Inflation drives sales of discounted cigarettes in the United States

Inflation drives sales of discounted cigarettes in the United States

According to the Wall Street Journal, after inflation, American smokers are turning to lower priced cigarettes. By the third quarter of 2022, the share of cheap tobacco brands in the American cigarette market will increase to 27.1%, 1.8 percentage points higher than a year ago.

Although the tobacco industry is more prone to economic recession than other industries, smokers are very sensitive to inflation because their income is lower than that of ordinary consumers.

In the United States, about 21% of people with an annual income of less than 35000 dollars smoke, while 7% of people with an annual income of more than 100000 dollars smoke.

The trend of low price cigarettes is in favor of small companies like Vector Group, which reported that the tobacco revenue in the third quarter of 2022 reached a record high.

The company's cigarette sales in this quarter increased by 30% over the same period last year. Driven by the significant growth of its Montego brand, which plays a price war, Vector's wholesale market share in this quarter reached 5.7%, the highest since 1984.

The Wall Street Journal pointed out that Vector's position was strengthened because the company's market share was relatively small. According to the master settlement agreement in 1998, about one-third of its trading volume was exempted from payment.

Imperial Brands, which has a large number of discount cigarette brands in the United States, has also gained market share as smokers look for bargains.