In 2020, cigarettes recorded its lowest retail volume decline in well over a decade while also realising growth in current value sales. Low volume declines for cigarettes marks the category’s best performance in years (due to a gradual fall in smoking prevalence) and underlines the extent to which the pandemic has transformed consumers’ approach to tobacco, although rising price sensitivity amongst low-income consumers drove a stronger performance in volume growth terms for illicit trade.
Consumers turned to the category’s leading brands in 2020, many of them positioned in the premium price segment, which gained share from the mid-price bracket. Leading brands Marlboro (Philip Morris USA Inc), Newport and Camel (both RJ Reynolds Tobacco Co for British American Tobacco Plc) witnessed only low volume sales declines compared to their performances over the review period as a whole.
Less travel and fewer work commutes in 2020 due to the pandemic and subsequent lockdowns changed where Americans purchased their cigarettes. Therefore, the category’s largest distribution channel, forecourt retailers, experienced a significant decline in retail volume share and sales in 2020 as fewer smokers had reasons to visit petrol stations.
Many of the factors leading to an improved performance for cigarettes in 2020 are starting to subside in early 2021. Perhaps the most significant factor leading to a slower decline in volumes sales in 2020, increased smoking occasions, will face headwinds in 2021 as many workers return to offices.
A return to normal working, commuting and socialisation patterns may have positive effects on the widely reported growth of anxiety during the pandemic, possibly encouraging higher rates of conversion of smokers to alternative tobacco products. This development will contribute to declines in cigarette sales throughout the forecast period and could also be hastened due to greater diversity in perceived reduced risk product offerings.
In May 2021, the FDA announced its intention to ban menthol cigarettes and flavoured cigars. Although the final rule has yet to be written, the announcement drew many reactions, some supportive of the measure, coming from advocacy groups and others more critical, from tobacco manufacturers.
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Understand the latest market trends and future growth opportunities for the Cigarettes industry in USA with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Cigarettes research and analysis database.
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