Good morning. Welcome to Altria's 2023 Investor Day. Thanks to those of you joining us here at the New York Stock Exchange and to those of you on the webcast. I'm Mac Livingston, Altria's Vice President of Investor Relations. Throughout the morning, the Investor Relations team will be around to assist you should any needs arise. I'm gonna start by covering a few housekeeping details. To guide us over the course of the day, we've created a dedicated webpage on altria.com that includes today's meeting materials, including the agenda, management bios, and slides that will be posted as we progress through the morning. We have also posted reconciliations and further explanations of the non-GAAP financial measures we discuss today. We will post our remarks following today's event. Our remarks this morning contain certain forward-looking statements and projections of future results.
Please review the safe harbor statement in the slides for the various factors that could cause actual results to differ materially from our forward-looking statements and projections. Additionally, the longer-term goals we discuss today assume the successful completion of the pending NJOY acquisition. Finally, all references in today's remarks to consumers refer to existing adult tobacco consumers 21 years of age or older, unless otherwise stated. In today's presentation, we're gonna focus on our pursuit of leadership in the reduced harm space. You will hear from many leaders in our management team who champion our efforts in moving beyond smoking. We believe that by meeting the opportunity to advance tobacco harm reduction, we will both align with societal demands of our business and create substantial shareholder value. Without further delay, I'll turn it over to Billy Gifford, Altria's Chief Executive Officer, for his opening remarks.
Thanks, Mac. Good morning to all of you all in the room and on the webcast. It's my great pleasure to be with you today to discuss our progress and path forward in pursuit of our vision to responsibly lead the transition of adult smokers to a smoke-free future. As Mac said, you will hear insights from several members of our talented management team who are driven to make our vision a reality. Our primary goal is to leave you with greater confidence in our ability to make significant progress in reducing the harm of tobacco use for the approximately 47 million U.S. tobacco consumers. Through that progress, we believe that Altria will advance its remarkable legacy of industry leadership by becoming a more consumer-centric, sustainable, and enduring company.
Over the past two decades, our company has successfully evolved from a global consumer products company to a U.S.-focused tobacco company, creating significant shareholder value in the process. Today, our evolution continues as we are moving beyond smoking. We're guided by consumers and by the science that strongly supports the significant public health benefit of moving smokers towards a smoke-free future. Of course, the best choice for smokers is to quit. If they can't quit or won't quit, we strongly believe that the best choice for them is to move to FDA-authorized smoke-free products. In fact, the FDA agrees that there is a continuum of risk among tobacco products. Independent research shows that it's not just a continuum, but a risk cliff that reflects a dramatic reduction in risk for smokers who fully switch to smoke-free alternatives.
Today, we outline how we're preparing to capture the harm reduction opportunity in the U.S., including expanding our understanding of tobacco consumers, enhancing our innovative smoke-free product portfolio, creating the external conditions for tobacco harm reduction to succeed, and building the commercial engine to responsibly drive transition to smoke-free products. Even with a marketplace of smoke-free alternatives, we know that many smokers will not switch overnight. It will take time, support, and encouragement. We have learned a great deal about the journey smokers face through our first-hand experience commercializing our moist smokeless tobacco brands on! and IQOS. Over the past few years, we've built valuable infrastructure that provides opportunities to engage with smokers, learn about their purchasing behaviors, and support them on their journey. We believe much of this infrastructure is category agnostic.
While much of it was originally funded by our smokable product segment and used to support Marlboro, we believe a significant portion of it can be used to drive our smoke-free businesses forward. Today, we will provide examples of this as we share more about our digital work, trade relationships, and manufacturing footprint. While our smokable segment has helped fund many of our smoke-free efforts, it's also significantly contributed to nearly $23 billion of cash returned to shareholders over the past three years through dividends and share repurchases. Sal will join us towards the end of the morning to discuss our smokable segment and how we're viewing our balance sheet and capital return programs going forward. Our goal remains to balance investments in our future with returning cash to shareholders as we continue to build a smoke-free future.
We believe the most successful consumer products companies are obsessed with their consumers. Over decades, our teams have studied tobacco consumers, their behaviors, needs and desires, and where they aren't being satisfied. For more than half a century, the vast majority of tobacco consumers in the U.S. found satisfaction in cigarettes, and many of them chose Marlboro. In the back half of the twentieth century, the Marlboro brand became the gold standard in the category and represented a moment of independence and freedom for its smokers. Philip Morris USA built significant brand loyalty that continues with Marlboro smokers today. In fact, in 2022, Marlboro was larger than the next 11 cigarette brands combined. Today, tobacco consumers are evolving, and many are increasingly considering a smoke-free nicotine product. We tried to stay with our consumers as they've evolved, sometimes with success and other times falling short.
It's because of these learnings gained from these shortfalls that we feel we can succeed going forward. Today, our businesses and product portfolio look different. We now have full control over our path within modern oral, and upon completion of our pending acquisition of NJOY, we have full global ownership of FDA-authorized products in the e-vapor space. We've established new external partnerships that are built on mutual respect, a commitment to harm reduction, and the desire to achieve win-win results. We've also made significant changes within our company that may go unnoticed to external observers. We have enhanced our product development processes and are now iterating alongside consumers to bring to market products that address their feedback and meet their expectations. We've made significant investments to enhance our digital capabilities across the entire organization, including in our supply chain and our consumer engagement and trade programs.
We have established two new organizations that are focused on delivering superior products and experiences to our consumers. All of these changes are built on what we have learned about helping smokers make better choices than continuing to smoke cigarettes. To achieve our vision, we know that we must continue to actively participate in the external environment to help influence policymakers embrace harm reduction as the right path forward for tobacco policy and include the opinions of smokers in the discussion. We're working to create the conditions for harm reduction and are focused on four key areas. First, we continue to encourage the FDA to make more progress for the benefit of the 47 million tobacco consumers. That means authorizing reduced-risk product applications in a reasonable timeframe and exercising appropriate enforcement actions for manufacturers that fail to comply with the regulations.
Next, we need to address the widespread misperceptions about the relative risks of tobacco products for smokers seeking less harmful alternatives. We believe tobacco consumers deserve this information, and regulators have a duty to provide it. Third, we need to continue to lead the way on responsibility. That means demonstrating through our actions that we're invested in addressing the issues people care most about, including underage use. Lastly, for harm reduction to become a reality, we believe policymakers, including the FDA, have to say no to calls for prohibition-based policies that will send us in the wrong direction, like broad-based flavor bans. We have all seen that prohibition does not work in other contexts and that it creates unregulated markets with negative unintended consequences. While more work needs to be done in these areas, we're optimistic we can get there in time.
Change won't happen overnight, but we will continue to do our part to create the conditions for harm reduction. We plan to stay the course and believe that our actions will benefit tobacco consumers, our businesses, our shareholders, and society. As we execute on our vision, we also believe that you, our investors, should better understand where we're going and how we're holding ourselves accountable. With that in mind, we're introducing our new 2028 Enterprise Goals to more clearly define where we are headed. Our Enterprise Goals include corporate financial metrics, specific U.S. smoke-free volume and revenue targets, and o ur desire to move beyond the U.S. nicotine space. Jody, Sal, and Olivier will share more details on each of these goals in their upcoming remarks. Going forward, we expect these goals to be incorporated in our executive compensation program.
Disruption and corporate evolutions require perseverance and commitment. I believe we have both, and that with our talent, passion for the consumer, belief in harm reduction, and evolving capabilities, we can deliver for consumers, our investors, and society over the long term. Thanks once again for being here. We have a great day in store for you, and I will be with you throughout the morning to guide the meeting and facilitate our Q&A sessions. Our next presenter is our newly appointed Consumer Experience Officer, Shannon Leistra. Prior to her current role, Shannon was the president and CEO of U.S. Smokeless Tobacco Company, and she's held various leadership roles in our brand management and sales organizations. Please join me in welcoming Shannon to the podium.
Thank you, Billy. Good morning, everyone. I am excited to be here today to share our insights on the U.S. tobacco consumer. We like to say that we are consumer obsessed. For good reason. Consumers are at the center of our vision and are a key stakeholder in achieving tobacco harm reduction. Of the 47 million tobacco consumers in the U.S., approximately 28 million are smokers. While all of these consumers use nicotine products, they vary greatly as individuals. We have developed a deep understanding of them as both consumers and people, the role tobacco products play in their lives, and how they choose products and brands across a range of usage occasions.
In 2022 alone, we conducted consumer research with approximately 50,000 tobacco consumers, analyzed more than 4.5 billion consumer transactions at retail, and engaged with consumers approximately 730 million times through our brands. Combined, this data fuels our digital consumer engagement system and transition marketing efforts. We believe that by blending our consumer understanding and advanced data analytics, we are creating a holistic view of smokers and their individual journeys switching to smoke-free products. Today, I'll share some of our findings that we've refined through decades of research. We have identified seven unique clusters of U.S. tobacco consumers, the distinct moments in which they use tobacco products, and their barriers and motivators to switching to smoke-free products.
Let's start with the clusters, which group tobacco consumers based on their product choices, personalities, and worldviews. We believe these clusters provide important insights into who our consumers are and how, when, and why they engage with tobacco products, and might engage with innovative smoke-free products in the future.
Let me share a few examples of the differences among clusters. Our research indicates that some embrace innovation while others prefer familiar experiences. Some are more individualistic while others are more community-minded. Some use smoke-free products for more than half of their total occasions, while others almost exclusively use cigarettes. Clusters that predominantly smoke account for about 2/3 of the tobacco consumer population. To be clear, these consumers and these clusters are not stagnant. We have observed growing interest in switching to smoke-free products across all of them, and in some cases, use of smoke-free products is growing as well.
This primarily has been driven by male consumers, ages 21 to 29, who tend to be more comfortable with change. In addition to consumer clusters, we have also identified distinct moments for tobacco enjoyment, which we believe provide a deeper understanding of the where, when, and why behind tobacco format and brand choices. We broadly group these moments into two categories. In one group are the detached moments, which include indulge, reward, and break. In the other are the engaged moments. These include the enhance, hang out, and multitask occasions.
I will begin with the detached moments. These are occasions when consumers use their tobacco product to help them disconnect. In indulge moments, consumers take their time to fully relish the multi-sensorial experiences of their product. I compare this to savoring a nice bottle of wine. It starts with the ritual of pouring a glass, then swirling it around and appreciating the aroma, and finally, enjoying how it tastes.
Let's move to reward, which are those moments of me time or micro vacations. They occur after finishing a difficult task or a long workday. The tobacco product is a sort of treat. There is break, such as the classic cigarette break, when consumers are looking to step away from the task at hand to reset before returning to it. Conversely, there are the engage moments when consumers want to connect with others and life around them, and the tobacco product is a part of the occasion as opposed to the focus of it. Tobacco complements other sensorial experiences and enhanced moments, such as enhancing drinks with friends with a Black and Mild cigar, or enhancing a quiet morning fishing with their favorite Copenhagen dip.
Hang out is the quintessential social moment. During these occasions, product choices are more likely to be shaped by the opinions of those around the consumer, and there's inherent desire to stay with the group. There are multitasking occasions when consumers use tobacco while performing an unrelated task. In multitask, the project is the focus, and the tobacco product is simply along for the ride. There is one usage occasion that is not a detached or engaged moment, and it is one of the most common: the routine occasion. Consumer engagement with both the tobacco product and the moment itself is low during routine moments. Our research indicates that not every moment has the same level of satisfaction and enjoyment for every consumer. Not surprisingly, a routine moment is likely not as enjoyable as a reward moment.
A consumer's product requirements can vary depending upon the moment and may not be fully met by their current product choice. Consider a smoker in a hangout moment. He wants to stay with the group and enjoy a cigarette, but his ability to do so may be limited if he's indoors. In this instance, a cigarette fails to meet his requirements because it does not deliver on the ability to joy anywhere. Like the consumer clusters, we have observed shifts in the key tobacco moments. For example, the pandemic disrupted consumer routines and multitask moments increased. Consumers were more likely to use their product at home and while alone, decreasing the number of hangout occasions and eliminating the product requirement to minimize social friction. We believe that understanding consumers and their tobacco usage occasions is crucial for driving transition to smoke-free products.
We believe that smoker transition happens across all of these moments. However, our research indicates that while there is broad interest in completely switching, only 6 million lifetime smokers have fully switched to smoke-free products. To better understand this gap, we believe it is critical to understand consumers' motives behind their choices, including any barriers or motivators for switching. While barriers and motivators can vary by consumer cluster and tobacco moment, our research indicates that some barriers are universal, with the most important being nicotine satisfaction. Smokers will reject a smoke-free product if it fails to deliver nicotine satisfaction, regardless of how motivating they find the product benefits. Additionally, smoke-free products must be easy to carry around and deliver an enjoyable sensory experience.
