Cheap cigarettes will continue taking US market share, tobacco firm JTI predicts

JAPAN TOBACCO

14/02/2025 11:24

LONDON, Feb 14 (Reuters) - Japan Tobacco International
expects a shift towards cheaper cigarette brands in the United
States to reach more than 40% of the market by 2027, its finance
chief told Reuters. 
    U.S. smokers have been swapping out brands such as Altria's
 MO.N  Marlboro and British American Tobacco's (BAT)  BATS.L 
Newport, which have been raising prices for years, for less
expensive brands as high inflation and interest rates stretch
their wallets. 
    BAT's U.S. cigarette volumes fell 10.1% last year in part
due to this shift, it reported on Thursday, while Altria has
also been losing market share.
    Those companies hope the trend is temporary and will recede
as economic pressures ease. But Japan Tobacco International
expects pricier brands to continue losing ground even as
affordability improves, finance chief Vassilis Vovos told
Reuters. 
    "This is a... hard trend and we see it continuing over
time," he said, adding steep price increases will continue to
push consumers to trade down - a trend visible in many markets
where big price gaps emerge. 
    Tobacco giants such as Altria and BAT have relied on
increasing prices to support revenue growth in markets like the
United States, the world's second largest tobacco market after
China, as falling smoking rates have put the industry's volumes
into structural decline.
    JTI, which is part of Japanese conglomerate Japan Tobacco
 2914.T , expects the value and super value segment to account
for 42% of the market by 2027, up from around 32% today, Vovos
said in an interview the day after the company reported
full-year results. 
    JTI completed the acquisition of U.S. tobacco company Vector
Group last year, which pushed its share of the super value
segment to 40% by the fourth quarter of 2024, its results
presentation showed. 


 (Reporting by Emma Rumney; Editing by Susan Fenton)
 ((Emma.Rumney@thomsonreuters.com; +447391409253;))