USA: Tobacco Products

September 2026: U.S. Cigarette Pricing Gains Offset Volume Decline to Keep Retail Sales Flat at $50.8 Billion

U.S. convenience store cigarette sales held steady at $50.8 billion over the 52 weeks ending July 12, 2026, as steady price growth balanced out continuing drops in unit consumption, according to the latest Circana Total U.S. Convenience data. Total unit volume fell 5.2% during the 52-week period to 4.97 billion packs. Notably, this 5.2% decline is noticeably more modest than the steep 8% annual volume drops observed in recent years.

The volume contraction was fully compensated by a 5.5% increase in price/mix, resulting in flat overall dollar sales (0.0% change year-over-year). Driving the revenue stability, the average unit price reached $10.22, officially lifting the national convenience store average above the $10 mark. However, substantial price variations persist from state to state, largely reflecting wide disparities in state-level excise taxes.

Product	Dollar Sales	1-Year % Change	Unit Sales	1-Year % Change	Unit Price	1-Year % Change
Cigarettes	$50.8 B	0.0%	4.97 B	-5.2%	$10.22	5.5%

When measured against the estimated 6.6 billion packs of cigarettes sold across all retail channels nationwide during the same timeframe, Circana’s convenience channel figure of 4.97 billion packs accounts for c.75% of the total U.S. cigarette category space, reinforcing convenience stores as the primary retail engine for the category.

September 2026: U.S. Tobacco Accessories Surge on Cigar Expansion as Smoking Tobacco Sees Tax-Driven Shift

U.S. convenience store sales for tobacco accessories jumped 13.1% to $640 million over the 52-week period ending July 12, 2026, driven by rapid expansion in cigar-related paraphernalia. Cigar accessories expanded by 31.3% in dollar turnover to reach $340 million, expanding its share of the total accessories category by 7.4 percentage points to 53.1%. Unit volume surged 19.5% to 147 million items, while average unit prices rose 9.8% to $2.31. This surge is fueled by strong c-store mass cigar demand, elevated consumer interest in smoking rituals, and rising sales of impulse hardware – such as torch lighters, cutters, and butane refills. Furthermore, crossover usage of these accessories with hemp, botanical, and cannabis wraps has expanded the customer base beyond traditional tobacco users.

Product	Dollar Sales	1-Year % Change	Dollar Share	1-Year pp Change	Unit Sales	1-Year % Change	Unit Price	1-Year % Change
Cigar Accessories	$340 M	31.3%	53.1	7.4	147 M	19.5%	$2.31	9.8%
Cigarette Accessories	$201 M	-3.1%	31.3	-5.2	81.6 M	-4.1%	$2.46	1.0%
Other Accessories	$99 M	-0.9%	15.5	-2.2	38.3 M	-3.8%	$2.59	3.0%
Tobacco Accessories	$640 M	13.1%	100.0	0.0	267 M	7.7%	$2.40	5.0%

Sales of cigarette accessories (papers, tubes, and rollers) dropped 3.1% to $201 million, with dollar share contracting 5.2 percentage points to 31.3%. Unit volume fell 4.1% to 81.6 million units, closely tracking the secular decline in factory-made cigarette consumption. However, unlike combustible cigarettes – where manufacturers offset unit drops through aggressive price increases – cigarette accessory prices rose by a meager 1.0% to $2.46, leaving the segment unable to prevent dollar sales contraction.

Product	Dollar Sales	1-Year % Change	Dollar Share	1-Year pp Change	Unit Sales	1-Year % Change	Unit Price	1-Year % Change
Pipe Tobacco	$83.9 M	3.0%	70.9	1.4	8.49 M	10.1%	$9.89	-6.4%
Roll-Your-Own Tobacco	$34.5 M	-3.4%	29.2	-1.4	3.16 M	-7.5%	$10.94	4.5%
Smoking Tobacco	$118 M	1.1%	100.0	0.0	11.6 M	4.7%	$10.17	-3.5%

Meanwhile, the smoking tobacco market recorded modest revenue growth (+1.1% to $118 million) as price-conscious consumers continued shifting volume away from roll-your-own tobacco in favor of lower-taxed pipe tobacco alternatives. The smoking tobacco segment grew 1.1% in dollar sales to $118 million, while unit volume increased 4.7% to 11.6 million units. This growth was marked by a ongoing volume migration from Roll-Your-Own (RYO) tobacco (-7.5% units to 3.16 million) to Pipe Tobacco (+10.1% units to 8.49 million). This structural shift is driven by federal excise tax disparities. Under federal tax code, pipe tobacco is taxed at a significantly lower rate per pound compared to RYO tobacco. Manufacturers and consumers take advantage of this loophole by utilizing slightly coarser, dual-purpose loose tobacco labeled as “pipe tobacco” for cigarette rolling, securing a far lower retail price point ($9.89/unit for pipe tobacco vs. $10.94/unit for RYO).