For most smokers, we believe there are still more barriers than motivators to switch. Most smokers are skeptical that smoke-free products will meet their requirements, likely in part due to prior unsatisfying experiences. For harm reduction to succeed, we believe smoke-free products must address smokers' barriers and deliver relevant benefits that they find compelling. We continue to believe that no single product will satisfy all tobacco consumers. In fact, we believe that the majority of smokers will use multiple smoke-free products in order to completely transition away from cigarettes. They'll use different platforms to meet the unique requirements they have across each moment. We believe transitioning to smoke-free alternatives requires more than just the right product mix. It is a complex and personal behavior change. I want to go back to what it means to be consumer obsessed.
To us, it means going beyond consumer understanding to consumer empathy. As part of our comprehensive research program, we followed smokers on their transition journey to gain further insights into the challenges and emotions they face. We'd like to share some of their experiences with you.
Millions of adult smokers.
Hi there.
Are looking to transition from cigarettes to smoke-free tobacco products.
Smoking doesn't fit in my equation in this life.
I'm just hoping to be able to do something that I didn't think that I could do.
I know I deserve to be smoke-free.
We asked some of them to share their journey.
I'm doing it for myself more than anybody else, but I know as a side effect, you know, my wife and my other friends and family would also be very happy.
Their motivations.
I feel like I have to do it for me.
My intention was to switch to a product that would allow me to kinda switch up my style.
I wanted to just push myself and motivate myself.
Eliminating cigarettes, replacing with an alternative product definitely allows me to be a better role model.
This is gonna be the new me, I guess.
We learned about their challenges.
I'm concerned that I may not be able to do it, but I'm gonna put 100% effort in, so I hope I can do it. I think I can.
By thinking about how much harder this is than I thought it was gonna be.
The busier I stay, the easier it is. On the days where I have a lot of downtime, it can be more of a struggle.
I've taken an incremental approach. This hasn't been a grand shift in my life. It's been gradual, which I think is much more manageable. Now, I'm more optimistic, you know? I see a brighter future ahead of me.
We heard about their successful transition to smoke-free alternatives.
I successfully transitioned, and I feel super happy about it. I feel super happy about my ability to do something that I put my mind to.
I found that my cigarette alternative has worked in almost every situation for the better.
I'm proud of myself and I don't wanna pat myself on the back too much 'cause I'm still going strong.
I don't see myself going back to cigarettes, ever.
This is definitely a part of the new me for sure now.
I'm putting my mind to it, so I will. I think if I'm not all the way switched, I'll be damn close.
Did it. You know, I finally did it.
We believe our consumer obsession is a critical enabler to moving beyond smoking. At a high level, let me show you how it informs our enterprise-wide efforts. Layering the components of our consumer understanding, we have created a framework to identify opportunities for what smokers may want next. We believe this approach unlocks a competitive advantage for us. It increases our consumer relevance by delivering against diverse consumer needs, and it drives internal focus and discipline. By putting the consumer at the center of everything we do, we believe we can more effectively and equitably transition smokers to less harmful alternatives. Now I'm going to turn it over to Jody Begley, our Chief Operating Officer, who will share how our innovation system activates against this framework, and one of its outputs, the promising smoke-free product portfolio we are creating.
Thank you, Shannon. Good morning, everyone. We are building a compelling portfolio of smoke-free products to succeed in the future. We've been building our portfolio through acquisitions, strategic partnerships, and organic product development. Our organic smoke-free product development is a multi-step process, but I'm gonna simplify it into three phases. In the first phase, we identify unmet consumer needs for their tobacco moments, assess the business opportunity, and the best path to compete. In the second phase, we design the product, iterate with the consumer, and conduct preliminary regulatory studies. Once the design is finalized, we begin formal regulatory preparations. As Shannon mentioned, no single product will fit all consumers' needs. By centering our efforts on the consumer and the science, we believe we are building a promising smoke-free portfolio that delivers enjoyable nicotine satisfaction to a wide range of consumers.
The majority of smokers who are open to innovative tobacco products are looking for an inhalable option. Based on our research, smokers are particularly motivated to switch to an inhalable platform if it's perceived to be less harmful and if they can use the product while being respectful to others. We believe that the opportunity for innovative, inhalable platforms primarily exists within the enhance and indulge moments, which are both enjoyable and sensorial locations. Let's dive into this portfolio, beginning with the e-vapor category, which remains the most successful category in transitioning U.S. smokers away from cigarettes. Earlier this month, we exited our minority investment in JUUL and made an exciting announcement regarding our agreement to acquire NJOY and its portfolio of e-vapor products.
NJOY has received six of the 23 marketing orders granted by the FDA to date for the entire e-vapor category. NJOY's marketing orders include the ACE device, three ACE tobacco-flavored pods, and two tobacco-flavored disposable products. Notably, NJOY ACE is currently the only pod-based product with market authorization from the FDA. Based on our consumer research, product and device performance are important attributes that smokers and vapers consider when selecting an e-vapor product. We believe that ACE is well-positioned in this regard compared to competitive products. ACE has a long-lasting battery life and provides more puffs per pod than either JUUL or Vuse Alto. Based on our research, smokers and vapers find ACE to have an enjoyable, full-bodied, and balanced flavor and a smooth inhale that is easy to pull. They also appreciate its durable design and described it as comfortable to hold and convenient to carry.
In our home usage test, we found that post-trial, smoker and vapor purchase intent for ACE was comparable to that of Vuse Alto and better than that of JUUL across both the non-menthol and menthol variants. NJOY is currently sold in a limited number of stores, and consumer awareness of the product is low. We believe we can responsibly accelerate US smoker and competitive vapor adoption of NJOY in ways that NJOY could not as a standalone company. Youth usage of NJOY products is limited according to the latest national survey data. Additionally, NJOY is developing access restriction technology for its devices to further address underage use. This technology uses Bluetooth connectivity to authenticate the user before unlocking the device. NJOY is currently preparing PMTAs with this technology for menthol and two non-tobacco-flavored ACE pods.
I'll remind you that FDA's pre-market review must consider risks and benefits to both tobacco users and non-users. There's significant evidence that flavors play an important role in helping smokers move to smoke-free products, and we believe this access restriction technology will further limit underage use. After closing, we expect to continue these efforts and complete the filings if they have not already been submitted to the FDA. We are excited to expand competition in the e-vapor category through NJOY and believe that this transition complements our efforts in the heated tobacco category, which I will now discuss. Our research indicates that about 1/3 of U.S. smokers interested in innovative inhalable alternatives would prefer a heated tobacco product. These consumers are looking to reduce the social friction associated with cigarettes, but they also want a satisfying, real tobacco taste.
While the heated tobacco category is undeveloped in the U.S., we believe our compelling product portfolio can lead in this space over time. Our joint venture with JT Group is an important step in strengthening our heated tobacco product portfolio. It provides us with a committed long-term partner with significant product development expertise for heated tobacco sticks. Our research indicates that some of the smokers looking for an innovative heated tobacco product are hesitant to try something entirely new and can be overwhelmed by too many choices. We believe the Ploom system can appeal to this particular audience, as the stick format provides a familiar tactile experience to cigarettes. When paired with the Marlboro brand, we expect Ploom to be an approachable and familiar heated tobacco proposition for U.S. smokers.
Our teams are working to select the final Marlboro heated tobacco stick blends for the U.S. market and complete preliminary PMTA research. We're encouraged by the initial results. Machine testing demonstrates that Ploom has significantly lower levels of many of the Harmful and Potentially Harmful Constituents that the FDA has identified in cigarettes. Following our rigorous scientific framework, the teams plan to formally begin regulatory preparations later this year and plan to file a PMTA in the first half of 2025 and then MRTP later that year. Our research also indicates that some smokers are interested in innovative heated tobacco products that bear less physical resemblance to traditional cigarettes. This includes the millions of U.S. smokers who tried but ultimately rejected e-vapor products.
These consumers are self-conscious about the image of being a smoker, and they find heated tobacco stick products cumbersome and complex. This is where our new heated tobacco capsule product fits in. This product, which is still in development, aims to address the consumer pain points that may have hindered this audience from transitioning to smoke-free products in the past. I would like to introduce our capsule product, which is unlike any other in the heated tobacco category. As you just saw in that video, SWIC is a new type of heated tobacco product that does not have the visual cues of cigarettes. Using our proprietary technology, tobacco-filled capsules are heated to a precise temperature to deliver a satisfying inhale that is similar to a cigarette. Because there's no combustion, there is no ash or lingering odor.
Each capsule is single use and lasts for one tobacco occasion. The sleek design fits in the palm of your hand and features a simple and intuitive user experience. Our research suggests that consumers find the product concept appealing and unique. After trying it, smokers said they found the device simple and easy to use versus heated tobacco stick products. We believe that SWIC holds promise for tobacco harm reduction, and we continue to make significant progress toward its development. Our capsule pilot line is operational at our Richmond manufacturing center, and prototypes are delivering low levels of HPHCs compared to cigarettes. Our regulatory sciences team conducted research on product concepts and marketing materials to evaluate interest in SWIC. This interest was even greater among smokers who viewed the promotional materials.
Importantly, intentions to try and use the product among non-tobacco consumers were low and statistically did not change after viewing the materials. We are excited by these results and believe they demonstrate our responsible, consumer-focused approach to product development. Turning to our oral tobacco efforts. Our research suggests that many smokers will use a combination of inhalable and oral products to fully transition away from cigarettes. There are approximately 6 million oral tobacco consumers in the U.S. We expect this number to increase as smokers transition to a portfolio of smoke-free products. Oral products are a particularly convenient option that can be used hands-free and without a charging device. We believe we are building a compelling oral tobacco portfolio that appeals to a wide range of consumers and exceeds expectations across a variety of nicotine moments. Let's begin with traditional MST.
Dippers typically choose MST for its simplicity and long-lasting tobacco taste. MST is used in both detach and engage moments. For example, dippers use MST to enhance an experience, such as a favorite outdoor activity, and as a reward, like when relaxing after work. Our MST portfolio is anchored by Copenhagen, the long-standing leader in the category. Copenhagen celebrated its 200th anniversary last year, making it one of the oldest brands in America. We're extremely proud of Copenhagen's history and its long-term stability within the traditional MST category. Copenhagen remains the number 1 dip brand with its iconic brand status, relevant product portfolio, and exciting product innovations, including Copenhagen Packs and, most recently, Copenhagen Fine Cut Wintergreen. To honor its 200-year milestone, the team launched Cope Rewards, the first and only national rewards program for an MST brand.
The program is resonating with dippers and adding to our vast database of tobacco consumer purchasing data. Brand loyalty increased among dippers enrolled in Cope Rewards, and we're excited about its potential contributions to sustaining Copenhagen's leadership in MST. Today, approximately one of every two MST consumers buys a UST brand. USSTC is the most profitable smoke-free company in the U.S., and it provides strong contributions to our financial results. Our oral tobacco products segment boasts robust adjusted OCI margins of approximately 66%, more than double that of many other CPG companies. Although most dippers are satisfied with their MST product, they're also open to product innovation, particularly if it provides additional flexibility to use anywhere. We believe it's these benefits that make nicotine pouches an attractive option for some dippers, especially in moments where it's hard to spit.
Retail data suggests there are now approximately 2 million nicotine pouch consumers in the U.S., a 33% increase versus 2021. The category is appealing to both smokers and dippers. In fact, consumer purchase data show that Camel and Natural American Spirit smokers and Camel Snus users repurchase nicotine pouches at the highest rate relative to other brands in their respective categories. Our research indicates that nicotine pouches particularly appeal to smokers and poly-category users who are looking to reduce social friction, especially those who prioritize being respectful around others. We think that the opportunity for smokers to begin transitioning to nicotine pouches primarily exists within the hangout and multitask moments. In these occasions, nicotine pouches offer a particularly compelling proposition to smokers, the ability to use hands-free while enjoying discreet nicotine satisfaction.
The nicotine pouch category continues to expand, representing a quarter of total oral tobacco retail share in the fourth quarter of last year. Helix had a remarkable year in 2022. In fact, on! was the fastest-growing brand within the nicotine pouch space year-over-year. On! increased its retail share of the oral nicotine pouch category to 24% in the fourth quarter, an increase of 2.5 percentage points over the prior year period. We're encouraged by these results and the brand's appeal to a broad set of tobacco consumers, which we believe reflects on!'s wide range of flavors and nicotine strengths. Competitive oral nicotine pouch consumers are showing increasing interest in on! Roughly 55% of on! consumers are age 21-39, a higher percentage than in the cigarette and MST categories, and approximately 30% of on! consumers are women.
