Cigarette value sales continue to climb despite tumbling volume
Over the course of the past decade, tobacco usage in the US has declined substantially. Anti-smoking campaigns and increased regulation aimed at restricting the legal smoking environment have turned public opinion against tobacco usage and cigarettes—the predominant form of tobacco consumed in the US—has been most affected by these efforts. Volume sales have declined annually for the past ten years, although in spite of the hostile environment, major tobacco companies have managed to maintain value growth through two major strategies. First, cigarette prices have been raised for all by each of the so-called ‘big three” Philip Morris USA, RJ Reynolds, and Lorillard. Second, new products which cater to budget as well as quality minded consumers have been introduced in an effort to drive value growth.
Smokeless tobacco resumes aggressive growth
Major tobacco companies have begun investing their efforts in developing ‘alternative’ and ‘emerging’ forms of tobacco in order to stimulate growth in the industry. The bulk of these endeavours have focused on smokeless tobacco, with some interesting examples including Camel Orbs, Marlboro Sticks and Camel Strips. However, Swedish-style snus has been far and away the most successful growth category. While largely unknown to US consumers in 2005, the category has since achieved significant volume growth with each passing year in an industry which is becoming increasingly hostile to tobacco use on a daily basis. Snus has benefited from being an effective source of nicotine for tobacco users and from the perception that snus use is less harmful than smoking cigarettes.
Looming changes to tax regulation threatens smoking tobacco
In 2009, US President Barack Obama signed a bill raising cigarette taxes and, in an effort to discourage users from simply switching their preferred method of tobacco use, the tax was extended to RYO (roll-your-own) tobacco and cigarillos. This created an opportunity for pipe tobacco manufacturers, which was quickly exploited though relabeling and then selling RYO tobacco as pipe tobacco at low prices. Consequently, volume and value sales for pipe tobacco exploded while sales of RYO tobacco declined dramatically towards the end of the review period. This trend slowed down in 2013 as legislators became aware of this activity and are now working to ensure that pipe tobacco which can be used as rolling tobacco attracts equivalent levels of taxation.
Health and beauty specialist retailers chain CVS pledges to stop distributing tobacco
In a major public relations manoeuvre, US health and beauty retail giant CVS announced plans to cease tobacco distribution in February 2014, citing the health concerns associated with tobacco use. Although CVS comprises a major distribution channel for tobacco in its own right, these measures are not expected to have much effect on top-line tobacco use as consumers are likely to move to other distribution channels. However, the company’s actions may spur other health and beauty specialist retailers to follow suit in terms of ceasing to stock tobacco.
External threats to the tobacco industry continue to mount
The US tobacco industry as defined by Euromonitor International is witnessing the rise of several products which could potentially threaten sales in the tobacco market. E-cigarettes, for instance, are becoming increasingly popular in various flavours due to their supposed health advantages and their convenience. In addition, marijuana use is steadily becoming legal in more places in the US, mainly for medical use, although in some cases it is becoming legal in all cases. Finally, the trend towards smoking alcohol received national media attention during 2013 as this method of alcohol intake promises “no calories, no carbs, and no impurities”.
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The Tobacco in USA market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Production, imports by origin, exports by destination
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Tobacco in USA?
- What are the major brands in USA?
- Which sector of the tobacco products market is the largest by value sales in USA?
- Which sector of the tobacco products market has been growing the fastest, by volume and value, in USA?
- Which sector is the most heavily taxed in USA?
- Which companies dominate in the total tobacco market in USA in terms of market share?
- What is the distribution channel split for the tobacco products market in USA?
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This industry report originates from Passport, our Tobacco market research database.