August 2026: US Adult Nicotine Use Shifts Toward Vaping and Pouches as Cigarette Decline Slows

Nicotine use among U.S. adults remained at persistently elevated levels in 2025, with vaping and nicotine pouches continuing to gain ground while cigarette smoking remained near historic lows. The latest Monitoring the Future Longitudinal Panel Study, conducted by researchers at the University of Michigan and supported by the National Institute on Drug Abuse at the National Institutes of Health, points to a continued diversification of nicotine consumption across the adult population, although the data do not yet indicate a broad-based increase in overall nicotine use among younger adults. Monitoring the Future has followed nationally representative cohorts recruited during their final year of high school since 1976, tracking substance use through adulthood. The panel covers three adult age groups: 19-30, 35-50 and 55-65. The longitudinal panel now includes approximately 120,000 individuals accumulated over five decades, while around 11,000 respondents provided data in the 2025 survey across the three age groups.

Among young adults aged 19-30, any nicotine use in the preceding 12 months stood at 38.6% in 2025, compared with 38.0% in 2024. Among adults aged 35–50, the corresponding rate was 29.2%. The most notable increase occurred among adults aged 55–65, where past-year use of any nicotine product rose from 25.0% in 2024 to 29.5% in 2025, a statistically significant increase. The measure includes cigarettes, vaping nicotine, large and small cigars, hookah, smokeless tobacco and nicotine pouches.

Vaping continued to be the most prominent area of growth among younger adults. Past-30-day nicotine vaping among 19–30-year-olds reached 19.3% in 2025, the highest level recorded since Monitoring the Future began tracking the measure in 2017, when prevalence was 6.1%. Past-year nicotine vaping reached 24.8%, almost double the 2017 level of 13.7%. Although the longer-term trends remain strongly upward, the increase in vaping between 2024 and 2025 was not statistically significant. Among adults aged 35-50, past-year nicotine vaping reached 8.5% in 2025, up significantly from 5.8% in 2020, while past-30-day use reached 6.4%.

Nicotine pouches continued their rapid expansion. Among young adults, past-year pouch use increased from 4.8% in 2023 to 9.5% in 2024 and 12.7% in 2025. Pouch use was highest among 25-26-year-olds, at 15.8%. Growth was also evident among older adults: past-year use among 35-50-year-olds increased significantly from 4.9% in 2024 to 7.2% in 2025, while use among 55-65-year-olds rose significantly from 4.3% to 5.7%.

The expansion of nicotine pouches among older adults is particularly notable because it coincided with increases in several other non-cigarette tobacco categories. Among 55-65-year-olds, past-year use of large cigars increased from 7.6% to 9.1%, hookah from 3.4% to 4.7%, and smokeless tobacco from 5.7% to 7.4%. Monitoring the Future describes these as consistent and substantial increases across several forms of tobacco use.

Cigarette smoking, meanwhile, remains close to historic lows but is showing signs that the pace of decline may be slowing. Among 19-30-year-olds, past-30-day cigarette use was 8.3% in 2025, down by nearly three-quarters from 28.8% in 2004. Daily smoking fell to a new historic low of 3.1%. However, both measures edged higher in 2025 from their record-low 2024 levels, although neither increase was statistically significant. Monitoring the Future therefore characterizes the long-term decline as continuing while suggesting that the rate of decline may be plateauing.

Among adults aged 35-50, cigarette smoking continued to decline, with past-30-day prevalence falling to 8.6% in 2025 from 15.4% in 2015. Among adults aged 55-65, past-30-day smoking was 10.6%, and there were no statistically significant year-on-year changes in cigarette-related measures between 2024 and 2025.

Taken together, the 2025 Monitoring the Future data point to a continued structural shift in the composition of adult nicotine consumption. Cigarette smoking remains at historically low levels, while vaping has become particularly prevalent among younger adults and nicotine pouches are expanding rapidly across age groups. The most significant development in 2025 was the increase in overall nicotine use among older adults, where rising pouch, cigar, hookah and smokeless-tobacco use more than offset the absence of a significant change in cigarette smoking. The data therefore suggest that the U.S. nicotine market is becoming increasingly diversified, with the decline of combustible cigarettes occurring alongside the growth of multiple non-combustible nicotine categories.