In comparison, women represent only 5% of the MST category. Helix remains focused on driving awareness of on! and transitioning smokers. Last year, the team launched the Carry on! equity campaign, which is designed to build a meaningful connection with consumers that spans each stage of their transition journey to on! As a result of the team's efforts, consumer awareness of on! grew approximately 40% year-over-year. Data-driven promotional strategies complement on!'s equity building campaign at retail. Helix uses sophisticated analysis to evaluate the impact of its promotional tools and effectively drive trial, repeat purchase, and adoption. This approach powered on!'s continued momentum in 2022 and enabled the team to efficiently manage promotional spend throughout the year. Helix reduced on! promotional spend per can by approximately 15% during the second half of 2022 compared to the first half.
Looking ahead, we expect to realize further spending efficiencies and anticipate that Helix will be profitable in 2025. PMTAs for the entire on! portfolio remain pending with the FDA. We previously shared research from our applications, including evidence of on!'s ability to transition smokers from cigarettes, and that on! has substantially lower levels of HPHCs than those found in traditional tobacco products. The harm reduction potential of on! is further illustrated by the results of our smoker clinical study. The study found that compared to consumers who continued smoking, those who switched to on! had substantially lower levels of HPHC exposure.
Additionally, the reduction in biomarkers observed among those who switched was comparable to tobacco abstinence over the same period. We believe there's overwhelming evidence that on! can benefit the health of the population as a whole. In addition, the National Youth Tobacco Survey indicates that prevalence of nicotine pouch use among middle and high school students remains low. We remain committed to preventing underage use through our responsible marketing efforts, which Jennifer will discuss in more detail later today.
While we await the FDA's decision regarding on!, we've continued to invest in rigorous scientific studies to support and expand our portfolio of oral tobacco products. We recently announced that we finalized the design of a new oral tobacco product. This product is an output of our innovation system. Before I unveil it, let's first review some of what I just shared about the oral tobacco consumer with a little more context.
Consumers are satisfied with MST in most settings, but when they're multitasking or hanging out with non-dippers, they're interested in a less disruptive product like spit-free nicotine pouches. Some dippers have tried and adopted nicotine pouches. However, many want flavor and nicotine satisfaction that is more like MST. We had these consumers in mind when we designed on!+. On!+ is a wet, spit-free tobacco derived nicotine pouch product that provides consumers the flexibility to enjoy anywhere. On!+ was designed for dippers and dual users with an optimized, long-lasting flavor system and a range of nicotine strengths. On!+ pouches are larger than any other tobacco derived nicotine pouch on the U.S. market. Its seamless pouches are made of our proprietary soft feel material for a more comfortable product experience.
The on!+ can features a compartment to responsibly dispose of used product just as the current on! packaging does today. We're excited about on!+ and believe consumers will be too. While a small sample size, our early research indicates that about three out of four dippers and nicotine pouch consumers in our study preferred on!+ over ZYN on a blind basis. We expect to file a PMTA for on!+ next year. Our regulatory sciences team is working diligently to compile scientific research to support the submission. For example, here we compare the HPHC levels of a 6 milligram on!+ against Grizzly Long Cut Wintergreen. As shown on the slide, a majority of the HPHCs found in the Grizzly product are absent from on!+ or are substantially reduced.
We're excited about the early results of our PMTA research as we prepare to demonstrate that on!+ is appropriate for the protection of public health. To support our regulatory studies, the team stood up a pilot line for on!+ at our MC campus. This line will also support a test market for on!+ through Helix's international distribution infrastructure, which we expect to formally announce later this year. Going forward, we expect to use a combination of our existing manufacturing facilities to produce on!+. As you've seen, we are building a comprehensive smoke-free portfolio that appeals to a range of consumers across their tobacco usage moments and has the potential to reduce harm. We have a promising pipeline of future products in development. We believe that with this portfolio, we can achieve two of our Enterprise Goals.
Our first 2028 enterprise goal is to grow total U.S. smoke-free volumes by at least 35% from our 2022 base of 800 million units. Our second goal is to approximately double our total U.S. smoke-free net revenue to $5 billion over the same timeframe, with $2 billion coming from innovative smoke-free products. Our 2022 smoke-free net revenue was approximately $2.6 billion, substantially all of which came from MST products.
These goals are ambitious for the U.S. market, but we believe we have the right plans in place to make them a reality. With that, I'd like to invite Shannon and Billy back onto the stage for Q&A. We will also be joined by Murray Garnick, our General Counsel, who also leads our law and regulatory affairs organizations. We have about 15 minutes for questions before we take a break.
Thank you. I have a few questions. One, SWIC, you mentioned it leverages some of the proprietary technology. Could you provide a little more color on this technology and maybe what is so unique? Curious about the charging of the device and if there are any advantages there. Finally, you know, how will you ultimately position this product technology in the market, especially relative to the heated tobacco sticks with the JV you have with Japan Tobacco? You know, thinking about it from which types of consumers do you expect both to attract and, you know, how will you possibly position it from a pricing perspective? Thank you.
Jody, you wanna kick us off?
Sure. The SWIC technology, we had purchased some IP a few years back, and we've been iterating on that technology over the past couple of years to design what we have today. I have the device here. By the way, some of the IR team has a device so you can touch and feel it at the break. In essence, as you saw in the video, we have tobacco-filled capsules. There's a heater, in the tobacco that heats it to a precise temperature, fairly simple to use. Done, ready to go. T his is IP again that we purchased a while back. Sometimes we get the question, hey, was this IP that we purchased from Poda? The answer is no, if that's p art of the question or behind the question.
We've been working on this for a while. We think Poda actually gives us maybe a different product platform to continue to iterate off of in the future. As it relates to go-to-market plans, there was a lot in your question, so if I miss something, let me know. As it relates to go-to-market plans. Actually, let me start with consumer. Based on some quantitative research we've done, as we've evaluated stick products versus capsule products, there's really a pretty even split between consumer preferences of formats for those who are interested in heated tobacco products. We think there's a space for both to play. For those who are looking for more of a familiar cigarette experience, stick products work for them.
I mentioned in my remarks, there are a number of smokers that had tried and rejected vapor, but are looking for a real tobacco taste, we think that's the audience that this is going to appeal to. We think there is room for both over time. With respect to pricing and go-to-market plans, it's a little early for that right now to comment on specifically how we'll move forward with that. We think the portfolio of Ploom using Marlboro HeatSticks as well as SWIC give us a really competitive portfolio in the market.
Yeah. I think the way I think about it, I kinda think about it simply. If you think about cigarettes over here and stick heat not burn, right, being similar to that in experience, and then you think about e-vapor being over here, I would say SWIC lands in the middle of that. It gives the consumer the experience of real tobacco with all of the benefits that they could get on either end, but t hey went over and tried e-vapor and rejected it. We think that's a prime audience for the SWIC device.
All right. Thank you.
Hi, Pam Kaufman from Morgan Stanley. I also have a question on SWIC. Can you talk about your expected timeline for PMTA submission, and how are you thinking about when it could ultimately hit the market? My second question is just around flavors in nicotine pouches. I noticed that on!+ is, there's a mint and menthol varieties. How are you thinking about how the FDA is going to approach flavors in pouches?
Jody, why don't you kick us off with SWIC, and then Murray, you can follow with flavors.
Remind me one more time on your question for SWIC quickly.
T he timeline for PMTA submission.
As I mentioned in my remarks, the product is still in development. We have made tremendous progress. Matter of fact, this gives me an opportunity to really brag on a lot of the folks that are sitting back home in R&D and other functions that have made this a reality. We have made significant progress. As we've continued to iterate with the consumer, and you heard Shannon's remarks earlier in terms of being consumer obsessed, we've had thousands of interactions with consumers on this product proposition. We've identified a couple things that we think can really further differentiate it. That shouldn't take too long, but we're still in the development process, so more to come over time. I think we're really close to having a finalized product here.
On flavors, look, the public health community, the FDA recognizes that flavors are important in transitioning smokers to non-combustible tobacco products. At the same time, some flavors are seem attractive to youth, and that becomes a problem. You see that over the last couple years, the FDA has been trying to wrestle with that, with that issue. We saw that in the e-vapor context where the FDA hasn't said no to flavors, but so far they haven't found an e-vapor product with flavors that they think will be appropriate for the public health.
When you get to these other oral products where the use numbers are virtually nonexistent or extremely low, as long as those numbers remain low, and we're certainly dedicated to make sure that that is true, and it's incredible high priority for us, as you'll hear later today, to keep those numbers low, then we think that they really provide a public health benefit by helping to transition smokers. Flavors become important in that respect. We're very optimistic that with respect to these oral tobacco products' flavors will be allowed by the FDA, and we're gonna do everything we can to make sure those numbers remain those youth numbers remain low.
Hi. Gaurav Jain from Barclays. On these products, you can file PMTAs today, and it will take years for them to come, and, you know, it's three years away when they can be launched in the market. You can partner with some international partner and launch these products today internationally, you know, like what PM has done with KT&G. Would you launch something like on!+ internationally first and also like SWIC, can you launch it internationally first before you launch it in the U.S.? The second is, how exactly do you do consumer testing? Because of the PMTA process, you cannot really launch it in a big enough area. What is allowed under the FDA guidelines? Like, how many consumers can you test it on?
Yeah. I'll kick us off on the international, and then Murray, you can talk about the ability of the consumer to use it for PMTA testing. When you think about international, we certainly see that as an opportunity. We're excited about the conversations we're having with JT, as we had mentioned when we announced the joint venture. We think there is an opportunity, and you're gonna hear a lot more about what we are thinking about there and how we're thinking about the international opportunity later in the day. If we don't answer your question, please ask it again, Gaurav.
Well, look, there's some studies, scientific studies that you have to do in order to make a submission to the PMTA. We're able to do those studies. The FDA does not at the same time require us to conduct a study and then impose regulations barring us from conducting that same study. We feel absolutely confident that we'll be able to conduct all the studies we need to submit a PMTA, and that has not been a problem.
Thank you. Ann Gurkin with Davenport. I have two questions. F irst, congratulations on the MRTP for Copenhagen. Is there any change in the speed of approval, maybe from the FDA? Any kind of timeline that might be accelerating or opening up or shaking out from approvals? Secondly, if you could comment on, you talked about promotional appeal for consumers to try SWIC. Can you talk about leveraging your database for promotion opportunities or to try to get trial on these new products? Thanks.
You wanna kick us off on the MRTP?
Sure. Look, we were delighted to get a MRTP for Copenhagen. We were disappointed it took five long years to do that. We are optimistic that over time, the FDA will simplify and expedite how it handles these applications, especially the PMTAs. You know, we've seen long delays, but we have to keep in mind that both the PMTAs is a new process for the FDA and that it was inundated by millions of applications virtually overnight. We do think that as time goes forward, they themselves have acknowledged the need to expedite and simplify the PMTA process through the Reagan-Udall Foundation report. That was one of the priorities set forth in that report and the FDA has reacted very positive to it. We think over time that will happen.
We have some experience with the SE process, the substantial equivalence process. At first that was a long delayed process. Now we're seeing it go much faster. It is far more clear what the FDA is looking for. The FDA has made it more clear what they're looking for in that SE process. Again, we remain disappointed that at this time the processes, especially the MRTP process, takes a long time, but we are very optimistic in the future.
I think when you think about the consumer, you're right, the database, we consider that a huge competitive advantage, but it's also the number of interactions we have with our brands with the consumer at retail. You saw some of the stats in the moist smokeless. You'll see some more, and you know 'em well in the cigarette. We interact with the consumer, and we're looking for ways to continue to build that database so that we can leverage those interactions. When they're ready to get on the journey and we wanna prompt them, we can start them on that journey. We see it as a huge competitive advantage in the U.S.
Thank you. Good morning. Vivien Azer from TD Cowen. I really appreciated the 2025 and 2028 commentary on the oral tobacco category, and I just wanted to dive into that, please. In terms of the 2028 volume and revenue targets, is it fair to assume that the core on! products, any incremental volume and revenue that you generate from that, given that on!+ still has to go through FDA approval, that would all be included in that target?
All those products are included in that target.
Okay. Got it. In terms of the 2025 profitability target, you know, how should we think about that relative to the segment level OCI margins? Because smokeless products have tremendous margins, so it seems like to have to commercialize that product for the better part of four or five years before you get to profitability would suggest that you're taking either a conservative approach to industry volume progression and/or you expect that the category will remain more promotionally intensive than legacy smokeless. Thank you.
Go ahead, please.
T hen jump in here if you wanna add something. We've seen obviously, and you saw in the data, and you continue to see it month after month, the growth of the oral tobacco pouch segment continues to grow. While it's growing, we think it's important to continue to invest to get a foothold. We've had terrific success. Over time, and I highlighted in my remarks, we're working to refine how we go to market. I think you saw some of that from the first half of the year to the last half of the year where we reduced promotional spending, but you didn't see the momentum of the brand slow down. You know, we think it's important to continue to invest, but we certainly have an eye toward profitability, and we'll continue to make progress there.
