Tobacco and Smoke Shops NAICS 459991

Apr 23, 2025 - Faster Growth Forecast

• The US tobacco and smoke shops industry is projected to grow at a CAGR of 4.55% between 2025 and 2029, faster than the overall economy’s projected growth, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The retail and wholesale sectors are driven by consumer spending, along with expenditure by businesses and government. A factor that may limit consumer spending is higher tariffs on consumer goods. On a positive note, lower inflation supports a moderate increase of real disposable income by about 2% in 2025 and 1.9% in 2026. Real income could suffer if prices rise due to tariff implementation. The forecast said retail spending could soften with the growth of spending on consumer services, but noted that consumers so far have maintained spending on goods even as travel and live entertainment spending has risen.
• Tobacco and smoke shops are preparing for price increases on cigars due to new US tariffs on imported goods, according to a report in Cigar Aficionado. In 2024, the US imported more than 400 million handmade cigars, with 99% of them being rolled in three countries: Nicaragua (64%), the Dominican Republic (24%), and Honduras (15%). These countries are now subject to tariffs imposed by the US, 10% on imports from Honduras and the Dominican Republic, and 18% for market-leader Nicaragua. According to the report, industry experts estimate that tariffs will increase prices from 50 cents to $2.10 more for each handmade cigar in a zero-tobacco tax state. This change means an estimated additional $12.50 to $52.50 or more per box of 25 cigars. Most likely, consumers will see prices rise in June after retailers work through their existing inventory.

• The New York Attorney General’s office has filed a lawsuit against 13 major e-cigarette companies for their role in the rise of youth vaping, seeking hundreds of millions of dollars. Attorney General Letitia James claims the companies have illegally distributed, marketed, and sold disposable vapes, which have become popular with minors. According to the announcement, an investigation found that the companies marketed highly addictive, candy- and fruit-flavored nicotine products to underage consumers, misled customers about the safety and legality of the products, illegally shipped products to New York, and violated health regulations designed to curb youth vaping. The manufacturers, distributors, and retailers named in the lawsuit include Puff Bar, MYLE Vape, Pod Juice, Mi-One Brands, Happy Distro, Demand Vape, EVO Brands, PVG2, Magellan Technology, Midwest Goods, Safa Goods, EVO Brands, and Price Point Distributors.
• Tobacco product demand may be affected by falling consumer confidence, with levels declining 7.2 points to 92.9 in March 2025 month over month, according to the Consumer Confidence Index from the Conference Board. Stephanie Guichard, Senior Economist of Global Indicators at The Conference Board, noted that the segment driving March’s decline was consumers over 55 years old, and the decline spanned all income groups with the exception being households earning over $125,000. Per Guichard, “Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022.” Purchasing plans for homes and new cars declined while big-ticket purchases rose on a six-month moving average basis, which may reflect plans to purchase certain items before impending tariffs lead to price increases.