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
Feb 21, 2025 - New York Sues Vape Companies
- 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.
- Consumer confidence levels fell in January 2025, dropping by 5.4 points from the previous month, according to The Conference Board. The Consumer Confidence Index was 104.1 in January 2025 from 109.5 in December 2024. Dana Peterson, chief economist at The Conference Board, noted that the segment with the highest gains in confidence were those at the bottom of the income range while households earning over $125,000 showed the sharpest decline in confidence. Per Peterson, “Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022. January was no exception. The Index weakened for a second straight month, but still remained in that range, even if in the lower part.” Purchasing plans for homes and new cars were flat while big-ticket purchases rose on a six-month moving average basis.
- Several new Illinois laws strengthening rules related to the use, promotion, and shipping of electronic cigarettes go into effect on January 1, 2025, according to a report in Tobacco Reporter. One law that went into effect prohibits the advertising, marketing, or promoting of an electronic cigarette in a manner that could cause a consumer to mistake it for an object that is anything other than a tobacco product. Some e-cigarettes are designed to look like school supplies, such as highlighters and erasers, to allow students to hide the products from school officials. Another new law prohibits electronic cigarettes purchased through remote sales methods such as mail or online from being shipped to anyone other than a retailer or distributor. A law that bans e-cigarettes from being used in indoor public spaces also became effective in January. More states may follow suit with similar advertising and shipping prohibitions.
- Tobacco and smoke shops will have to monitor minimum wage changes in 2025, as 21 states and 50 local jurisdictions increased their minimum wages, according to Chain Store Age. States with the highest minimum wage in the US are Washington ($16.66 per hour), California ($16.50), and New York ($16.50). Nearly 30 cities in California and seven towns in Washington will raise minimum wages in 2025, with Tukwila, Washington, offering the highest minimum hourly wage in the US at $21.10. According to the Economic Policy Institute, the minimum wage change will affect more than $9 million workers and raise pay by a combined $5.7 billion. Unchanged since 2009, the federal minimum wage is $7.25 an hour, and some 20 states, primarily located in the South and the Midwest, use the federal minimum as their wage floor.
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