A lot of the digital and data and analytics capability we have are gonna help us get there because we wanna make sure we do it in a smart way. Again, we feel good about the trajectory where we're headed from a profitability standpoint and expect to break even by 2025. I do not know if there is things you wanna add.
No, you're gonna hear a little bit more, Vivien, later in the day of how we're thinking about margins across the space. Thank you.
Hey, guys. Owen at Jefferies. I'm not sure how much you can talk about it, but you mentioned the age-verified technology for NJOY and an additional couple of flavors. I mean, how do you view a PMTA there? Will that need to be tested in a market outside the U.S. to actually show it works as intended with teenagers? If you don't do that, do you think its chances are more limited, via PMTA?
Yeah, I'll kick us off. Murray certainly add anything. I think when you think about it, Owen, when you think about that the FDA has been denying because they're concerned about underage use, we are as well. They haven't had to really deal with yet that they know and they agree flavors play an important role in transitioning adults over because you're gonna have a flavor deficit from a cigarette. They haven't had it where age restriction is a part of it or access restriction. If you can basically kind of walk this line of the benefit is there for adults, you can prevent underage use of it because of access control, I think that'll be something important for the FDA to consider as they move forward.
Yeah. As far as how NJOY is putting together its PMTA, we haven't closed yet. That task still belongs to NJOY. NJOY is doing it. We are not. When we close, if the PMTA has not been submitted, we'll then take over. Right now we're not involved in that because the transaction has not closed. I will rely generally on what I said before. That is NJOY will be able to conduct the necessary research and make the necessary showing under the FDA regulations in order to submit a PMTA. We're not concerned about that, but we're not involved at this point in putting together that PMTA.
Thank you.
All right. I don't see any other questions in the room, so this is. We're gonna take a short break. During the break, as you heard, that the IR team, some of us will actually have both new products. While we can't let you use them, because they haven't reached FDA authorization, we can certainly let you touch, feel, and we'll be happy to entertain any other questions that you may have then. Then after that short break, we'll start up again. Thank you.
I was an academic all my professional career before I joined Altria. As I came here and talked to people, I realized that, you know, harm reduction has a role to play in improving the lives of smokers. I started leading the clinical research role. I think that we have reached a stage, almost a tipping point, where, you know, smokers are looking for alternative products. Research has shown that more than half of the close to 31 million smokers that currently smoke cigarettes are looking for alternative products. With advances in technology, we have a growing range of a portfolio of products. There's something for the smokers to choose from.
The third thing is this, you know, we have FDA that's regulating and going to assess the science and evidence, and make a decision on authorizing the product, allowing manufacturers to say something about the risk differential. These three factors, smokers' interest, availability of products, and FDA regulation, have converged to transitioning smokers to smoke-free products. I am very optimistic about the future and the role that we will play in improving the lives of millions.
Good morning. I'm Scott Myers. For the past four years, I've had the privilege of leading Altria Group's sales and distribution company. I've been with Altria since 1996 and held various leadership positions within Altria's family of companies. This morning, you've heard about our exciting new Enterprise Goals, and I'm here to discuss what I'll call our enterprise goal enablers, our systems and expertise that exist throughout our supply chain that we believe provide us a competitive advantage and will help accelerate our progress to a smoke-free future. Let's begin this morning with an inside look at our world-class manufacturing facilities. Our operating companies have manufacturing centers and processing facilities across several states, including PM USA's flagship cigarette manufacturing center in Richmond, Virginia, or the MC as we call it. We have successfully repurposed several areas within the MC to support our innovative products.
For example, we now produce over 90% of on!'s volume in the MC and expect to add the production of Marlboro HeatSticks in the future. The MC has a modular design, which allows us to employ different bays within the factory for different products while spreading out fixed costs, such as skilled labor. By repurposing existing manufacturing space, we're able to expand our businesses using our highly talented workforce while managing our overhead and capital expenditures. Our strong manufacturing capabilities are underpinned by our supply chain and procurement organizations. We have consistently sourced raw materials and product inputs during a very dynamic period that has stressed global supply chains. We have strong relationships with our growers and our suppliers, and we expect to strengthen these partnerships as our business evolves while establishing new ones along the way.
We believe our ability to efficiently get our products into the hands of our wholesale and retail partners remains a tremendous competitive advantage. Our distribution system is efficient and time-tested, with some of our partnerships exceeding 60 years. The network includes over 20 public warehouses that ships our products to over 900 distributors and then sends our brands to retail outlets across the United States. The strength of Marlboro is the bedrock of our distribution network and allows us to get our new products to consumers across the country. In other words, as one of my distribution partners told me during the pandemic when driver shortages were high, Scotty, Marlboro makes the truck go. Our long-standing trade relationships have provided the foundation for us to develop programs powered by data and consumer insights that support our collective business objectives.
For example, PM USA enhanced its Wholesale Leaders Program in 2021 to encourage our wholesalers to maintain more consistent ordering for our cigarette brands while creating more financial flexibility for their businesses. This program enhancement has created less volatile inventory levels over the past six quarters while allowing PM USA to manage its business in a more efficient manner. It is the same program that allows us to get a new product, once it's received at wholesale, to over 90% of targeted stores in less than three weeks. Let's now move to the retail environment. In the U.S., there are approximately 25 million tobacco transactions at retail each day. Love that fact. Tobacco consumers' shopping behavior is highly routine, with 75% of consumers purchasing their product at a single preferred store.
U.S. tobacco volumes is dispersed across rural and metropolitan areas and across several different trade channels, with most transactions taking place, as you all know, in convenience stores. Our roughly 1,600 person sales force has vast coverage across these areas, servicing more than 1,200 headquarter chain accounts and over 200,000 retail stores, which represents more than 90% of the U.S. tobacco industry volume. Our sales team is organized by field sales and account management. More than 1,100 sales managers are focused on influencing retailers and executing operating company plans at the store level, while our account teams help drive strategic alignment with our largest accounts at their headquarter level. This structure maximizes our ability to create the best in-store experience for our consumers while delivering the highest quality service to the trade and to our operating companies.
In fact, when we asked retailers, they ranked AGDC personnel better than all other CPG manufacturers for both account management and store level personnel. We believe this is a clear indicator of the strength of our sales organization and the trade relationships we have. These relationships serve several purposes, including creating the best in-store experience for the consumer, and importantly, supporting responsible retailing of tobacco products and efforts to limit reach, access, and appeal to unintended audiences. Our trade programs serve as a foundation for us in helping accomplish these objectives. As an example, through PM USA's Retail Leaders trade program, stores receive incentives and promotional resources to help them grow their cigarette business. In return, retailers are required to agree to certain merchandising requirements and display underage tobacco prevention signage.
This program provides us best-in-class visibility and product placement behind the selling counter, connecting smokers with our leading cigarette brands. PM USA has achieved the number one placement on cigarette fixtures in over 93% of its volume. Our trade programs also contain incentives for retailers to provide transaction level scan data to PM USA. This is the data Shannon mentioned earlier, which enables us a feedback loop between our brands and our consumers, serving as a data engine for our revenue growth management infrastructure. You've likely heard us discuss our RGM capabilities in the past, but I'd like to provide a little more detail on how we execute these strategies and how they will be a critical tool moving forward as we progress towards our vision. Years ago, when PM USA made a pricing decision in the market, it was done at a national level.
Over time, PM USA has evolved its pricing and promotion strategies to become more precise. In 2018, the introduction of Manufacturer Supported Off Invoice program, or MSOI, allowed us to support Marlboro more effectively at a state level. This program has delivered tremendous efficiencies. We recognize an opportunity to be even more surgical with our strategies and deploy our promotional allocations at the store level. For example, as you might imagine, a store in downtown Houston may have very different category dynamics than a store in suburban Dallas, and accordingly, PM USA may offer different levels of promotional support. Building on the success of MSOI, PM USA introduced strategic options or PSOs, and yes, we like acronyms, in 2021 to offer a variety of store level value delivery strategies.
To support the introduction of PSOs, our teams evaluated over 250 data points to analyze the dynamics at the store level. Through this analysis, over 200,000 stores were placed into smaller groups based off of category, consumer, and competitive dynamics. Each group was then assigned a recommended strategic option that optimized Marlboro's price in those stores. Our highly skilled sales force then worked with our trade partners to provide recommendations on the appropriate option for their stores. As a result, PM USA can be more efficient with its promotional resources across stores and offer increased incentives to consumers under greater economic pressure. There are at least four strategic options available within each state, and PM USA has continued to adjust these options as market conditions evolve. The closer we've gotten to the consumer through data, the more efficiently we're able to manage our promotional spend.
Our ultimate aspiration is to deploy individual consumer-level RGM strategies through personalized consumer offers. Our teams continue to pursue this opportunity. Moving to our digital efforts. We launched a new digital trade program last spring, and we believe this program enhances our ongoing commitment to responsible retailing. The program includes multiple participation options for our retailers. For those participating at the highest level, we introduced incentives for retailers that include age and identity verification solutions in their digital platforms. Once a consumer is verified, retailers can provide offers and messaging from our brands within their apps. Currently, consumers can view offers from smokable and MST brands. Going forward, we expect to expand this program to include on! and other smoke-free brands.
Our strong presence at retail, along with our robust adult tobacco consumer database, gives us broad reach among the 47 million U.S. tobacco consumers. We have a long history of effectively communicating with consumers across a variety of channels, from disruptive activations at retail to innovative digital programs such as Marlboro Rewards. As Shannon mentioned, we acknowledge that smokers have different barriers and motivations as they consider moving to smoke-free products. Our newly established transition marketing organization, led by Shannon, is focused on walking alongside smokers to support their transition journey. We believe our infrastructure has helped Altria achieve long-standing leadership in the U.S. tobacco space. Our manufacturing and supply chain capabilities are state-of-the-art. Our footprint at retail and our trade relationships are best in class. Our proprietary and advanced analytics, RGM, and digital capabilities keep us connected to our consumers.
Our marketing organization is agile, nimble, and very innovative. We are confident that as we continue along our journey, we can optimize our tools to help us achieve our Enterprise Goals. I'd now like to turn the presentation over to Megan Witherspoon for our Creating the Conditions panel discussion. Megan.
Good morning, everyone. I'm Megan Witherspoon, Vice President of Communications, delighted to be here, joined on stage with these amazing Altria leaders. I'll quickly introduce them. On the end here we have Paige Magness. She's our Senior Vice President of Regulatory Affairs. Jennifer Hunter, she's our Senior Vice President of Corporate Citizenship and also our Chief Sustainability Officer. Here we have Todd Walker, our Senior Vice President of Government Affairs.
I'll be moderating this morning's panel, we'll be discussing the ways we work together across the enterprise and also with our key external stakeholders to create an external environment where harm reduction can truly succeed. In Billy's remarks this morning, he talked about four conditions that we're actively working to advance in the external environment. The first is we know we need a responsible marketplace where underage use of tobacco products continues to decline.
Second, we need a robust marketplace of smoke-free alternatives that are authorized by the FDA for adult smokers to switch to. Third, we know we need adult smoker education around the relative risks of these various tobacco products and the benefits of switching to smoke-free alternatives. Finally, we need legal and regulatory policies that really advance harm reduction and avoid prohibition. During the panel, we're gonna speak through each of these conditions, talk a bit about the work that we have underway in each, where we see signs of progress and where we see ongoing opportunity. With that, we're gonna jump into the first condition related to responsibility and underage prevention.
I'm gonna start with Jennifer. Obviously, underage prevention is something we've been focused on for many years. Responsibility is core to and actually embedded in our vision, something we take quite seriously. Jennifer, can you talk a little bit about our approach to responsibility broadly, and then how harm reduction and underage prevention fit in?
Absolutely. First of all, thank you, and it's exciting to be here with you all. I think you've heard from our conversations already this morning that, to Megan's point, responsibility is embedded in everything that we do. We believe that understanding what stakeholders expect of us and aligning our business practices as appropriate with those expectations and measuring and communicating progress in those areas is critically important. When we talk to our stakeholders through formal materiality assessments, we know that the two most important expectations of our companies are to address the harm associated with tobacco use and to make sure young people are not using our products.
That's why we have invested in preventing underage tobacco use now for 25 years, because we know for harm reduction to be a reality for those adult smokers that Shannon talked about today, we need to make sure that underage use is absolutely under control. A broader approach to leading responsibly, we know, creates long-term business and social value, and that's where we remain focused.
Dive a little bit deeper, if you will, into underage prevention specifically. What are the actions that we're taking, and why do you think that those are the most appropriate things for us to be doing?
We have a comprehensive approach to preventing underage use. Young people use tobacco products for a variety of different reasons. It's a complex issue. We have a comprehensive framework that actually has guided our work for the 25 years that we've been investing in preventing underage use. We have seen the benefits of a number of different stakeholders working to address underage use, specifically on smoking, as we saw cigarette rates come down. You can imagine our disappointment and concern when we saw the rapid increase in e-vapor. We announced in 2019 a $100 million commitment to address underage use of e-vapor.