August 2026: U.S. Smoking and Vaping Rates Remain Largely Unchanged While Nicotine Pouches Begin Taking Root

U.S. adult cigarette smoking and vaping rates have remained largely unchanged in recent years, even as oral nicotine pouches begin taking root among younger demographics and men, according to new data from Gallup. Currently, 11% of U.S. adults report smoking cigarettes, holding firm in the 11% to 12% range observed over the past five years. The figure marks a historic contrast from Gallup’s initial 1944 survey (41%) and its 1954 peak of 45%. Cigarette smoking dropped below 30% in 1989 and has consistently remained below 20% since 2015.

Meanwhile, e-cigarette use stands at 9%, continuing a stable trend of 6% to 9% adoption since Gallup first began tracking vaping in 2019. In a notable expansion of its research, Gallup’s survey marked the first-ever inclusion of nicotine pouches, finding that 4% of U.S. adults used products such as Zyn in the past week.

Age and Demographic Divisions

Nicotine consumption habits vary sharply depending on age, income, and gender:

– Age: Middle-aged adults (ages 30 to 49) lead in cigarette smoking at 16%, followed by those aged 50 to 64 at 11%. Conversely, vaping is heavily concentrated among young adults aged 18 to 29 at 17%, dropping sharply with age down to just 1% among seniors 65 and older. Nicotine pouch use also skews younger, highest among adults aged 30 to 49 (7%) and 18 to 29 (5%).

– Income & Education: Cigarette smoking and vaping remain most prevalent among lower-income Americans and those without a college degree. Nicotine pouches flip this socio-economic pattern, showing higher usage among higher-income households. Education level does not produce a statistically significant gap for pouch users.

– Gender: The sharpest demographic disparity appears in nicotine pouch consumption, where adoption among men reaches 7% compared to just 1% among women.

August 2026: As U.S. Smoking Hits Record Lows, Vaping and Cannabis Use Surge

According to a recently published national data on substance use, there has been a major generational shift in nicotine and cannabinoid consumption patterns across the U.S. Combustible cigarette smoking has dropped to all-time historic lows, continuing a multi-decade decline. Conversely, cannabis consumption and vaping – both nicotine and cannabis – have reached or remained near record highs, with the highest rates concentrated among young adults aged 19 to 30.

Traditional combustible cigarette smoking continues a persistent, long-term downward trajectory across all adult age groups. Past-month and past-year cigarette smoking among young adults aged 19 to 30 have reached the lowest levels ever recorded in the five-decade history of tracking this data.

In contrast, total cannabis consumption across all formats remains at or near record high levels, driven by steep increases over the past decade. Among young adults aged 19 to 30, approximately 42% report past-year cannabis use, about 29% report past-month use, and roughly 10% report daily or near-daily use, defined as consumption on 20 or more occasions in the past 30 days. Cannabis use has also surged among midlife adults aged 35 to 50, with past-year use at roughly 29%, past-month use at 19%, and daily use at 8%, nearly doubling over the past ten years.

Vaping behaviors have experienced a rapid rise, particularly among young adults. Past-year cannabis vaping in the 19 to 30 age group stands at approximately 22%, while past-month prevalence is around 14%, representing a doubling of past-year rates since 2017. Nicotine vaping has similarly escalated, with approximately 25% of young adults reporting past-year use and 19% reporting past-month use, which is an approximate tripling of past-month rates since 2017. Additionally, emerging alternative nicotine products such as nicotine pouches saw past-year prevalence among young adults rise to 9.5%, nearly doubling from 4.9% in 2023.

Overall, the national data demonstrates a clear structural shift in substance use behaviors. Traditional combustible smoking is steadily being phased out, while alternative delivery systems – specifically e-cigarettes and vaping devices – alongside general cannabis use, have expanded significantly among young adults.

August 2026: Cigar Accessories Surge 29% to Drive Total U.S. C-Store Tobacco Accessories Growth Past $630 Million

Total U.S. convenience store sales for the tobacco accessories category jumped 12.0% year-over-year to $631 million for the 52 weeks ending June 14, according to Circana data. Category growth was supported by a 7.1% gain in total volume to 264.9 million units, while average unit prices rose 4.5% to $2.38.

However, a closer look at the channel performance reveals a category in sharp divergence: category growth was driven entirely by cigar accessories, which single-handedly offset declines across cigarette, pipe, and alternative accessories. Cigar accessories delivered massive double-digit gains, surging 29.4% in dollar sales to $331 million. Unit sales grew 18.7% to 145 million units, while average unit prices increased 9.0% to $2.29. Cigar accessories now account for over half of all c-store tobacco accessory dollars, capturing a 52.5% market share (up 7.1 share points YoY). Without the $75.1 million in net growth generated by cigar accessories, the broader category would have contracted YoY.

