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.
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.
Shrinking Customer Base
Despite the addictive nature of tobacco products, the number of Americans that smoke continues to decline.
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
Jul 1, 2024 - Employment, Sales Up
- Sales for miscellaneous store retailers, including tobacco and smoke shops, rose 7.1% in March 2024 compared to a year ago and 11.8% higher than the previous month, according to data from the Census Bureau. The increase follows a 3.1% rise in personal consumption expenditures in March year over year and 0.5% up from the previous month, according to data from the Bureau of Economic Analysis. Employment and labor costs for the industry grew at close to the same rate in April 2024 compared to the previous year, per the BLS. Employment by other miscellaneous retailers grew 1.6% and wages increased 1.3% to $21.78 per hour in April 2024 year over year.
- 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.
- The US tobacco and smoke shops industry is projected to grow at a CAGR of 1.3% 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 projected growth. The report noted that consumer confidence levels are expected to improve in the forecast window, which bodes well for retail and wholesale sectors. Factors that continue to limit consumer spending are higher price levels and interest rates, though both are expected to improve in 2024. Post-pandemic, consumer spending has shown slower gains of 2.5% in 2022 and 2.2% in 2023, supported in part by savings accumulated by households from federal pandemic relief programs.
- Consumer confidence levels fell in June 2024, after an uptick in May, according to data from The Conference Board. The Conference Board’s consumer confidence index was 100.4 in June 2024 from 101.3 in May 2024. Dana Peterson, chief economist at The Conference Board, noted that confidence was the highest among those under age 35 and those in the income category of over $100,000. Plans for large appliance and smart phone purchases rose on a six-month basis, while plans for car purchases stalled.
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