We relied on that framework, and then we also invested in some new areas. Support for increasing the legal age of 18 purchase from 18 to 21 was one of those, ’cause we know that social access is the primary way young people get access to tobacco products. Working with Todd’s team and others, we were successful in increasing through our advocacy legal age of purchase at the federal level, 41 states, Washington D.C. and Puerto Rico. Now 87% of the U.S. population operates under legal age of 21. We also, as you heard, Scott talk about, the sales organization plays a tremendous role in preventing access at retail. We invested in age validation technology. This was intended to help take the human error out of purchase at retail.
Today, there are 137,000 stores that have age validation technology, representing 80% of PM USA volume. We also stood up what we call the Underage Tobacco Use Survey. This is actually run by Paige's team, so there's a theme here. This is really an effort across the organization. Underage Tobacco Use Survey helps us have an early read on what's happening with underage youth. We still rely on the national datasets, but it is important for us to see, especially with new to market products, if there is underage use, and then that informs our underage prevention strategies as well as our regulatory strategies. With all of this, we've got to make sure we continue to market our products responsibly, and that's to adults who are interested in using them and avoiding unintended audiences, including youth.
Great. Thanks. Todd, obviously your government affairs team is actively involved in this work as well. Jennifer talked about legal age of purchase of 21, I know your team played a huge role there. How else are you engaging with policymakers around responsibility and underage prevention specifically?
Thank you. Good morning, everybody. It's great to be here with you. Thank you for joining us both in person and on the webcast for our Investor Day. I'm honored to be with you. You know, Jennifer talked about our decades in leadership and responsibility in our industry. The same is true in the public policy arena. It goes back for decades. Think about FDA regulation of tobacco products. We were the only company to support FDA regulation of tobacco products. Jennifer mentioned Tobacco 21. Over the last several years, the tremendous progress we've made passing Tobacco 21 at the federal level and in the states, and what a positive impact that's had.
Just a year ago, last Congress, we were part of a coalition and really leaders in helping make sure that synthetic nicotine products were regulated by FDA, and that legislation passed Congress and was signed into law about a year ago, I think April of 2022. If you sort of take a step back and think about it, we have a comprehensive regulatory framework in this country, between FDA, new Tobacco 21, synthetic nicotine, the regulatory system at the state level. We have a comprehensive framework for the sale of legal and regulated products in the U.S., and it works well. What we're focused on now is really enforcement in the illicit market.
You all know the e-vapor market is in a bit of a flux throughout this PMTA process, and that's contributed to a growth in illicit e-vapor products on the market. The FDA and others are now focusing on this. We think there's an opportunity to do more and to do it quicker. We're gonna support the FDA and encourage the FDA to use all the tools they have in their toolbox, to partner with others, to make sure that the enforcement is effective. We're also engaging with state policymakers, state regulators, states' attorneys general to educate them on the need for enforcement in this space. We're starting to see interest and some movement there.
For example, some states are considering adding e-vapor products to their registries in the state, so that an e-vapor manufacturer would have to certify that they're in compliance with federal law to sell in that state. You know, our trade partners care deeply about this. I was looking over for Scott, but our trade partners care deeply about this issue too and wanna see enforcement. You know, I think right now that is, from a responsibility standpoint, our primary focus. I think it's starting to get the focus and attention that it deserves. I'm, you know, hopeful that in the near future, we'll start to see some real progress.
Thanks. Speaking of progress, obviously a ton of really important work going on here. Jennifer, can you just sum up kind of the progress that we're seeing in the marketplace and where you see the biggest opportunities?
Absolutely. Again, if you think about, underage rates of cigarette smoking, according to the most recent Monitoring the Future, they are at 2.1%. This is nearly a 93% reduction since its peak period in 1997. As we look at the most recent National Youth Tobacco Survey, we know that, after e-vapor rates reached their peak in, 2019, they've reduced by almost 50%. I think as we talk about the complexity of this issue, the comprehensive approach that's required, and all of the stakeholders that touch it, this is a moment to, like, pause and celebrate and to continue to say more work needs to be done in order to make sure underage use remains in check so that harm reduction remains a reality.
That means enforcement that Todd talked about for p roducts that are not authorized and should not be in the marketplace, young people do not have access to them. That is just really critical that that happens. Encouraged by where we are, but know that as we look to pursue our vision and harm reduction, that we need to make sure we remain focused on underage use.
Yeah. Thank you. Great progress. You know, as you said, cause to celebrate for a moment and continue to maintain the focus there. Okay, we're gonna switch to the second condition, which is really focused on the regulatory environment. Paige, I'm gonna come to you. Obviously, we know for harm reduction to succeed, we need to have a marketplace of FDA-authorized smoke-free products for adult smokers to switch to, and those products need to meet the desires and requirements that we heard so much about this morning. Obviously, the FDA plays a critical role in this, and we'd love to see more and faster progress. Paige, tell us a little bit about where you see the biggest opportunities in the regulatory space.
Happy to. Good morning, everybody. Really good to see you all. You know, as Todd mentioned, we were the company to support FDA regulation, right? Many, many years ago. Really, I think there were two principles behind that that really hold true today. That is our desire for a science-based framework that would evaluate products and the communications about them, and a common set of rules for all manufacturers. We believed those were important conditions for the tobacco industry to proceed. When I think about where we are today, the system really is not optimized, that is clear. What we are focused on is how do we advocate for and influence a few things? Clearer, more transparent and more efficient product pathways, which are necessary to bring that authorized marketplace to life that we've talked about.
Clear communications to adult smokers about the risk and the relative risk of the products. We know that the information smokers receive is important to the choices that they're making every day. Enforcement, as Todd said, t here has to be a common set of rules for all manufacturers, which does require appropriate enforcement, and so advocating for all the tools to be brought to bear that are necessary to create that. You know, we continue to advocate really for a system that we think would better benefit the adult smoker who, you know, in the video you saw earlier today, sometimes they get lost in the policy debates. That's really where we're focused.
There's been a lot of conversation recently about the Reagan-Udall report and the recommendations that it put forth to the FDA. What's your assessment of the report and how the FDA is responding to it?
Yeah. As most people know, the FDA Commissioner, Dr. Califf, had asked a third party, the Reagan-Udall Foundation, to conduct an assessment of a couple of FDA's programs, including the Center for Tobacco Products. That concluded in December of last year. What the foundation or the committee, I guess had come forward with was I would group into just a few things, although there were a lot of recommendations. They talked about the need for clear and efficient and transparent pathways for products. They talked about the need to support industry innovation better and the need to build trust with stakeholders in FDA's activities.
Most recently, the Center for Tobacco Products issued its response to that report, which laid out, you know, a set of actions that the Center for Tobacco Products wants to pursue in order to improve its operations. We were really generally encouraged by those, and we think they really set the right foundation. They talked about a need for a strategy, right? A five-year comprehensive strategic plan, which would be very helpful to stakeholders like all of us in understanding the direction of the agency. They talked about the real opportunities around the product pathways, including even considering some new pathways. Communications came up, something that we advocate for a lot. Even in the agency has begun undertaking some research in terms of what messaging can go to adult smokers regarding relative risk.
Enforcement came up, y ou know, and particularly enforcement around market denial orders. Really what we saw was the agency laying out action steps around the things that we continue to believe are really important for the ultimate success of the regulatory framework, which we do want to succeed. I think where we are is the details will matter, and we think this needs to be moving forward with urgency. We'll be looking for that activity to proceed in an expedited fashion, hopefully.
Great. Thanks for that. You mentioned one of the Reagan-Udall recommendations around correcting nicotine misperceptions and communications to adult smokers. That's a great segue to our third condition, which is on that topic. You know, it's clear from the data that there's widespread misunderstanding about the relative risks of tobacco products, and that is a substantial barrier to harm reduction. Can you talk a little bit about why that is such a barrier, why it's critical to address, and who is really supposed to take the lead on these communications to adult smokers?
Certainly. Misperceptions about product risk are in fact a barrier to switching. Our analyses, for example, of the PATH data, which is a longitudinal data set, would tell you that smokers who had an accurate perception of risk were 3x more likely to switch in subsequent waves of the study. We do know that it affects the product choices that they make. T his is something we continue, I personally continue to be very vocal about the real opportunity here. I'm optimistic. I think there are a few reasons to be optimistic. Other nations, I think, have provided a nice model for how this can work. The U.K. is a great example of a country that really appreciates, when you provide specific information about relative risk, that it can impact the public health in a constructive way.
You know, Dr. Califf, for example, he has expressed concern about misinformation and the threat that it can cause to public health. He doesn't link it to nicotine, but we think that creates an opportunity for a conversation there. We are seeing, coming out of the Center for Tobacco Products, much clearer articulation of the risks, for example, of e-vapor product use. I do see signs of progress. I would add we know that public opinion is squarely in the camp of that the agency has a responsibility to communicate clearly about the risks of products. I believe we'll make progress over time. I think there's some specific things I would be looking for.
We believe that FDA does have a role to play here, and when you think about their public communication aspect of the center, they have experience, right, running public health campaigns and with effective messaging. We know from our experience as tobacco marketers that you can do so in a very targeted way and make sure the message reaches the adult smoker and avoids unintended audiences. We would encourage that. We would also encourage communications to physicians, whom we know are the most trusted source for information about choices that a smoker might make to leave cigarette smoking. We also believe, as Murray said earlier, that the MRTP pathway needs to be much more functional and efficient.
It is our job as manufacturers to develop the products, to conduct the science and bring that forward, but then what we would expect is that FDA can be more efficient in evaluating those products and the communications about them. Those are some of my thoughts.
Great. Thanks. Yeah. Obviously, some encouraging signs of progress and more work to be done. We've been talking a lot about the regulatory environment, let's broaden this now and talk a little bit about the legislative environment as well and our fourth condition, which is really around policies that support harm reduction and avoid prohibition. We've said for a while now we believe prohibition doesn't work, and yet we're seeing some more of these kind of this push for some of these prohibitionist policies, like total flavor bans and nicotine caps and such. Todd, kind of what's your perspective on all of this? How is your team working to address this issue?
Sure. Thank you for the question. Look, I feel good about how we're positioned to engage on these issues. If you sort of take a step back, and Paige, you mentioned some of this, and think about the external environment, I think it helps to put it in context. First of all, you know, Americans don't like prohibition. They know that if, you know, the best approach is to keep tobacco products legal and regulated, and the data supports that. Secondly, most policymakers understand that if you force tobacco products out of legal commerce and into the illicit market, you're gonna create significant public health and public safety issues. Those things are sort of understood. Third, we know from public opinion research that Americans overwhelmingly support harm reduction over prohibition.
T hose are just, I think, real important ground-setting facts as to why we're seeing what we're seeing in terms of most prohibitionary legislative policies being defeated. When you take all that and think about it, and you can look as an example the FDA comment period on menthol, where during a relatively short period of time, there were over 850,000 communications, combined to Congress and FDA expressing opposition to the ban and expressing support for harm reduction as a better path forward. At the end of the day, I think all of that positions us in a place to engage effectively on these topics.
There's a growing chorus of diverse stakeholders who are interested in this and are engaging adult tobacco consumers, the trade, our retail and wholesale partners, public health advocates, criminal justice reform advocates, law enforcement, tobacco growers, and others. Again, I feel like, we're positioned in a good place, and we're seeing most of these proposals that are introduced in the states being rejected.
With all that you're seeing kind of in the legislative environment and kind of what you see on the horizon, what's your outlook over the next few years, and where is your team most focused?
You know, I'm optimistic that the policy environment is gonna continue to favor harm reduction over prohibition, and that is where we're focused. Our focus is on advancing policies that work and support harm reduction, many of which we've already talked about here today. Putting the adult smoker squarely into the harm reduction equation. Making sure that when policymakers and regulators make decisions, they're thinking about harm reduction opportunities for adult smokers. Paige mentioned the product pathways, making sure they're efficient and making sure they're timely, at least have a reasonable time to make those decisions. Correcting nicotine misperceptions is an important component of where we're focused, and hoping that FDA will take a more active role on that. Enforcement, which we've mentioned a couple of times.
Those are some of the key focus areas building on the points that Billy made at the beginning of the presentation. Given, you know, what we've talked about, public opinion, the fact that the science and evidence, there is consensus around that. Public opinion supporting harm reduction over prohibition. The fact that harm reduction, if you think about it, is a really pretty common sense policy approach, and it's used in other areas. Preventing initiation, encouraging cessation, and providing alternatives to those who don't quit. I think it sort of adds up to a place that we're gonna continue to see progress because it makes so much sense.
Excellent. Well, thank you all for that excellent conversation. This is gonna conclude today's panel. Hopefully you all heard examples of our leadership in this space, and our ongoing commitment to this work. Really excited to kinda see what's next and appreciate all of your ongoing commitment to this work. With that, we're gonna invite Scott Myers back to the stage and take your questions.