Product Segment	Dollar Sales	1-Yr %	Dollar Share	1-Yr Share Chg	Unit Sales	1-Yr %	Price Per Unit	1-Yr %
Tobacco Accessories	$631 M	+12.0%	100.0%	0.0	264.9 M	+7.1%	$2.38	+4.5%
Cigar Accessories	$331 M	+29.4%	52.5%	+7.1	145 M	+18.7%	$2.29	+9.0%
Cigarette Accessories	$200 M	-3.4%	31.8%	-5.1	81.6 M	-4.5%	$2.46	+1.2%
Others	$99.4 M	-0.6%	15.8%	-2.0	38.5 M	-3.3%	$2.58	+2.8%

The explosive demand for cigar accessories is heavily propelled by the continued expansion of legal adult-use and medical cannabis across the U.S. Rather than traditional cigar smoking, growth in this segment is anchored by:

– Blunt & Leaf Wraps: Consumers frequently visit convenience stores to purchase whole-leaf tobacco wraps, hemp wraps, and natural cigarillos intended for hand-rolling cannabis blunts.

– Roll-Your-Own Hardware: Demand for specialized torch lighters, cigar splitters, rolling trays, and cutters has escalated as c-stores act as primary quick-stop destinations for cannabis prep supplies.

In contrast, cigarette accessories fell 3.4% in dollar sales to $200 million, while unit sales contracted 4.5% to 81.6 million units. Dollar share for the sub-category fell 5.05 points to 31.76%. Two primary market forces explain this pullback:

– Secular Cigarette Smoking Decline: Overall combustible cigarette consumption continues its multi-year downward trajectory, reducing the core base of paper and filter consumers.

– Surge in Fourth-Tier & Deep-Discount Cigarettes: Historically, Make-Your-Own (MYO) and Roll-Your-Own (RYO) cigarette accessories (tubes, papers, manual injectors) spiked during economic downturns as smokers sought cheap alternatives to premium packs. However, the market has seen a surge in ultra-cheap, fourth-tier discount factory cigarettes priced under $5 to $6 per pack. With pre-made cigarettes available at aggressive bargain price points, cost-conscious smokers have less economic incentive to manually roll their own, squeezing demand for cigarette accessory supplies.

August 2026: Other Tobacco Products Overtake Cigarettes in C-Store Profitability in a Historic Shift

The convenience store retail sector has reached a historic turning point as the “Other Tobacco Products” (OTP) category generated more in-store gross profit than traditional cigarettes for the first time. Driven by rapid growth in modern nicotine pouches, OTP expanded into a $20 billion category in the convenience channel according to NielsenIQ data, representing 8.5% of total in-store sales in 2025, according to the NACS State of the Industry Report¹. The category posted the largest year-over-year sales increase among all inside merchandise categories in 2025, contributing 6.7% of in-store gross profits compared to 6.6% for cigarettes. This landmark shift reflects a broader consumer transition away from combustible products toward alternative nicotine delivery formats.

Unlike traditional combustible cigarettes, the OTP category is far from uniform. While certain segments experienced unit sales volume declines in 2025 – including vaping products down 13.7%, traditional smokeless down 8.0%, and cigars down 5.9% – a major surge in modern nicotine pouch sales volume, supported by steady growth in smoking accessories, kept the overall category in growth territory.

At the same time, consumer purchasing habits are increasingly defined by poly-use. Data presented at the 2026 NACS State of the Industry Summit revealed that 52% of cigarette smokers also use other nicotine products, while 87% of modern oral nicotine consumers use multiple nicotine items. Because shoppers are combining products rather than completely substituting one for another, NACS Convenience Voices research shows that cigarettes remain among the items most commonly purchased alongside OTP.

June 2026: U.S. Smokers Trade Down to Fourth-Tier Cigarettes as Economic Pressures Mount

Rising cigarette prices, persistent inflation, and broader economic pressures are prompting more U.S. smokers to switch from premium brands to lower-priced fourth-tier (“deep-discount”) cigarette brands. Convenience store operators report that many consumers are seeking more affordable nicotine options as household budgets come under strain from higher living costs, reduced government support, and growing credit card debt.

The trend reflects increasing price sensitivity among smokers, with some consumers reducing consumption, purchasing single packs instead of cartons, or moving to deep-discount brands. Industry data indicates that fourth-tier cigarettes have gained market share at the expense of premium brands, with some retailers reporting that deep-discount products account for a substantial portion of cigarette sales in certain markets. Reflecting this trend, Altria reported that the total discount cigarette category reached a record 33.3% share of the U.S. cigarette market in the first quarter of 2026, with the branded discount and deep-discount segments accounting for 17.4% and 15.9% of the market, respectively.

