Cigarettes in the US

PROSPECTS

FDA seeks to limit nicotine content

In 2017, the FDA, the governing body whose policy measures have far-reaching effects on the cigarette industry, announced a new plan to regulate nicotine content in all cigarettes. Although neither the timing nor the exact details have yet been made clear, the policy is expected to have serious implications for cigarette producers.

Rising prices and taxes not deterring that many smokers

Over the review period tobacco companies continued to raise prices to offset declining volume sales. This trend was reinforced by a wave of legislation announcing new taxes on cigarettes, aimed at increasing revenue for local and state governments as well as explicitly reducing cigarette consumption.

Consumers adopt new strategies to avoid taxes

The US saw a further decline in illicit trade in 2017 thanks to increased coordination between the country’s regulatory agencies and tobacco manufacturers. Increased taxes on cigarettes and significant disparities in taxation between different jurisdictions, however, contributed to an increase in the illegal resale of cigarettes purchased within the boundaries of low-tax areas in counties, cities and states where tobacco taxes are higher.

COMPETITIVE LANDSCAPE

Menthol bans sweep the nation

Concerns over tobacco companies’ use of menthol flavouring to entice young smokers and particularly accusations that they are specifically targeting minority smokers have fuelled recent efforts by legislators to curb or even ban the sale of menthol cigarettes. According to many American politicians, the inclusion of menthol flavouring in cigarettes unfairly targets impoverished American communities and contributes to the already below average health outcomes of these populations.

Smoking ban purview widens to outdoor spaces

Concerns over the effects of second-hand smoke became widespread over the review period, with American legislators starting to seek new ways to minimise exposure to passive smoking in all public spaces. In multiple American cities, bans which go beyond indoor spaces are being introduced, and include places such as public parks and beaches.

Heat-not-burn set to attract smokers of combustible cigarettes

Thanks to smokeless alternatives, the prospects for the overall tobacco category are looking up. Late 2017 and early 2018 saw Philip Morris further its efforts to introduce its Iqos product in the US.

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