Thanks.
Thank you.
Hi, Gaurav Jain from Barclays. Clearly, there is a lot of focus on the growth of disposables in the U.S. e-cigarette market as well as internationally. We saw with the EVALI crisis here that it did impact what happened internationally. You are seeing this disposable growth quite a lot right now in Europe. If something happens there, it could also impact how people think of e-cigarettes here. How are you thinking of this entire e-cigarette disposable growth, and what can you do to maybe better engage with the FDA and make them aware of what's happening?
Gaurav, is your question getting to growth in terms of use by youth? Is that where you're coming from?
Yes.
Okay.
That is, I guess, what's there in the media, that we probably are seeing something happen again.
That's right. Yes. One of the, I guess, biggest concerns is, you see disposable products that are emerging as the top brands among kids in the NYTS. That is of great concern and gets back to our comments about enforcement. For the system to fully operate, you know, the rules have to be enforced. There, I continue to think that is, you know, a critical opportunity to be addressed. I know Todd hears that from stakeholders as well.
Yeah. o, I agree, and I think it comes back to the enforcement comments and making sure that policymakers are informed with the information, that there's the right resources available, and that there's appropriate enforcement happening in t he marketplace. I think FDA is looking at all that as well in terms of the disposable piece.
Thank you. Scott, I wanted to touch on some of the capabilities that you guys have in store. In particular as a very large market share leader in the overall nicotine category, and how you think that you can affect back bar shelf sets. I think, you know, in the 13 years that I've been covering the space, the modern oral segment as a whole seems very hard to shop from a consumer standpoint, because it just has so many SKUs from a flavor and a strength perspective. What do you think Altria can do to help better merchandise that segment overall? Thank you.
No, it's a great question. Thanks for it. We're working with the trade every day on their back bar and how it presents to the consumer. Certainly bringing them information about how the consumer reacts, as well as all that data we have about what's really selling in their stores versus what's not. Really spending a lot of time with them on just availability. They're not used to dealing with categories that grow 65%, 75%, 80% year-over-year. You have to really hold their hand, if you will, a little bit, and intervene on their inventory ordering systems and those things. That's where we're in such a good position.
We got 1,100 people walking in the doors to help the store managers who are really constrained right now from a labor standpoint, manage those systems, keep them in stock, and then over time, create the category that kind of presents the product the best way to the consumer. I'm really happy with what we've done with our friends in Helix on!, with the product as far as how we moved it forward and getting the visibility we've achieved. We're, we're on the right path, but it takes a lot of intervention and a lot of engagement from us.
I also had a question for Scott. I was hoping maybe you could share some color on your, you know, distribution or go-to-market strategy with SWIC, and then ultimately maybe, you know, for Japan Tobacco's heated tobacco sticks and, you know, how that may differ from your strategy with IQOS when you distributed that. I'm just wondering, you know, if you could highlight for us any of the key learnings and how you might approach things differently? Thanks.
No, great question. Thanks, Bonnie. I mean, the trade's excited about these new categories first. They're really open to ideas about ways to disrupt in their stores and create that, you know, awareness with the trade or the consumers. First you start there. They're really excited. We work with the brand teams on what they're trying to achieve in that store and how they wanna connect with the consumer, whether it's disrupt or engage the consumer in the store or let the platform do the work. Ultimately, we build a program with them. As you think forward with those categories, it'll be the same process we do there as we've done with on!.
We'll think about the consumer, we'll talk to the trade, we'll engage with them, then we'll kind of bring forward a program that hopefully presents the product in the best light inside that store.
Thank you. I was just wondering if you'd comment on going back to the database and working with that database. Do you need to outsource some of that management to firms outside of Altria, or do you have the necessary manpower? Can you attract talent to continue to manage that database and leverage it, especially as you bring on all these new products?
Yeah, that's one of those areas that it's certainly a core competency for us. Our advanced analytics team, you spend a few minutes with this team and you really see their capability and how they're able to look at all this data, model it, help us better understand things from pricing all the way to basic things like availability in the store, and build proprietary models for us to manage that business. I would tell you, the team we have is phenomenal, and the access to 4.5 billion transactions of data plus loyalty IDs and those type of things that lets us see a consumer anonymized shop across the category really is a competitive advantage. Our talent is that's certainly there, and we can attract the talent for it.
Thank you. Your pricing strategy has become even more targeted and sophisticated over the years. Where do you see further opportunity for improvement, and what are some of the initiatives that you have there?
No, I think our brand teams are learning from this data every day with our advanced analytics team's help, right? As they're studying and they build a long history of data so they can model these things out. The second part of the opportunity is you bring in new types of information and insight to the trade that they don't have any other CPG company bringing them with. To kind of march them along the journey about what is the optimized approach, whether it's availability or pricing or whatever it may be, you build their confidence in it, and then over time, you move them towards the direction they should be for their consumer and their marketplace.
Question for Todd. How do you think about the FDA's proposed nicotine product standard in the context of some of your comments about prohibitionist policies?
Well, I think it sort of fits in with that. I mean, Paige can talk about what FDA is currently saying in terms of their timing on that, which is not completely clear. We certainly think if they move forward with it's going to be a very long process. Certainly we view that as another, you know, approach towards a prohibitionary type policy that is not practical and would not be likely to work and would have faced, I think, significant opposition from the stakeholders I talked about earlier, growers, the trade, adult tobacco consumers, and others. You know, we'll see where FDA goes with it.
Paige, I don't know if you wanna comment on timing, but at this point, I think if they go forward, it's gonna be a very, very, very long process.
I would agree with everything Todd said. FDA has reiterated that it's still on their agenda. They've become a little bit less precise when they talk about the timing. it may be something that we see proposed this year, but I'm not sure.
Okay. I don't see any other questions. If you have no more questions for the panel, thank you all, and I think we're gonna take another short break. Thank you.
Thank you.
The joy of the work that we do with inclusion, diversity, and equity is that it is central to achieving our vision. This work touches every single team, every single leader. It doesn't matter if you are in product development or if you are in manufacturing on our core tobacco products. The work that we do impacts everyone. For me, there's almost no other team that is able to impact the vision more directly than we are, because at the end of the day, we are transforming how teams understand themselves, how they work together, how they're able to both create the new products and to go ahead and continue to produce the products that we have. We're putting out ambitious goals and then actually holding folks accountable to do the work to make progress.
Good morning, everyone. It's great to see so many familiar faces. Today, I'll discuss the largest component of our business, the smokable product segment. I'll transition to our enterprise financial goals and capital allocation. The smokable product segment, which includes our cigarette and cigar businesses, has been and will continue to be a significant contributor to our earnings. Our ability to grow profits in this segment requires a thoughtful balance of pricing, cost management, retail share performance, and equity building. Our proud and passionate PM USA and JMC employees continue to manufacture and manage iconic premium quality brands for smokers. Over the past five years, the smokable segment has grown adjusted OCI by $2.2 billion, representing a compounded annual growth rate of 4.7%. Over the same time period, adjusted OCI margins have expanded from 51% to 59%, an impressive increase of 8 percentage points.
Let's now dive deeper into cigarette category and marketplace dynamics. The cigarette category secular decline rate is influenced by a variety of factors, including prevalence, demographics, incidents, and cross-category movement. Macroeconomic factors, purchasing behaviors, and pricing also impact category dynamics. We've studied the U.S. cigarette category for decades. We believe that the secular decline rate of approximately 2.5% is still relevant today. Cigarette prevalence trends for smokers in 2022 remain consistent with previous years. Demographic trends, such as smoker age cohorts, also remain largely in line with patterns observed in previous years. Our data analytics and tools allow us to analyze trends at a more localized level to increase the precision of our models and assess consumer behaviors around various pricing scenarios.
Based on our recent analysis, we have identified a slight change in the national price elasticity coefficient for the cigarette industry. We now estimate that the elasticity coefficient is - 0.35 for the total industry. This is a small adjustment from our previous estimate of - 0.3, and we believe it reflects the impact of higher cigarette retail prices. Our analyses indicate that a significant driver of the volume decline in 2022 was attributable to macroeconomic and other pressures that impacted smoker disposable income and purchasing behavior. Those macroeconomic pressures, along with increased competitive activity, contributed to growth in the discount segment, which grew more than a share point in 2022. We also observed certain branded discount offerings priced at deep discount levels. As we've noted in the past, some smokers will adjust their purchase behaviors based on short-term economic conditions.
However, over the long term, we believe the majority of smokers continue to value the premium quality and consistency of brands like Marlboro. We remain premium-focused to maximize long-term profit over low margin share gains. PM USA continues to make investments in Marlboro to maintain the brand's leadership in the cigarette category. As a result, Marlboro remained the undisputed leader in the category last year. Marlboro's share of the premium segment grew to 58.2% for the full year, an increase of 0.5 versus the prior year. Marlboro has performed better than many other premium brands over the last several years. In fact, over the past three years, Marlboro grew its share of premium by one full share point. We are encouraged by Marlboro's resilient performance, and the brand remained the share leader in all 50 states for full year 2022.
Our 2028 enterprise goal is to maintain our leadership position in the U.S. tobacco space. We expect Marlboro to continue its impressive leadership in the cigarette category while we grow our presence in the major smoke-free categories. Let's not lose sight of the prominence of Blackand Mild in the machine-made tip cigar space and Copenhagen in oral tobacco. This new enterprise goal reflects the strength of our current brand portfolio and our confidence in our ability to build leadership positions in smoke-free categories over time. Let's now transition to our financials and capital allocation.
We have achieved substantial earnings growth and rewarded shareholders with significant cash returns throughout our history. Since 2018, we have grown our adjusted diluted earnings per share by 4.9% on a compounded annual basis and returned more than $36 billion to shareholders through dividends and share repurchases, which is larger than the market caps of over 50% of the companies in the entire S&P 500. We achieved this while effectively managing a strong balance sheet. As we advance our vision, we remain committed to long-term shareholder value creation. Today, we are excited to share with you how we are evolving our enterprise financial goals alongside our growing smoke-free portfolio. One of the common themes I've heard was your desire to better understand our long-term EPS growth, operating margin, and capital allocation strategies. We've heard your feedback and have established goals in each of these areas.
Let's begin with our EPS growth objective. Based on the strength of our core tobacco businesses, we expect to maintain our ability to grow full year adjusted diluted EPS over time. Our goal is to deliver mid-single digits adjusted diluted EPS growth on a compounded annual basis through 2028. We believe this goal provides flexibility to allocate the necessary resources to advance our vision while continuing to drive earnings growth through our core tobacco businesses. We expect investments in growth areas to vary from year to year, and that some years may have a lower EPS growth rate, while other years may have higher EPS growth. We plan to continue to provide EPS guidance ranges on an annual basis to account for business and market dynamics applicable to any given year.
Moving to our 2028 enterprise operating margin goal. We expect to continue delivering strong margins while investing behind innovative smoke-free products. Our goal is to maintain a total adjusted OCI margin of at least 60% in each of the next five years.
Turning to capital allocation, we have a long-standing commitment to a strong and consistently growing dividend. Our dividend remains the primary vehicle for returning cash to shareholders. We recognize the dividend is a top priority for our investors, and it remains a top priority for us. We have increased our dividend for more than half a century, with 57 increases over the past 53 years. Since 2018, our annualized dividend purchase or dividend per share has grown by 4.1% on a compounded annual basis. Since 2010, our objective has been a target dividend payout ratio of approximately 80% of adjusted diluted EPS, subject to the discretion of our board.
As we invest in our vision, adjusted EPS growth may be slightly more variable year- to- year compared to our history of steady and consistent growth. Therefore, to provide investors with confidence in consistent dividend growth, we are establishing a new progressive dividend policy that targets mid-single digits dividend growth annually. We believe this dividend goal is an acknowledgment of our strong commitment to consistent dividend growth and shareholder return. The strong cash generation of our businesses has annually produced about $1 billion of cash in excess of our dividend payments. As we consider this excess cash, we expect to continue balancing share repurchases with investments in our business and debt repayment. We continue to see value in our shares. At year-end 2022, we completed our previous share repurchase program, repurchasing $3.5 billion of shares over the last two years.
For 2023, we expect to complete our current $1 billion program by the end of this year and continue to our balanced approach as we also retired approximately $1.3 billion of notes at maturity with available cash. Most recently, we announced our plans regarding the NJOY transaction. We have multiple sources of funding for this transaction, including our significant cash generation, strong access to the credit markets, and committed short-term financing. Our options are also enhanced by the $2.7 billion transition agreement with Philip Morris International for the IQOS system. We received $1 billion from PMI in the fourth quarter of last year and expect to receive a payment of $1.7 billion plus interest by July 2023. Our balance sheet remains strong, and we have manageable annual debt maturity towers through 2038, none of which exceed $2 billion.
