But before we begin, I'd like to remind you that some of the comments on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties, as described in the company's earnings release and in other filings with the SEC.Now, I'd now like to turn the call over to Murray Kessler. Murray S. Kessler Thank you, Bob, and good morning, everyone. Lorillard's third quarter played out just as we expected and just as we said it would during our last conference call. I'm pleased to report that very strong fundamentals continue. We acknowledged that strong fundamentals were masked by a significant comparative reduction in wholesale inventory, adversely affecting our reported volume growth by just over 400 basis points. But we can't emphasize enough that absent the inventory comparison, which was simply a timing issue, our business, as measured by retail shipments, was as strong as we've seen all year. This is especially encouraging as we reduced promotional spending versus year ago on our flagship Newport Menthol brand, and our recent round of price increases are all sticking. We also observed no unusual competitive promotional activity during the quarter. So let's take a closer look at third quarter highlights. First, total Lorillard domestic volume increased 2.8% versus year ago in quarter 3. Adjusting for inventory fluctuations, total Lorillard domestic volume was up an estimated 7%. This is about the same level of the growth adjusted for inventory changes we saw in the first and second quarters. The point is further illustrated by a look at shipments from wholesale to retail, as measured by our proprietary EXCEL database, which is unaffected by changes in wholesale inventory. Total Lorillard retail shipments were up over 8% versus year ago in the quarter. Of note, Lorillard discount brand shipments to retail, while still up double digits at about 12%, actually slowed a little from prior quarters. So the acceleration of our retail shipment and market share growth was driven by our premium brand Newport, which grew 8% in total versus year ago during the quarter, following 5.5% growth in the second quarter and 6.3% in the first quarter. Again, I'm referring to retail shipments, which are more indicative of consumer purchasing and eliminate the noise from quarter-to-quarter due to inventory swings. Given the difficult macro-economic environment that continue during the third quarter, we were happy to see such a strong performance on our premium brand.
Our premium strength traced to the incremental volume this year associated with the Newport Non-Menthol launch and a very strong quarter and improvement in trend on our flagship Newport Menthol business. Newport Menthol benefited from our geographic expansion plan, which we highlighted during our Investor Day. Both of these initiatives are performing extremely well. Newport Non-Menthol continues to hold just under a 1% share despite our recent 20% price increase which has significantly enhanced profitability on this new brand, and Newport Menthol, in expansion markets, continues to grow double digits.It's worth mentioning, as a number of investors are concerned about heightened promotional spending hurting industry pricing power, that even with our investment in these expansion markets, total Newport Menthol promotional spending was down versus year ago for the quarter, and it is down for the year. This also includes the increased spending effect of volume previously sold non-promotive on Native American reservations in New York, switching to promoted volumes in other locations. So let me repeat my self. While I can't speak for the rest of the industry, Lorillard has reduced by down-spending this year and this quarter. We recognize that between mix, and more importantly this quarter, the negative inventory comparison, it is hard to see the impact of pricing. David will try and make this as transparent as possible during his comments. Let me reassure you, however, that the price increases we took in July are being fully realized to the income statement. Turning to the broader industry. We estimate total industry domestic shipments declined 6.4%. Similar to Lorillard, the total industry was negatively affected by inventory fluctuations. We estimate that impact to be about 3 percentage points. Read the rest of this transcript for free on seekingalpha.com