Tobacco and Smoke Shops
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 12,400 tobacco and smoke shops in the US sell cigarettes, cigars, tobacco, pipes and other smokers’ supplies and accessories. Cigars, cigarettes, tobacco, and smokers’ accessories account for 84% of industry sales. For some firms, e-cigarettes and vaporizers are accounting for an increasing percentage of sales (as much as 30%). Some shops also sell packaged alcoholic beverages (liquor, beer, wine), groceries, and fuel.
Shrinking Customer Base
Despite the addictive nature of tobacco products, the number of Americans that smoke continues to decline.
Competition From Alternative Retailers
Tobacco and smoke shops compete with a variety of alternative retailers, including gas stations, convenience stores, grocery stores, pharmacies, liquor stores, dollar stores, and online retailers.
Industry size & Structure
The average tobacco and smoke shop operates out of a single location, employs fewer than 10 workers, and generates over $800,000 annually.
- The tobacco and smoke shop industry consists of about 12,400 establishments that employ 107,900 workers and generate about $10 billion annually.
- The industry is fragmented; the top 50 companies account for 20% of industry revenue.
- Large firms include Smoker Friendly and Admiral Discount Tobacco. Most large firms are chains that operate regionally.
- Nearly 12% of US adults are cigarette smokers, according to the CDC.
- Some "vape shops", which sell primarily vaporizers and e-cigarettes, operate out of kiosks and may be excluded from the official tobacco and smoke shop retail category by the Census.
Industry Forecast
Tobacco and Smoke Shops Industry Growth
Recent Developments
Nov 10, 2024 - ISM Services Index Growth
- Economic activity in the services sector expanded for the fourth consecutive month in October 2024, according to the Services ISM Report on Business. The Services PMI registered 56% in October, up 1.1 percentage points from September. Of the 14 of the 18 services industries reporting growth in October, Retail Trade reported the fastest growth during the period. Sales for miscellaneous store retailers, including tobacco and smoke shops, rose 1% in June 2024 compared to a year ago and were 5.3% lower than the previous month, according to the US Census Bureau. The results follow a 2.6% rise in personal consumption expenditures in June year over year and a 0.2% increase from the previous month, according to the Bureau of Economic Analysis. Employment increased while labor costs for the industry were flat in July 2024 compared to the previous year, per the Bureau of Labor Statistics (BLS).
- The US tobacco and smoke shops industry is projected to grow at a CAGR of 1.2% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is slower than the overall economy‘s anticipated growth. The report noted that consumer confidence is expected to improve in the forecast period, which bodes well for the retail and wholesale industries. Factors that continue to limit consumer spending are lower consumer sentiment levels, higher interest levels, and elevated price levels. On a positive note, inflation is subsiding, which supports a moderate increase of real disposable income by about 1.9% in 2024 and 2.4% in 2025. Retailers have seen internet sales increasingly grow in share since the pandemic, growing from 12.8% of total sales in February 2020 to 17.9% in April 2024.
- A new rule from the US Food and Drug Administration (FDA) has raised the age for photo verification needed for tobacco products, according to Reuters. The new regulation requires that retailers verify the age of anyone under 30 buying tobacco products, three years older than the previous mandate. The requirement is part of a rule finalized by the FDA in late August. The FDA has also updated rules around the sale of tobacco products via vending machines. Retailers are not permitted to sell tobacco products via vending machines in places where individuals under 21 are present or permitted to enter, an increase from 18 years previously. The changes are part of a directive from the Further Consolidated Appropriations Act, signed into law in 2019, which increased the federal minimum age for the sale of tobacco products from 18 to 21 in the US. The FDA says the new rules help protect the youth in the US from the health risks of tobacco products. According to Brian King, the director of the FDA's Center for Tobacco Products, "Decades of science have shown that keeping tobacco products away from youth is critical to reducing the number of people who ultimately become addicted to these products and suffer from tobacco-related disease and death."
- Altria is expanding its NJOY retail distribution following an FDA marketing approval of four menthol vapor products, according to Convenience Store News (CSN). Following a scientific review of the products, the US Food and Drug Administration's approval in June 2024 was the first time the agency issued marketing authorization for non-tobacco flavored e-cigarette products. The four products are NJOY ACE Pod Menthol 2.4%, NJOY ACE Pod Menthol 5%, NJOY DAILY Menthol 4.5%, and NJOY DAILY EXTRA Menthol 6%. The company markets the products as a way to transition adult smokers to smoke-free alternatives. Altria broadened its NJOY distribution to more than 80,000 stores in Q1 2024 and plans to expand to 100,000 stores by the end of the year, with a rollout of the brand's first retail trade program to achieve higher visibility, per CSN.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.