FORECAST STUDY 2024 Deep Dive:
Tobacco
Unit Volume
— Retailer respondent
If laws pass banning disposable vapes
as well as flavored cigars and menthol, I see sales decreasing. I also believe it will not change the
fact that younger kids are smoking and vaping.
It will just punish the adults who enjoy it.
I have never smoked, but I believe
this to be true.
“
“
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Cigarettes is the only in-store category where the majority of retailers surveyed expect to see a decrease in unit volume year over year. The percentage of retailers who say cigarette volume will decline in 2023 jumped more than 10 points to 59%, while just 7% expect volume to increase.
59%
Exclusive projections and insights into the cigarettes and OTP categories at c-stores.
Potential Regulation for Maximum Nicotine Level in Cigarettes
and Other Tobacco Products:
In June 2022, the FDA announced that the agency would propose a new regulation setting a maximum level of nicotine in cigarettes and certain other tobacco products. The other products that could be subject to this regulation were not specified. A proposed rule/regulation is expected to be published sometime by October 2023 and will be followed by a public comment period. When the proposed rule is published, the FDA may identify a timeframe for the new rule to go into effect.
No.5
Consumers Are
Feeling the Pinch
The tobacco consumer remains under substantial financial pressure. Ongoing inflation and continued list price increases are forcing the tobacco consumer to make difficult decisions to either buy less, buy cheaper or try to quit.
Downtrading Sees
an Upswing
Price-conscious consumers are not staying as brand loyal as they have been historically. They are increasingly making purchase decisions based on what is on promotion. “Many [are] being more selective in their purchases and turning to more affordable alternatives, such as fourth tier/deep discount cigarettes, modern oral tobacco and, increasingly, illicit or gray market disposable vapor products," noted Bonnie Herzog, a Goldman Sachs senior financial analyst. C-store retailers are responding accordingly by allocating more shelf space to the fastest-growing nicotine segments: deep discount cigarettes and modern oral.
The Rise of the Polyuser
Rather than quit or leave the tobacco category altogether, an acceleration is happening around polyusage by smokers. "This consumer is more willing to cross over between product groups and try alternative tobacco products than ever before," said Don Stuart, managing partner at Cadent Consulting Group. "These aren't buyers of your father's pipe tobacco or cigars."
Regulation Fatigue
Several respondents in Goldman Sachs’ latest “Nicotine Nuggets” survey expressed fatigue with the ongoing regulatory uncertainties related to the potential federal menthol ban, the U.S. Food and Drug Administration’s (FDA) slow progress completing premarket tobacco product application reviews, and the FDA’s ramped-up efforts to enforce bans on illegal disposable vape products and flavors.
46%
