Inflation Hurts Altria’s Cigarette Volumes

Company shares 1st-quarter 2023 earnings, including goals for smoke-free future
Altria sign
Photograph: Shutterstock

The cumulative effects of inflation over the past several quarters affected tobacco consumers’ discretionary income and tobacco industry volumes in first-quarter 2023, Altria CEO Billy Gifford said during the company’s earnings call Thursday.

Cigarettes were down 11.4% in first-quarter 2023 compared to the same quarter in 2022, Altria reported. Marlboro’s net pack price increased 6.8% in the first quarter compared to last year, Altria Executive Vice President and CFO Sal Mancuso said on the call.

While Mancuso said he expects industry volume declines to moderate overtime as the macroeconomic environment stabilizes, some smokers are trading down to cheaper alternatives.

“We continue to see increased competitive activity in the discount segment, including multiple branded discount offerings priced at deep discount levels,” Mancuso said.

The Richmond, Virginia-based company saw success in smokeless, though. While total oral tobacco products were down 1.8% in the first quarter 2023 compared to the previous year, On modern oral nicotine (MON) pouches were a bright spot for Altria, up 37.7%.  

Overall, Altria’s first-quarter 2022 net revenues were down 2.9% compared to first-quarter 2022, the company reported. Altria reaffirmed its 2023 full-year guidance to deliver 2023 full-year adjusted diluted EPS in a range of $4.98 to $5.13, representing a growth rate of 3% to 6% from 2022.

“We are off to a strong start and believe our businesses are on track to deliver against full-year plans,” said Gifford. “Our tobacco businesses performed well in a challenging macroeconomic environment. We delivered strong adjusted diluted [earnings per share] growth of 5.4%, and we announced exciting progress toward our vision.”

Altria’s vision is to responsibly lead the transition of adult smokers to a smoke-free future by 2030.

Specifically, it aims to grow U.S. smoke-free volumes by at least 35% from its 2022 base of 800 million units by 2028. In that same time, it also wants to double its smoke-free net revenues to $5 billion from its 2022 base of $2.6 billion, with $2 billion coming from innovative smoke-free products. 

It has already made moves toward these goals by dropping Juul, acquiring Njoy and announcing new smoke-free products at its annual investor day.

Other highlights from Altria’s top brands include:

  • Marlboro retail share of the total cigarette category was 42% in the first quarter, a decrease of 0.6 share points versus the prior year; however, Marlboro’s share of the premium segment was 58.5%, an increase in share points from the year prior, Altria said.
  • Copenhagen continued to be the leading oral tobacco brand with a retail share of 25.4%, Altria said.
  • Total U.S. oral tobacco category share (which includes moist smokeless, snus and oral nicotine pouches) for On nicotine pouches grew to 6.5%, an increase of 2.4 percentage points. On’s share of the nicotine pouch category grew to 24.6%, up from the year prior.

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