes. In the first quarter, consumer discretionary income levels remained under pressure. Due to the cumulative effect of higher inflation over the past year. As a reminder this cigarette industry experienced a higher-rate of volume decline beginning in the second quarter of 2022, as smokers shifted their purchasing behaviors. As a result, the widespread inflation and the rapid increase in gas prices that were exacerbated by the Russian invasion of Ukraine. While gas prices began to recede in the second half of last year, higher inflation persisted across other goods and services, and cigarette volumes remained under pressure.
Moving into the first quarter of 2023, the cumulative effects of inflation over the past several quarters. Continue to impact tobacco consumers discretionary income and tobacco industry volumes. We will continue to monitor these factors and their impact on tobacco consumers as we progress throughout the year. Sal, will provide additional color on industry volume in his remarks.
Let's now turn to the oral tobacco category. We are excited by the continued growth of oral nicotine pouch products, which grew their share of the total oral tobacco category for the 20th consecutive quarter. Oral nicotine pouches grew 7.1 share point year-over-year and now represent 26.2% on the oral tobacco category. Encouragingly, continued oral nicotine pouch growth was the primary contributor to the estimated 1% increase in total oral tobacco volumes over the past six months.
Helix grew on! reported shipment volume to 25.2 million cans during the first quarter. An increase of 38%. On! continued its momentum at retail, growing its share of the total oral tobacco category by 2.4% to 6.5%. And on! continue to grow its share of the nicotine pouch category, reaching 24.6% in the first quarter, up 3.3 percentage points. Notably on! outgrew SNUS[Phonetic] sequentially on an absolute basis in 50,000 stores. Helix delivered these impressive results as bonds retail price grew 7% sequentially and 33% versus the year ago period. We believe on!s ability to continue to grow share, while effectively reducing its promotional investment, demonstrates the strength of its product portfolio and brand equity. Helix is continuing its focus on strategically investing behind the brand as the category grows and remains committed to achieving profitability in 2025.
Let's now move to e-vapor which has been the most successful category in the U.S. in transitioning smokers to alternative products. We believe the category is continuing to undergo a significant reset, and we estimate that first quarter e-vapor volumes decreased 11% versus a year ago and 1% sequentially. We have observed a decline in traditional multi outlet and convenience channel volumes, which we believe is primarily a result of the FDA marketing denial orders issued for JUUL and MyBlu. This volume decline has been partially offset by increased volume in non-traditional channels such as e-commerce and vape stores.
We are excited about our pending acquisition of NJOY and its portfolio of e-vapor products. NJOY is the only company to receive a marketing granted order for pod based products. We continue to believe the strength of our commercial resources can benefits smokers and vapors across the U.S. and expand smoke-free competition and stores were NJOY Ace has not been distributed. The completion of the NJOY transaction is subject to customary closing conditions including clearance from the Federal Trade Commission.
Moving to the regulatory environment, we remain optimistic about the future of harm reduction in the U.S. and we continue to encourage the FDA to make more progress for the benefit of the 47 million tobacco consumers. In February, the FDA provided a response to the Reagan-Udall Foundation assessment of FDA's tobacco operations. We are encouraged that the agency recognizes some important areas for improvement, including developing and communicating a five-year strategic plan, improving transparency and defining more efficient product pathways. Increasing enforcement of marketing denial orders and exploring ways the agency can and should address nicotine misperceptions through communications.
We look-forward to learning more details on these efforts. In addition, FDA enforcement is critical to making continued progress toward reducing youth usage of e-vapor products. The FDA has the necessary enforcement tools and we encourage them to take the appropriate action against noncompliant manufacturers. We continue to believe that harm reduction not prohibition is the best path forward and we have made this clear, in the public comments, we submitted in response to the FDA's proposed menthol ban.
Our comments highlight, the many unintended consequences of prohibition including, the adoption of adulterated and unregulated products and the development of unlisted markets. Unfortunately, we believe a number of those consequences are playing out in California, where a ban on flavored nicotine products, went into effect in late 2022. Our operating company's immediately ceased the shipment of products. So California wholesalers that we determine were not compliant with the law. Our brands continued to perform well in the state with Marlboro and Copenhagen growing retail share sequentially. However, we remain concerned with the lack of enforcement in the state, as some flavored products remained in the market.
We also believe some manufacturers have introduced new products or rebranded existing ones to sidestep the purpose of the law. In March, menthol cigarettes still represented nearly 40% of the volume sold in the multi-outlet channel in California, an increase of 1.3 percentage points from January. Additionally, we have seen evidence that some California smokers our self mentholating their cigarettes using alternative products such as flavor cards and menthol drops.
We have also observed flavored e-vapor products in the market that appears to have been renamed to mislead state regulators. And trade dynamics in surrounding states suggest that some smokers are crossing state borders to purchase menthol products, for example, the share of menthol in Nevada, increased 1.3 percentage points sequentially in the first quarter to 37.4%. We believe this is significant as the total share of the menthol in Nevada has not been greater than 36.5% over the past four years.
Compliance remains a top priority, and our government affairs teams, our engaging with California government officials to encourage them to enhance enforcement and to hold all manufacturers to the same standard. Our goal is for policymakers to embrace harm reduction as the proper framework for tobacco and nicotine product regulation. In fact, public opinion strongly favors harm reduction over prohibition and signs shows a significant public health benefit of moving smokers away from combustible products, what a smoke-free future.
As we described at our Investor Day, we are continuing our efforts to create the conditions for harm reduction to succeed through advocacy, engagement and our actions. I believe we are well-positioned for success in 2023 and beyond. And while the external environment remains dynamic, I am confident that we have the tools in-place to succeed. We have amazing brands, sales strategies and most importantly, talented and dedicated employees. With these things in mind, we reaffirm our guidance to deliver 2023 full year adjusted diluted EPS at a range of $4.98, to $5.13. This range represents an adjusted diluted EPS growth rate of 3% to 6% from a $4.84 base in 2022. And expose the potential financial impacts of the pending NJOY transaction.
I'll now turn it over to Sal, to provide more detail on the business environment and our results.