The shift toward value brands is expected to continue as tobacco manufacturers implement further price increases and consumers look for ways to manage spending. The downtrading trend highlights how macroeconomic pressures are reshaping purchasing behavior in the U.S. cigarette market, with affordability becoming an increasingly important factor in brand choice.

June 2026: The U.S. Cigarette Segment Sustains the Lion’s Share Through Pricing Power Amid Volume Declines

The cigarette segment remains the financial anchor of the U.S. nicotine market, maintaining a definitive lion’s share of total category revenue despite structural consumer shifts and ongoing volume contraction. According to Circana Total U.S. Convenience data for the 12 weeks ending March 22, 2026, cigarettes command an impressive 66.1% share of total nicotine dollar sales, completely overshadowing all other tobacco and alternative product categories combined. During the tracked period, the category achieved a 1.6% increase in dollar sales, climbing to a massive $11.10 billion footprint.

Category	Sales ($ Bn)	ΔSales (%)	Share (%)	ΔShare (pp)	Volume (Bn)	ΔVolume (%)	Price ($)	ΔPrice (%)
Cigarettes	$11.10	1.6%	66.1%	-0.7	1.08	-4.0%	$10.30	5.9%
Smokeless Tobacco	$3.07	11.5%	18.3%	1.4	0.42	9.0%	$7.29	2.3%
E-vapor	$1.41	-5.8%	8.4%	-0.8	0.07	-14.0%	$20.63	9.5%
Cigars	$0.91	1.7%	5.4%	-0.1	0.42	-4.1%	$2.16	6.0%
Tobacco Accessories	$0.15	15.5%	0.9%	0.1	0.06	10.8%	$2.38	4.3%
Other Smoking Items	$0.14	-1.2%	0.9%	0.0	0.05	-2.8%	$2.64	1.7%
Total Nicotine	$16.78	2.7%	100%	0.0	2.11	-1.6%	$7.97	4.4%

This top-line revenue growth, however, masks a deeper, long-term decline in consumer purchase volumes. Cigarette volume dropped by 4.0% down to 1.08 billion units. The segment’s ability to yield higher overall revenue despite a shrinking base of unit sales relies entirely on aggressive manufacturer pricing power. The average price per unit jumped 5.9% to a premium $10.30, directly compensating for the volume dip and allowing the category to buffer its bottom line even as it shed 0.7 percentage points in total nicotine market share.

Behind the counter, convenience store operators are managing a prominent bifurcated market driven by acute consumer price sensitivity. Industry data reveals a widening split within the core category: a segment of premium-brand loyalists continues to absorb consecutive price hikes to prioritize product consistency and immediate availability, while budget-conscious consumers are actively trading down into lower-priced, fourth-tier discount offerings. In many convenience networks, these fourth-tier value brands have become vital tools for sustaining retail unit velocity, cushioning the blow from contracting premium tier volumes.

Ultimately, even as modern alternatives like oral nicotine pouches capture double-digit momentum elsewhere on the backbar, traditional cigarettes remain a highly predictable, crucial driver of retail foot traffic and overall store basket contribution. Amid major shifts within the categories, the total nicotine market grew 2.7% to $16.78 billion in the first quarter of 2026.

December 2025: Driven by nicotine pouch growth, retail tobacco sales is up modestly in the U.S.

In the 12-week period, ending October 5, 2025, total tobacco sales is up 0.9% to $17.79 billion retail turnover ($77.1 billion annual run-rate) in the U.S., according to the Circana data. Growth in smokeless tobacco (+14.6%, driven by nicotine pouches reported under the spitless tobacco sub-category) more than offset the decline in cigarette (-0.7%), cigar (-1.2%) and vape (-9.2%) sales. In the core cigarette category, Industry compensated 6% volume decline with 5.6% price increase and the dollar sales is down only 0.7% to $12.1 billion (annual run-rate: $52.4 billion). The unit cigarette price reached $10 per pack for the first-time. In terms of category mix, weight of cigarettes in total tobacco sales declined to 68% (down -1.1pp) while the weight of smokeless tobacco increased to 17.1% (up +2.1pp).

March 2025: Inflation is running hot for tobacco products in the USA

According to the February 2025 CPI report, prices for tobacco products raised 6.6% year-on-year basis and 0.6% sequentially (versus the previous month). A pack of cigarettes (for a mainstream brand) now costs $10.25 on average, or $9.75 based on a volume-weighted average. For cigarette prices across the USA: USA: Cigarette Prices.

