Altria Group (NYSE:MO) executives highlighted “continued momentum” in 2025, pointing to adjusted earnings growth, cash returns to shareholders, and progress across the company’s smoke-free portfolio, while also acknowledging persistent headwinds from illicit flavored disposable e-vapor products and a challenging promotional environment in nicotine pouches.
2025 performance and shareholder returns
CEO Billy Gifford said Altria delivered “strong financial performance” in 2025, with adjusted diluted earnings per share up 4.4% for the full year. The company returned $8 billion to shareholders through dividends and share repurchases combined.
U.S. nicotine landscape: growth, but illicit e-vapor remains a headwind
Gifford described a U.S. nicotine market in which smoke-free alternatives are now a majority of total nicotine consumption on an equivalized basis. He said the estimated number of adult consumers in the e-vapor and oral tobacco categories grew to nearly 30 million, “nearly as large as the adult smoker population.” He also said Altria estimates smoke-free alternatives represented more than 50% of the total nicotine space in 2025, up 5 percentage points from the prior year, while total nicotine industry equivalized volumes increased for the third consecutive year.
However, Gifford said the primary driver of smoke-free growth continues to be the widespread availability of illicit flavored, disposable e-vapor products. Altria estimates the e-vapor category grew about 15% in 2025, with illicit products representing approximately 70% of the category. The company estimated more than 20 million vapers at year-end, with nearly 15 million using disposable products.
Management said there were early signs of progress on enforcement and market dynamics. Gifford noted fourth-quarter legislation requiring the FDA to allocate at least $200 million of tobacco user fees to enforcement activities, and said early signs suggest these efforts—together with tariffs on Chinese manufactured goods—are beginning to impact the illicit marketplace. He also said growth in disposable e-vapor is moderating, with disposable e-vapor volumes up about 30% in 2025 versus over 50% in 2024, and the number of disposable vapers rising about 10% versus over 40% in 2024.
Even so, Gifford said Altria intends to maintain a “measured approach” to e-vapor investments until enforcement meaningfully addresses the illicit market and the regulatory framework functions as intended, citing the pace of FDA authorizations and the intellectual property landscape as additional headwinds.
Nicotine pouches and on! PLUS authorization
In oral tobacco, Gifford said nicotine pouches continue to drive growth, with oral tobacco volume up an estimated 14% over the past six months. In the fourth quarter, nicotine pouches grew 10.4 share points year-over-year and represented nearly 57% of the total oral category. Management also described elevated competitor promotional activity, with average retail prices for category competitors down 3% sequentially and 12% year-over-year in the fourth quarter, while on! pricing rose.
Gifford said Helix (Altria’s oral nicotine business) grew on! reported shipment volume to more than 44 million cans in the fourth quarter and more than 177 million cans for the full year, up about 11%. On!’s retail share of the total oral tobacco category was 7.7% for the fourth quarter and 8.2% for the full year.
A key milestone came in December, when the FDA authorized on! PLUS Mint, Wintergreen, and Tobacco in 6 mg and 9 mg nicotine strengths (with a 12 mg variant still under review). Following authorization, Helix resumed shipments of on! PLUS in Florida, North Carolina, and Texas after previously halting shipments during an FDA pilot program period. Management said it is laying the foundation for a national expansion planned for the first half of 2026, supported by investments in retail merchandising fixtures and equity.
Gifford said early consumer feedback indicates on! PLUS’s pouch material and “smooth flavor proposition” are competitive advantages, and cited internal research in which on! PLUS Mint achieved higher overall purchase intention scores than the leading nicotine pouch brand, with superior pouch comfort and mouthfeel. On pricing, Gifford said the company believes on! PLUS is differentiated and “commands a premium,” while noting that introductory promotions may vary by state.
Segment results, duty drawback investments, and 2026 guidance
Mancuso said the smokable product segment generated more than $11 billion in adjusted operating companies income (OCI) for the full year and expanded adjusted OCI margins by 1.8 percentage points to 63.4%, supported by net price realization of 8.4%. In the fourth quarter, smokable adjusted OCI declined 2.4% and margins contracted 0.8 percentage points to 60.4%, with year-over-year cost per pack comparisons impacted by higher manufacturing costs tied to investments to build PM USA cigarette import and export capabilities.
Altria reported domestic cigarette volumes down 7.9% in the fourth quarter and 10% for the full year, with adjusted declines of 7% and 9.5% after calendar differences in trade inventory movements. Mancuso said the company estimates industry domestic cigarette volumes fell 8% for the full year and 6.5% for the fourth quarter on an adjusted basis, representing a sequential improvement of about 1.5 percentage points.
Management also updated its view of cross-category pressure from e-vapor on cigarette declines. Mancuso said Altria now estimates cross-category impacts contributed about 2% to 3% to cigarette industry decline over the past 12 months, versus a prior estimate of 3% to 4%.
In the discount segment, the company pointed to discretionary income pressures and said discount retail share grew 2.6 share points in the fourth quarter and 2.2 share points for the full year. Marlboro retail share declined 1.5 share points in the fourth quarter and 1.2 share points for the full year, though management emphasized Marlboro’s leadership in the premium segment, with premium share at 59.4% for the full year.
In oral tobacco, investments behind on! and on! PLUS contributed to a 4.6% decline in adjusted OCI in the fourth quarter and a five percentage point margin contraction to 64.5%. For the full year, oral adjusted OCI increased 1.3% and margins expanded 0.1 percentage points to 67.9%.
On e-vapor, Mancuso said the company recorded $1.3 billion in non-cash impairment charges in the fourth quarter following impairment assessments of definite-lived intangible assets and goodwill, citing the expectation that effective, sustained enforcement will develop more gradually and that enforcement has not meaningfully reduced illicit e-vapor volumes to date. He also noted a reporting change: Altria updated its reportable segments for full-year 2025 to include an e-vapor product segment consisting of the NJOY business.
For 2026, management guided to adjusted diluted EPS of $5.56 to $5.72, representing 2.5% to 5.5% growth from a $5.42 base in 2025. Gifford said growth is expected to be weighted to the second half, reflecting a progressive increase in cigarette import and export activity over the course of the year. The guidance also assumes planned investments to support contract manufacturing capabilities, limited impact on combustible and e-vapor volumes from illicit enforcement efforts, and that NJOY Ace will not return to the marketplace in 2026.
During Q&A, executives fielded several questions about the import/export initiative, including capital spending and “duty drawback” benefits. Management declined to provide detailed program specifics but said the opportunity depends on matching exports with imports. Mancuso said the return on investment for the import/export spending is “very strong,” with payback “less than a year,” while also noting that investments generally precede volume ramp. Management said 2026 capital expenditures are expected to be elevated, primarily driven by import/export investments and manufacturing capability needs, including support for smoke-free products.
Altria also discussed its Basic cigarette strategy, describing it as a targeted effort in “roughly over 30,000 stores” aimed at consumers under economic pressure. Gifford said the company views Basic and the import/export decision as independent, and management said it does not believe Basic is having an outsized cannibalization impact on Marlboro.
About Altria Group (NYSE:MO)
Altria Group, Inc (NYSE: MO) is a U.S.-based consumer goods company whose principal business is the manufacture and sale of tobacco products. Headquartered in Richmond, Virginia, the company’s operations are focused primarily on the U.S. market and include the production, marketing and distribution of cigarettes, smokeless tobacco and cigars. Its flagship cigarette franchise in the United States is sold through its operating subsidiaries and is among the most recognizable cigarette brands in the country.
Altria’s principal operating businesses include Philip Morris USA (cigarettes), U.S.
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