As of year-end, our debt-to-EBITDA ratio was 2.1x , down 0.4 over the past three years. Looking ahead, we continue to believe a strong balance sheet is in the long-term interest of both debt and equity investors. Our enterprise goal is a capital structure with leverage of approximately 2x debt to EBITDA. We believe this level will provide us with appropriate access to the capital markets and the flexibility to invest in pursuit of our vision while providing strong returns to shareholders. Turning to the tax impact of our former JUUL stake, we estimate that we have more than $12.5 billion in losses. For tax purposes, we plan to claim approximately $6.4 billion in ordinary losses this year.
We do not expect this tax position will have an impact to our 2023 financial results as we plan to record a full reserve pending an IRS review. We expect the balance of losses related to the investment to be capital losses, and we plan to claim a portion of these on our 2023 federal income tax returns to offset capital gains from our IQOS agreement. We have flexibility on when to realize the remainder of the capital losses given our entity structure. We will continue to evaluate opportunities to use these losses with the objective of maximizing long-term shareholder value.
I would like to discuss our investment in ABI, the world's largest brewer. We continue to evaluate the stake as a financial investment, and our goal remains to maximize long-term value of the investment for our shareholders. As a reminder, our investment in ABI has a tax basis of approximately $3 billion.
In summary, our leading tobacco brands will continue to be an engine for earnings growth and support our significant cash returns to shareholders. Our Enterprise Goals offer more clarity on our aspirations to continue to lead in the U.S. tobacco space, maintain strong operating margins, generate earnings growth, steadily grow our dividend, and maintain a strong balance sheet. We are confident in our ability to achieve our financial aspirations while we advance our vision and remain focused on creating long-term value for our investors. I will now pass it over to the newest member of our executive leadership team, Chief Innovation and Product Officer, Olivier Houpert.
Good morning. It is a pleasure meeting all of you. As Sal mentioned, I currently serve as Altria's Chief Innovation and Product Officer. I am responsible for leading the development of Altria's long-term product pipeline and enhancing a comprehensive innovation system, inclusive of partnerships and internal capabilities. Prior to joining Altria in May of last year, I spent 30 years at Procter & Gamble, mostly working across multiple roles in R&D and innovation. My most recent role at P&G was Vice President of Global Dish Care and Site Leader for the P&G Innovation Center in Brussels. I chose to join Altria because I believe in the company vision, and I am motivated to help accelerate the company's transformation to a smoke-free future. This morning, I am happy to be here to discuss our new innovation and product organization.
We have centralized our product development, consumer research, and innovation functions, while also creating an open innovation system to enhance our internal capabilities. We have also begun exploring how we can leverage our existing capabilities to create incremental value through non-nicotine adjacency strategies. Let's walk through each of these areas, starting with product development. Our team is focused on providing Altria's operating companies with the best smoke-free products to effectively compete. We have evolved our product development efforts to be more consumer-centric, and we've adjusted our organization accordingly. Our new products now exist within an innovation system that better leverages consumer insights, data, emerging trends, and our existing talent.
This system ensures a disciplined approach to product development that will align with consumer expectations, meet regulatory requirements, and align with our stringent requirement for commercial success. We are led by the science and work with an agile mindset to rapidly design and prototype to increase learning potential. This morning, you heard Jody share the exciting progress we've made on two new products coming out of this innovation system. We're not stopping there. We want more products, we want the best products, and we want them faster. With the changes we have made, I believe that we have a very bright future ahead, and I look forward to sharing more exciting product news with you over time. We have also created an open innovation system called Connect and Transform.
This team is focused on partnering externally to leverage subject matter expertise, new technologies, and disruptive innovations to augment our internal capabilities and support our innovation strategies. This system will balance our desire to create meaningful and productive external relationships with maintaining ownership of our proprietary technologies and competitively sensitive plans. We believe that the fastest, most effective way to understand emerging trends and technologies is to develop relationships with those that are inventing tomorrow's solutions.
Moving to growth opportunities beyond nicotine products, we believe we can create incremental value through non-nicotine adjacency strategies. Earlier today, Shannon discussed how tobacco consumers use tobacco products to elevate certain everyday moments when they're looking to either detach from or engage with the world around them. Understanding these moments and the tobacco products that best satisfy them is a core competency that we've built over many years.
As we look to the future, we see opportunities to build on this knowledge to identify non-nicotine products that could satisfy these same moments. Cannabis products are one such example. We're also expanding our lens to a broader consumer base to understand other everyday moments that could be elevated through non-nicotine products. Our approach is to understand what problems or gaps consumers are facing today within these moments, identify new and different ways to solve them, and then leverage a combination of our core competencies and new external relationships to create product solutions that can address these consumer needs. While this is an exciting area of exploration for our company, we intend to be disciplined and thoughtful when identifying potential non-nicotine opportunities. We are also focused on the international tobacco opportunity, which we know will be largely incremental to our business.
We are continuing to explore the best path to compete in overseas market and are holding discussions with JT about potential future collaboration opportunities for smoke-free products. We are excited about the international opportunity of our portfolio of smoke-free products. To be clear, we are committed to growing beyond the U.S. tobacco space, which is why in addition to our corporate and smoke-free product goals, we're also in the process of establishing long-term growth goals. We believe that the international smoke-free and global non-nicotine spaces are a combined multi-billion-dollar opportunity for us. Our teams are currently evaluating these opportunities and expect to finalize strategies for these growth areas over the next 12 months. Once the strategies are completed, we will share them with you alongside specific metrics that you can use to hold us accountable.
I joined Altria because I am motivated to accelerate the company's transformation. I believe that the steps we are taking today will pave the way for a continued success in the future. Thank you very much for your time today. I will now turn the podium back over to Billy for closing remarks.
Thank you, Olivier. Thank you all for joining us today. As I stated in my introduction, our primary goal today is to leave you with greater confidence in our ability to make significant progress on the harm reduction opportunity in front of us. I hope you have enjoyed hearing from members of our talented leadership team. These conversations provided greater clarity on the direction of our company. Let's revisit the 2028 Enterprise Goals framework. Recap what we shared throughout the morning.
As Sal mentioned, these goals reflect our long history of delivering strong financial performance, growing our dividend, and maintaining a flexible balance sheet. They also reflect our intent to maintain our leadership position in the U.S. tobacco space through the strength of our amazing brands, including Marlboro, the undisputed leader in the cigarette category for decades, Copenhagen, the leading oral tobacco brand with a rich 200-year heritage, and Blacland Mild, the leading tipped cigar brand in the most profitable machine-made large mass cigar segment.
We believe we will be well-positioned to achieve our U.S. smoke-free goals by enhancing our portfolio across the three major smoke-free categories, including on! and on!+ and nicotine pouches, SWIC, and a joint venture for Ploom in the heated tobacco category, and NJOY ACE in e-vapor upon closing. As Olivier said, while we're extremely pleased with our portfolio, we will never be satisfied. We want more products, we want better products, and we want them faster. We will continue to explore how we can add to our nicotine portfolio through partnerships and internal product development. Additionally, we are exploring opportunities beyond U.S. nicotine with Olivier's new organization. We believe our 2028 Enterprise Goals reflect our desire to deliver strong shareholder returns while investing and growing our smoke-free businesses.
While some of these metrics may be discussed during our quarterly earnings calls, we will provide an annual update on the complete set of goals moving forward. Our path forward continues to be guided by the consumer. We're learning from the past and applying these learnings to how we approach the future, and we're realistic about the road ahead. We know that change does not happen overnight and that there will be bumps along the way, but we remain relentlessly committed to the path ahead. The internal capabilities that Scott outlined, along with our enhanced portfolio of smoke-free products and the grit and determination of our talented employees, gives me confidence we will achieve our vision. Before moving to the final question-and-answer session, I'd like to thank you, our investors, for your interest in Altria.
I appreciate your engagement over the years for pushing and challenging us and for sharing our commitment to achieving harm reduction. We look forward to continuing our relationship for years to come. With that, I'd like to invite Sal and Olivier back on stage for our final question-and-answer session.
Got one right over here.
Thank you so much. Sal, I was hoping that you could touch on the adjustment that you guys made to your view of price elasticities in U.S. combustible cigarettes. Can you remind us how long it took for you guys to adjust that from 0.25 to 0.3? I have a follow-up.
You know, the first part of your question, I don't quite recall when we made that adjustment. I will tell you the - 0.3 has been in place for decades. We made a slight adjustment based on the data we're seeing. We do believe the elevated retail cigarette price is a factor. It's a slight adjustment. It's not a big adjustment. You know, that elasticity coefficient has been in place for a very long time.
Yeah. Historical knowledge here. I think if you think about it, the 0.25, the adjustment of 0.3 did take a long, long time. What you see and what Sal is highlighting is the step-up and just the price structure in the cigarette category. We felt it was necessary to make this small adjustment. That's the entire cigarette industry. Know that with the data analytics, there's lots of price elasticity between brands, between the way the consumer thinks about brands, the new smoke-free category. There's a lot of detail under that. That's really just what we see as the national price elasticity.
Understood. You know, recognizing that I'm sure you guys are all students of the global tobacco market, where price elasticities are not necessarily as accommodative as they are in the U.S., I think what we've observed is that as price elasticities degrade, even modestly, that you do tend to see an acceleration in down trading. I was wondering if you guys could touch on the role that Marlboro Special Blend can play in the portfolio to help you better compete against the down trading that we're seeing largely driven by your competitors. Thank you.
Yeah, I think when you think about it, you actually have to step back and think about the last couple of times that the consumer was under such economic strain, and this is true across all categories, but let's go specific to tobacco. When you look at the last couple of times, go back to 2008, 2009, you saw that the discount category go up and premium go down slightly, but it recovered through time. That's what history would tell us. What we wanna do, and we see it as more efficient and more effective use of our resources, is actually have places for the consumer to land. You'll recall, during the pandemic, we actually saw Marlboro share go up. The consumer had extra discretionary income. The Marlboro brand is still the aspirational brand in the cigarette category. We saw the benefit of that.
Now they're under pressure, we wanna have a safe place for them to land. It's harder to win them back and more costly than giving them a safe place to land. Special Select and those types of things, the data analytics we have where we can get as close as we can get to the individual consumer when they're under economic strain, keeps them loyal to Marlboro.
Hi, Priya Ohri-Gupta from Barclays. Sal, thank you so much for giving us the context around the leverage target. Was hoping that I could ask two follow-ups around that. One, any thoughts around sort of a ratings objective that we might think about as tied to that? Two, as we're thinking about sort of the next few years, particularly over that five-year horizon that you guys are talking about, how closely should we expect that approximately 2x t arget to be managed to. As we think about this year, for example, given where you ended, last year at the target of about 2.1x, having repaid some debt already, should we expect you to then sort of issue in order to come back up to that level? I s there, you know, flexibility to sort of trend above below that too? Thank you.
No, it's a great question. The first part of your question, what I would say is it's important for us to be investment grade. As you know, from time to time, we will access the CP market, the short-term market, because our cash inflows vary and outflows vary. Come March, April timeframe, when we're paying the MSA, you have a significant amount of cash outflow. The second part of your question, I would think of the 2x target as a target. There are gonna be years where we're below it, there'll be years where we're above it. There's a lot of variables that go into that determination, not only market conditions, but company needs, opportunities.
Think of that as a target and know that we may be below, we may be above it, depending on what's happening in the marketplace and what's happening with our business.
Hi, Pam Kaufman. What level of investment behind your smoke-free vision are you incorporating into your mid-single digit EPS growth targets? Given the reliance on the cigarette business to fund the investment, how are you thinking about the long-term pricing strategy, particularly given that elasticities are increasing, although modestly? You know, as pricing steps up, can elasticities move higher?
Yeah, tha t's why I wanted to take us back a bit more historical perspective. When the consumer's under economic pressure, you see some of these shifts take place. I would push back on you a bit to say this is a significant degradation in the price elasticity because this is the total category. When you look at the price elasticity, even at -0.35, I would say when you look at other categories, that's really, really small, based on the pricing strength in the industry. I think when you think about future pricing, I'll be careful not to talk about it is an important part of the algorithm. I think when you think about investments, what we wanted to provide you all was a framework. Overall margin's not below 60%.
That tells you we're gonna be disciplined and look for ways to utilize infrastructure from either cigarettes or moist smokeless and other parts of the business and leverage that. Marlboro paid for it. We can utilize the knowledge and the learnings in other parts of the business. I think when you think about the EPS, what we wanted to provide there was through time, on a compounded annual basis, we wanted to target mid-single digits. That gives you some idea that we're going to invest in growing businesses, we're not gonna starve them, and that we're gonna balance that with the total portfolio that we have to be able to make the appropriate investments and grow, but at the same time, invest in the Marlboro when necessary.