March 2025: Number of nicotine users increased to 48.6 million in 2023 in the USA

The US Centers for Disease Control and Prevention (CDC) issued its periodical “Tobacco Product Use Among Adults” report for the 2017-2023 period. According to the report, number of nicotine users in the USA increased by 2.45% from 47.4 million in 2017 to 48.6 million in 2023.

The 6.8 million-person decrease in the number of exclusive smokers was more than offset by a 7.2 million-person increase in the number of exclusive vapers. The increase in the number of vapers was primarily driven by the younger adults aged 18–24 and 25–44 years (i.e. up 2.3 million and 3.9 million, respectively). Although the current e-cigarette use prevalence among youth has decreased substantially from its 2017–2018 peak, some of the then-youth are now likely included in the survey of adults.

While current cigarette smoking has decreased to the lowest level in 60 years (i.e. down from 42.4% in 1965 to 11.6% in 2022), current tobacco product use (i.e. any recreational nicotine product meets the federal definition of tobacco product in the US) is increasing among the adult Americans. CDC recommends comprehensive strategies, such as price increases, smoke-free policies, high-impact media campaigns, and cessation support, to prevent and reduce tobacco product use, nicotine addiction, and their associated adverse health outcomes.

Download the report: Tobacco Product Use Among Adults [2017-2023]

February 2025: Share of BAT’s VUSE in the US vape market drops close to 5%

Altria reported that there are now 20 million vapers in the US, 13.5 million of whom are (illicit) disposable vape users (Altria Q4 2024 earnings relase). The total e-cigarette category volume reached 6 billion pack equivalent. Based on Altria’s conversion rate of 1 cigarette pack equals 1.5ml of e-liquid, this represent a total e-vapor category size of 9 billion mls of e-liquid (ilicit & legal, tracked & untracked channels combined).

BAT reported 287 million pods sold in the US in FY24, representing a -3.7% decline versus FY23 in a booming market (+33% year-on-year basis). In addition, BAT claimed 50.2% share in the US e-vapor market (by value). Considering that VUSE pods contain 1.8 ml of e-liquid, BAT’s total US e-vapor volume is 516.6 million ml. In a 9 billion ml market, this represents a share of 5.7% (by volume). The presence (dominance) of BAT’s market-leading VUSE brand in the US is far from the 50% headline figure reported.

August 2024: Smoking rate in the US drops to 11%

According to eight decades of Gallup trends, cigarette smoking in the US is at its lowest point with only 11% of the adults to have smoked a cigarette in the past week². The most recent measurement matches the historical low of 2022 and is 1pp below the 12% level measured in 2023. Between the initial measurement in 1944 and 1974, at least four in 10 adults said they smoked cigarettes. The current smoking rate is about one-fourth as large as it was five decades ago, one-third as large as it was in the late 1980s and half as large as it was a decade ago.

A major reason for the decline is that cigarette smoking has plunged among young adults (aged 18 to 29 vape) – who are traditionally the most likely age group to smoke. Only 6% of adults under age 30 smoke cigarettes (compared with 35% of young adults in early-2000s) while 18% of them vape.

Excluding the senior adults (65 years or older) and noting the inherent inaccuracy caused by the dual-usage, total cigarette & e-cigarette prevalence among the US adults ranges tightly between 21% to 24% – with the popularity of e-cigarettes declining among older age groups. Although vaping (7%) is still less common than cigarette smoking (11%) among the US adults, the prevailing trend (driven by the age profile) is likely to result in vaping to surpass cigarette smoking as the more common activity before the end of this decade.

February 2024: US nicotine market grows +1% per annum in the last 5 years

At the CAGNY conference, Altria stated that there were 52Mn nicotine (tobacco) users in the US in 2023 (i.e. 1Mn more than 2018) and repeated the recently revised estimate of 1% CAGR (in the 2018-23 period) in total nicotine consumption volume. Moreover, Altria estimated that there ~17Mn vapers in the US in 2023 with ~12Mn being exclusive and more than 9Mn being disposable vape users (- following a more than 60% growth in 2023).

According to Altria, despite appealing to a wide range of adult consumers, vapers are younger (skewed towards the 21-29 years old bracket), have higher income levels and live more in urban areas – when compared to smokers. In terms of volume, Altria estimated the e-vapor category growth of ~35% in 2023, driven by illicit flavored disposable products (now over 50% of the category). Additionally, Altria estimates pod-based volume decline of ~15% in 2023 (now 15%- 20% of category volumes).

There is a certain level of contradiction between the Altria’s and BAT’s estimates. At the FY23 Results release, BAT mentioned that there are now c.29Mn adult vapers: “c.29Mn adult vapour consumers is based on Consumer Tracker – Kantar data. It is important to note that this includes consumers who poly-use with other nicotine categories. Based on the same Kantar data there are c.37Mn cigarette smokers in the US including poly-users”.

