Goldman Sachs Q2 U.S. survey: rising traditional tobacco prices accelerate channel shift toward next

According to Goldman Sachs' second quarter 2023 "Nicotine Market" survey, convenience store retailers and other tobacco product sellers hold a cautious outlook on the category. The survey covered feedback from approximately 60,000 sales locations across the United States. Here are the key points from the survey results:

1. Changes in Consumer Attitudes

43% of respondents have a more negative outlook on the overall tobacco/nicotine market. The main reasons include consumer economic pressure, declining disposable income, regulatory restrictions, and rising tobacco prices, leading consumers to choose cheaper products or completely abandon consumption.

2. Price Issues Raise Concerns

Due to recent price increases in tobacco products, consumers are forced to reduce purchases or opt for cheaper products. Altria made its third cigarette price adjustment of the year in July. This price is considered unsustainable for core tobacco consumers and is further reducing demand.

3. Benefits for Smoke-Free Products

As traditional tobacco product prices rise, smoke-free nicotine and e-cigarette products are becoming more favored by consumers. Additionally, some retailers have noted that the sales trend of flavored disposable e-cigarettes and oral nicotine pouches is accelerating.

4. Increased Concerns Over Black Market Activities

The FDA has faced difficulties in removing non-compliant flavored e-cigarette products from the market, leading to increased black market activities. Some respondents have also indicated that the FDA's ongoing delays in the approval and marketing bans for flavored products have benefited the illegal market, raising concerns about market order.

5. Positive Factors

Despite the aforementioned issues and concerns, the report also points out some positive factors. These include growth in non-combustible alternatives and cigarette sales. Although cigarette prices have risen, cigarettes still account for over a quarter of in-store sales, making them an important sales category for retailers.