Maybe a quick follow-on on that as it relates to the EPS growth that you talked about just being mid-single digits. You did highlight, Sal, that some years you might be lower and some years you might be higher. In the context of what you just said, can you give us a sense of, you know, how much lower below mid-single digits, or are you talking low end of the mid-single digit range? You know, I'm just trying to understand, could your EPS in some particular year be as low as, you know, low single digits, flat, and if so, how in the context of what you just mentioned?
Somehow I anticipated that question coming from you, Bonnie, that we provide more information, and then we need more information. I think what we're really looking at is on a competency basis, being mid-single digits. That would allow us, when we see the consumer moving to a category, we can invest in the category. Through time, we're targeting that mid-single digits, so that through this transition period, if you will, with the consumer over the next five years, that you have an idea of how we're gonna manage the business across the entire portfolio. I know you would like a specific range, but I'll ask for some grace to say that was.
All right.
Hey, guys. A couple of questions, please. First one on the 2028 targets. I think you said targeting more than $2 billion in new reduced-risk sales. I was just wondering if you could kind of give some color in how you see that $2 billion being split across the different categories.
Yeah. I think when you think about it, I think it's important to look at where the market is today and where the consumer is. E-vapor is the largest. A large portion of the consumers have moved to e-vapor. Unless we see the FDA take draconian measures to force them out of that category, they would have to have a significant reason to move. We know that a large portion of consumers went over to e-vapor and rejected it and moved back to cigarettes. We think both the capsule and the stick product from Ploom, while there is no heat-not-burn category in the U.S. currently, that that has potential through time, you remember, we have to go through the FDA authorization to get there.
Novel oral with the product that we have in the marketplace, attracting both smokers and dippers, we believe in that period of time will be a category that's growing and will continue to grow.
Thanks. Next question just on beyond nicotine. I know you said you're finalizing strategies there, but is that something you're looking to develop technology internally and invest externally into that? Obviously, PM has a venture capital arm, BAT does. We get visibility on some of their investments. Japan Tobacco spoke about that recently as well. Is that something you'll be looking to invest on in terms of venture investment in these areas as well? Thank you.
I appreciate your question. I think it's early on in the exploration phase. We're gonna come back with the specific measures on how you should hold us accountable. I think when we're thinking about the exploration phase, all of those costs are in the goals that we have here. I wouldn't think of anything drastic. It's really thinking about what are our strengths and how do we leverage them into moments for consumers across all the categories. It's not to move people to tobacco, is there space for us with permission to play in other categories that consumers enjoy for moments in their life.
Great. Thank you.
Thank you.
Hi. A couple of questions from me. On the JUUL loss, which you have split between income tax losses and capital losses, like, if it can be split, why not put 100% under income tax losses? That's number one. Second, if this year you will not reduce your income tax rate, but if IRS agrees, that means that your income tax rate will go down over the next few years, so that mid-single digit EPS growth can just come from that. Is that guidance on a constant tax rate, or there is an assumption that tax rates will be going down in the next few years?
Well, we give guidance on our effective tax rate, which we did in our January call, That's for the current year. You are correct. We do not expect that to change. We are holding, or I should say this does not impact our guidance because we are fully reserving for the ordinary losses for this year, We've shared our position with the IRS, We're waiting to hear any feedback from them at this point. You know, when you think about the losses, they're split between ordinary and capital, as I said. We do have the ability on timing of some of the future capital losses. In 2023, we are going to offset some of the capital gains related to the IQOS transition agreement with capital losses.
You know, we're not really giving longer range guidance related to the effective tax rate. We have really good people in our tax department. They continue to plan and manage our tax liabilities and to both comply with the regulations, but to maximize shareholder return.
Sure. Thank you. Secondly, you know, we will have a new competition in the U.S. market next year with IQOS, how do you factor that potential share loss in this entire framework of pricing, volume decline in cigarettes, and EPS growth guidance?
In setting the goals, we try to look at multiple scenarios and then take what we thought was a stretch but realistic. It will really depend on the consumer. We've had competition in the U.S., as you know, for quite a while. It's how the consumer's making choices between these various categories and how they put products in their consideration set, and that was all incorporated in our goals. That's exactly why we use the portfolio approach, Gaurav, is we think about the consumer and external factors that can influence and where would they if something happens in one category, what categories would they go to, and how can we compete best in each?
Olivier, question for you. You've joined from P&G, who have an R&D budget of about $2 billion a year, and where innovation is obviously a core competency for their business. You've joined a business where, at least historically in cigarettes, innovation has taken a bit more of a back seat, right? My question is, what have you found at Altria since you started, in terms of their internal capabilities in this area, and what surprised you?
Thank you for the question. I would say a number of core competencies that I found at Altria is quite impressive. You know, they're the best, we're the best at doing certain businesses. You know, our core business is very strong. Our ability, for example, to create, you know, great flavors. N ot just that, and in the tobacco space, there's a lot of core competencies that we have from, you know, how we understand even the plants and how we could potentially modify that. There's a lot of core competencies. You can't really compare with P&G, which operates across, you know, a large number of very different categories.
If you took, you know, every individual business unit, you know, at P&G, you look at their core competency, it becomes much more comparable to where we are at Altria given the space that we cover. Yes, I mean, if you look at the numbers, even resources and budget, you're not in the same league, but that's where we are today, you know. I joined, as I said, because I think we can make a big impact on this market. I think we can transform this company and serve many more consumers than we're serving today. I think the future is ahead of us.
You talked about some of the macro impacts on the consumer last year that drove declines in the category. How are you thinking about the potential impact of the reduction in SNAP benefits on the cigarette category and given the exposure to the lower income consumer.
Yeah, I mean, I think it will have an impact. You mentioned 1 headwind, but I think there are other tailwinds as well. Unemployment's at significantly low. You have headwinds and tailwinds all the time with our consumer, and I think that's what we've proven that we know how to navigate. I think with the tools and the advanced analytics we have in place, it's getting to those individual consumers as close as you can get to them, to provide them the economic benefit if they need it, because that they're under strain at the current time.
Okay. Sal, you touched on your ABI or, you know, your ABI asset, just maybe a quick question. Would it be fair to say that you may now be more interested in possibly exiting that asset, you know, just given the tax shield you now have on JUUL as you laid out, and as you step up investments to pivot, you know, your portfolio to smoke-free? That's, you know, maybe my first question for Sal. I have another question about, you know, the opportunities you have internationally, and as you continue to explore those opportunities, and you touched on, you know, possibly with JT. Could you just share a little bit more color on that and then possibly timing? How much of a role M&A may play in your, you know, desire to move more internationally? Thanks.
You wanna take it, Sal?
I'll start with ABI. Really nothing to report on ABI. You're right, Bonnie, in that tax is one of the variables we analyze when we look at the ABI investment. But there are other variables that we also consider, and we've talked about those in the past, including use of proceeds, including the health of ABI's business, the health of the overall beer industry. We'll continue to do the analysis. If we have anything to report, of course we'll be transparent and report that to you. As of now, nothing new to report.
As far as international, we see that as a huge opportunity. It's a benefit. It's completely adjacent. How do we leverage any of the products that we produce for the U.S., the U.S. consumer, into international markets? We said we're in the exploration phase. You mentioned whether it's partnerships and who the partnerships with. We'll come back to you. We suggested that we'll come back within 12 months. What we're extremely excited about though, is the conversations we're having with JT. You remember when we put the JV in place for the U.S. for the Ploom device, there was a memorandum of understanding of what other areas could we collaborate on, whether that's future product development, international opportunities. We'll continue to explore those and come back when we have something to share.
Thank you. Olivier, you referenced some of the consumer work that Shannon's group is doing as being critical to informing how you're thinking about the initiatives that fall under your purview. I'm interested to hear how you're thinking about leveraging Altria's route to market capabilities in terms of informing the different pathways you might pursue. Thank you.
Thank you for the question. It's a great question because while we're being consumer-centric, I think obsessed, as Shannon said, we also wanna understand how people buy their products, how they use their products. Leveraging our core competencies, including our go-to market strategy, is part of the equation. You heard Shannon said this morning, and this is something I observed when I joined the company, is all the products we're selling today, I think with no exception, are always with their users. That's a very unique thing, something that many other companies would love to have. When we think about that and how they buy their products, how they consume their products, we're being led by what is closest to that in terms of where the next product iteration could be. That includes the way people purchase their products.
As we explore the non-nicotine opportunities, for example, that's gonna be an important lens that we use to make sure we capitalize on what we're really good at.
Back here, Brian Cowen from Bank of America. Sal, can you talk about the capital needs for smoke-free or for international, you know, through 2028? You know, does this change sort of the CapEx trends, which have been relatively modest for your business? Then maybe separately, how should we think about inventory dynamics within working capital, especially as you build up smoke-free?
Yeah. You know, first, again, we wanted to be transparent and provide you with a leverage target, and I thought that was important. We get a lot of feedback from investors that they'd like to know that. When you think about CapEx, you're right. We've had a modest level of capital expenditures 'cause we've had a very mature business, and it's allowed us to have capital expenditures in line with depreciation. The way I would think about CapEx today is you're seeing a shift f rom core business to new businesses. We're able to leverage the breadth of our portfolio and our footprint to be efficient in how we allocate those CapEx dollars.
As an example, when we expanded manufacturing for on!, which allowed us to move into over 100,000 stores, we bought equipment, we got it up and running, but we were able to do that within our Richmond MC campus. We didn't have to build a green field. We could leverage that fixed cost, as was discussed earlier, and also manage our CapEx. That being said, we're gonna make the necessary capital expenditures in these new categories, because we believe that's the future of our business. It's important to have manufacturing capability to be able to put product in the stores and have it accessible to the consumers, drive awareness, trial, and conversion.
You know, we feel good about the leverage target. We feel good about our ability to use cash derived from our core businesses, which convert income at a very high level for cash. We feel good about that and, you know, and as I said, we will make the necessary capital investments that are required in these new categories. As far as working capital, again, you know, it's important for us to manage our strong balance sheet. It's important for us to provide cash returns to our shareholders, and we believe we can manage that across our portfolio very effectively.
You know, over the next two, three years, you are investing in these two categories where you will have products in the market. One is through Helix, and the other one will be through NJOY. Now, in Helix, you are saying you will break even in 2025. You know, if you look at Swedish Match, their margins were, like, north of 50% at the volumes that you have today. One could argue that if you were to price up on on!, you could take that incremental sort of money and put it more aggressively behind your e-cigarette business and drive that more aggressively.
What I'm trying to understand is how are you making those choices because you have created an overall envelope of EPS growth, so that's a constraint, and you have new competition on cigarette side, so that we will see, you know, how things evolve. How do you make those choices is what I'm very curious to hear.
Yeah, it's a good question. I think you have to think about it. We and others have been the beneficiary that a large group of consumers chose cigarettes. Yeah, we had many SKUs, but if you think about the supply chain, the production, slight differences in ingredients, but everything was the same. The distribution was the same. I think as you think about the consumer making different choices, and we believe they're gonna fragment across these three spaces, and that's why we wanna participate in all three. As they're in that transition period, you're gonna wanna make the investments that are necessary to get those products in their consideration set. We believe we're on track to have the best products. You saw it with NJOY.
Once it's in their hands and they try it, they like the product better than other products in the marketplace. What we're trying to do is make sure that we get it in their consideration set, so we're gonna make the necessary investments. There is a trade-off, and that's why we try to give you a total picture. Here's what we're gonna do on EPS, where our goal is. Here's how we're gonna think about total margin, because you're gonna be investing in some, and some you're gonna be backing off of investments because you feel like the category is more at a stable state. We're gonna be balancing that across time. They're individual decisions on an annual basis, and so we're gonna make those decisions as we're moving through time.
Yeah, all of those factors consider in as we make those. Any others? We may have time for one more if it's out here.
Thanks. We talked about a lot today, a lot of innovation in the pipeline, you know, that you've announced and some maybe you haven't yet announced. As you sit here today, what are you know, most excited about in terms of having the biggest impact, you know, on your business and getting you to your goal to have a greater presence in smoke free, as well as what, you know, do you think will have the most impact on your margins? For instance, Billy, we were talking earlier about the advantages SWIC has in, you know, given that it will be taxed as an OTP. Maybe you could just highlight for us as you sit back today, what are you most excited about in the context of that? Thanks.
Yeah, I really appreciate the question, Bonnie, and it's gonna sound cliché. It, it really is, but I mean it. It's the people. Altria has, I think, the strongest talent base. We have curveballs that come our way, and the team can, if you allow me to use a baseball analogy, continues to hit it out of the park. It's the passion of our colleagues across Altria. You saw some displayed today with the talent from the leadership team that we put on display. It really is the people of Altria, our colleagues, that give me the most excitement, the passion and grit that they have. Thank you all very much for your time today. Thank you for your continued interest in Altria, we'll be available for those in the room to answer any last questions.
Thank you very much.