Cigarettes Are Losing Their Pull Over Consumers Seeking a Nicotine Fix

Smokers in the U.S. are shifting from cigarettes to other options available on the market, such as vapes, at a more rapid pace than anticipated, and tobacco giants are feeling the pressure, according to The Wall Street Journal.

Soon, Americans who need a nicotine fix are more likely to opt for a vape or an oral nicotine pouch than a cigarette. However, some tobacco companies seem to be ahead of the curve with this shift.

Last year, shares for cigarettes dropped to 60%, according to data from Marlboro maker Altria. This is a downturn of 20% compared to when it was at 80% in 2018. An increasing amount of smokers are choosing to move over to smoke-free products such as vapes. If the trend carries on, the market share for cigarettes could fall under 50% in just three more years.

Last year, the number of cigarettes sold in the U.S. dropped by around 8%, which is “double the long-term average,” per the WSJ. There are conflicting views on what is causing a drop at such a high rate and whether the trend is here to stay or just a short-term movement. During the pandemic, the use of cigarettes was higher when people were couped up at home, but since then it has been lower than pre-pandemic levels.

One of the reasons for this shift could be inflation and the rise in prices, which may have caused smokers to cut back or use it as an opportunity to quit. Altria announced a new price rise that came into place in January after it raised prices a few times last year. However, the norm leading up to the pandemic was a couple of price increases a year.

These pricier cigarettes, however, don’t fully explain the rapid shift from cigarettes over to other options because smokers have the choice to go for cheaper brands. According to a Goldman Sachs survey, which assessed 67,000 U.S. convenience stores and gas stations that sell cigarettes, retailers think the recent price increases are causing smokers to look outside the cigarette category altogether.

Tobacco companies face the hurdle of consumers now having a broader range of options to move to than ever before. In addition to oral nicotine pouches, illicit disposable vapes imported from China emerged as the fastest-growing nicotine product in the U.S. last year. With cigarette sales rapidly dropping, they are receiving reduced retail space, heightening the issue.

Cigarette companies have responded to the drop in sales by utilizing their ability to mark up prices. Despite a decrease of over 20% in cigarette industry volumes in the U.S. between 2018 and 2023, Altria successfully increased its operating profit by 27%.