CDC estimated that there were 28.3Mn adults smokers and 35.6Mn combustible product users in the US in 2021³. The estimates of Altria (37Mn combustible product users, including poly-users), BAT (37Mn cigarette smokers, including poly-users) and CDC are more-or-less aligned – if and only if BAT’s dataset also include the cigar and pipe users.

CDC’s 2021 estimate of 11.1Mn vapers is obviously out-of-date and doesn’t represent the recent category growth driven by the flavored disposable products. Nevertheless, the difference between the estimates of Altria (17Mn) and BAT (29Mn) is vast and requires reconciliation – even if the definition of min. frequency / amount of use required to qualify as a vaper (or smoker) could possibly vary from one dataset to another.

In any case, the trend is clear: it is a matter of time before there are more vapers in the US than cigarette smokers – thereby, vapes becoming the most used nicotine/tobacco product in the US by dethroning the cigarettes.

January 2024: US legal vape market decline accelarates

According to the latest Nielsen c-store report (four-week ending Dec 30), overall e-cigarette category sales is down by -9.9% year-on-year basis – representing an acceleration in the decline trend versus the previous months (-8%). The volume decline is driven by sales shifting to the untracked channels (lower-tier retailers not covered by Nielsen as well as online and specialty stores) that offer (unauthorized) flavored products and more affordable brands/alternatives. Thousands of new illegal e-cigarettes (mostly flavored disposables) have been launched in the US over the past six months despite a record number of products being denied & detained by the FDA. Recall: our “Illicit Trade – RRPs: The US” write-up.

In a market facing intensifying sales volume pressure, leading brands preserve their relative market positions with the distant leader, BAT’s VUSE, maintaining its ~42% (value) share. Category shares of JUUL and NJOY are also fairly stable at ~24% and 2.5%, respectively.

November 2023: No slow-down in US cigarette volume decline

In FY22, top-5 tobacco companies generated 43% of their total operating profit in the US. Every percentage point move in US market share make an outsized impact on the financial delivery of these companies – especially for Altria, BAT and Imperial Brands. Thereby, the developments in the US market matter the most.   

Most recently, Altria reported that adjusted cigarette market volume is down -8% in Q3 2023 with no slowdown in decline trend (also -8% in YTD2023). Persistent weakness in discretionary spending (despite the softening inflation) coupled with switching-out (to other nicotine categories) continue to put pressure on cigarette volumes. In addition, downtrading (to discount brands) is still pronounced – despite Altria claiming that the total discount segment share is flat since Q1 2023. However, the accuracy of retail scan/audit data, including Circana (used by Altria) and NielsenIQ (the most relied on), is contestable.     

Vector Group reports the estimated US cigarette market shares as: Altria (43%), BAT (30%), Imperial (10.5%) and Vector (5.5%). All others make 11% of the market. Vector’s SoM figures are in line with Imperial’s 10+% SoM claim (vs. ~8.5% in NielsenIQ) and in disarray with Altria’s ~47% SoM claim. There is clearly a major discrepancy in the retail scan/audit dataset used by different companies. One possible explanation could be the limited of coverage of retail intelligence services in the lower-tier stores. Vectors defines these stores as the retailers not participating in BAT Reynolds’ contractual trade program (- that requires such retail stores to price and sell an “EDLP: Every Day Low Price” brand to consumers, at equal to or less than the lowest price offered for any cigarette products sold in the store). Vector notes that 88% of deep discount volume is sold in non-EDLP stores.

In addition, major manufacturers’ pricing power seem to be weakening. In Q3 2023, Altria’s price/mix improvements failed to compensate for the volume decline – resulting in -3.7% smokeable revenue decline. Stronger (15-25¢ a pack) and more frequent (4 times a year) price hikes by the manufacturers are likely having a more-than-usual impact on the cigarette volumes (i.e. price elasticity worsening due to the income effect and existence of alternatives). Moreover, we assume that the record-high price gap (between premium and discount brands) are driving a significant increase in the market share of (deep) discount brands – whose share progression are not well-captured by the retail intelligence services.

Keeping in mind the limitations explained above (which favor the major companies), the most recent NielsenIQ data re-confirms no slowdown in cigarette volume decline. Altria and BAT Reynolds continue to be the main share donors in a fast-declining market. However, there is a visible deceleration in BAT’s SoM loss – thanks to the volume gain by the discount brand, Lucky Strike, and re-confirming BAT’s H1 2023 Earning disclosures. Imperial Brands (Sonoma) and Vector (Montego) continue to gain SoM – albeit at a significantly slower pace. The real winner is all other manufacturers – reporting a mid-/high-single digit volume increase (despite NielsenIQ’s under-estimation) in a market declining by -8% to -8.5%.    

