Key takeaway: Goldman Sachs’ second-quarter Nicotine Sector Report shows that adult tobacco consumers remain under pressure due to inflation, reduced disposable income, and tighter regulations, while nicotine pouches continue to grow strongly.
Goldman Sachs' Q2 "Nicotine Sector Report" indicates that adult tobacco consumers continue to face pressure due to inflation, reduced disposable income, and tightening regulations.
The survey covered approximately 60,000 retail locations in the U.S., accounting for about 40% of all tobacco sales points. The report shows that tobacco consumers are reducing their purchase frequency, opting for more economical smokeless options, and decreasing their trips to stores.
Goldman Sachs' senior financial analyst Bonnie Herzog stated, "Given the price increases, ongoing uncertainty regarding e-cigarettes, and tightening regulations, retailers and wholesalers are cautious about the tobacco market outlook."
Other key findings from the report include:
- Approximately 58% of respondents believe manufacturers' pricing power is now weaker compared to 2022, down from 66% in Q1.- The market share of Philip Morris USA's Marlboro brand declined in Q2, but there is optimism regarding the performance of its premium product, Marlboro Special Select.- The survey reflects that Altria Group's Marlboro Black investment has boosted the mid-tier market value, aiming to keep consumers choosing the Marlboro brand.- Smokeless nicotine products led by modern oral nicotine brands like ZYN and on! continue to show strong performance, thanks to increased promotional activities.- E-cigarette sales have increased, reflecting the rise in promotional activities behind key brands like VUSE and JUUL.- 65% of respondents believe that the merger of Altria and NJOY will accelerate the market share growth of NJOY ACE.- Promotional activities are increasing, but the extent varies across different nicotine categories.- If the federal government bans menthol cigarettes, it would have a significant negative impact and could lead smokers to turn to the black market or revert to non-menthol cigarettes and illegal disposable e-cigarettes.
