According to a report from the Wall Street Journal, American smokers are turning to lower priced cigarettes following inflation. By the third quarter of 2022, the market share of inexpensive tobacco brands in the US cigarette market has grown to 27.1%, an increase of 1.8 percentage points compared to the previous year.
Although the tobacco industry is more susceptible to economic downturns than other industries, smokers are sensitive to inflation because their incomes are lower than those of average consumers. In the United States, smoking rates are around 21% among those making less than $35,000 per year, while only 7% of those making over $100,000 per year smoke.
The trend of low-priced cigarettes is benefiting small companies such as Vector Group, which has reported record-high tobacco revenues in the third quarter of 2022. The company's cigarette sales increased by 30% compared to the same period last year. With its price-competitive Montego brand experiencing significant growth, Vector's wholesale market share reached 5.7% this quarter, its highest since 1984.
According to The Wall Street Journal, Vector's position has been strengthened because the company's market share is relatively small and, under the 1998 settlement agreement, about one-third of its trade volume is exempt from payment.
Imperial Brands boasts a vast portfolio of discounted cigarette brands in the US, with its market share steadily increasing as smokers seek more affordable options.
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