According to a recent report by Reuters, Japan Tobacco International (JTI) predicts that by 2027, the market share of budget cigarette brands in the United States will exceed 40%.
In recent years, due to high inflation and rising interest rates, consumers are facing increased economic pressure. As a result, American smokers are gradually shifting away from traditional cigarette brands like Altria's Marlboro and British American Tobacco's Newport, which have been consistently raising prices for years, and towards lower-priced brands.
British American Tobacco announced on Thursday that its cigarette sales in the United States decreased by 10.1% in 2024, partly due to brand switching. Meanwhile, Altria's market share also declined.
These companies hope that this trend is temporary, and expect that as economic pressures ease, consumers will return to traditional brands. However, Vassilis Vovos, the Chief Financial Officer of Japan Tobacco International (JTI), stated in an interview with Reuters that even as affordability improves, higher-priced brands may continue to lose market share.
This is a very stubborn trend, and we expect it to continue.
He added that the price increase will continue to drive consumers to choose cheaper brands.
In order to drive revenue growth in the face of declining smoking rates, tobacco giants such as Altria and British American Tobacco (BAT) are relying on price-hiking strategies in the U.S. market to support their revenue growth in markets like the United States. Japan Tobacco International (JTI) predicts that low-price and super low-price brands will account for 42% of the market by 2027, compared to around 32% in 2022.
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