In brief, the outlook for the US cigarette market remains cautious and there are no comforting news for the tobacco majors (- especially, for Altria).

November 2023: US legal vape market continues to decline

According to the latest Nielsen c-store report (four-week ending Nov 4), BAT’s VUSE preserves its distant leadership in the US e-cigarette market with 42.1% category share (up +0.3pp versus a months ago)⁴. Category shares of JUUL and NJOY are stable at 24.4% and 2.5%, respectively. The overall category sales is down -8%, driven by more e-cigarette sales volume shifting to the untracked channels (lower-tier retailers not covered by Nielsen as well as online and specialty stores) that offer (unauthorized) flavored products and more affordable brands/alternatives. Recall: our “Illicit Trade – RRPs: The US” write-up.

BAT claims 46.7% share in the tracked channels. However, based on our proprietary market model, we estimate that unauthorized products & untracked channels make up half of the US e-cigarette market; thereby, BAT’s real share is in the mid-twenties by value and in the mid-teens by volume. An in-depth analysis of the current US RRP/Smoke-free Market and 2030 Market Projection is available in our research report.

October 2023: BAT compensates vape volume decline through pricing

According to the latest Nielsen c-store report (four-week ending Oct 7), BAT’s VUSE preserves its distant leadership in the US e-cigarette market with 41.8% category share⁵ (note: BAT claims 46.7% share in the tracked channels). JUUL’s share continues to slide and is now down to 24.4% (from 74.6% in May 2019). NJOY’s share is flat at 2.5% as Altria’s ownership has not yet resulted in a meaningful improvement in its market position. The overall category sales is down -8%, driven by more e-cigarette sales volume shifting to the untracked channels (online and specialty stores) that offer (prohibited) flavored products and more affordable brands/alternatives. In H1 2023, BAT reported +23% revenue growth and -6.5% volume decline for VUSE in the US (implying +31.5% pricing/mix improvement). BAT is (over-)compensating the volume pressure with pricing as the VUSE US profits are crucial for BAT to deliver the “RRP/NGP break-even in 2024” target.

October 2023: US cigarette market size is more than halved in the last two decades

The number of cigarettes sold (by the largest cigarette companies) in the US decreased from 190.2Bn in 2021 to 173.5Bn in 2022⁶. The number of cigarettes sold in the US was 628.2Bn in 1980 (-72% since) and 413.9Bn in 2000 (-58% since).

Menthol flavored cigarettes comprised 36% of the market among major manufacturers. The amount spent on cigarette advertising & promotion decreased from $8.06Bn in 2021 to $8.01Bn in 2022. Price discounts paid to cigarette retailers ($5.74Bn) and wholesalers ($1.14Bn) were the two largest expenditure categories in 2022. Combined spending on price discounts accounted for 85.9% of industry spending.

Smokeless tobacco sales decreased from 122Mn pounds in 2021 to 113.3Mn pounds in 2022⁷. The revenue from those sales rose from $4.96Bn in 2021 to $4.98Bn in 2022. Menthol flavored smokeless tobacco products comprised more than half of all sales and fruit flavored smokeless tobacco products comprised 2.6% of pounds sold. Spending on advertising & promotion by the major manufacturers decreased from $575.5Mn in 2021 to $572.7Mn in 2022. The two largest spending categories in 2022 were price discounts paid to retailers, which were $360.5Mn and promotional allowances paid to wholesalers, which were $44.7Mn.

Smokeless tobacco manufacturers also reported selling $1.06Bn of nicotine lozenges, pucks and pouches in 2022, more than double the $452.8Mn sold in 2020.

References:

1. https://www.nacsmagazine.com/issues/august-2026/rebalancing-the-backbar ↩︎
2. https://news.gallup.com/poll/648521/cigarette-smoking-rate-ties-year-low.aspx ↩︎
3. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10168602 ↩︎
4. Reynolds’ Vuse slightly expands US e-cigarette market lead (journalnow.com) ↩︎
5. https://journalnow.com/news/local/business/vuse-remains-top-us-e-cigarette-but-synthetic-nicotine-chipping-away ↩︎
6. https://www.ftc.gov/system/files/ftc_gov/pdf/2022-Cigarette-Report.pdf ↩︎
7. https://www.ftc.gov/system/files/ftc_gov/pdf/2022-Smokeless-Tobacco-Report.pdf ↩︎