Are Cigarettes Making a Comeback?
NEW YORK — Americans appear to be smoking more for the first time more than a decade, according to a new report.
A confluence of factors—from a better jobs market to cheaper gasoline to reductions in government anti-smoking programs—are driving a months-long pickup in cigarette sales, according to Bloomberg citing analysts reported. If current trends hold, 2015 could mark the first year since 2002 that sales volumes increase.
Not even tobacco companies are suggesting the long-term decline in smoking in the U.S. is reversing itself. Indeed, executives predict annual volumes will keep falling over time.
But recent data points to a slight increase in pack sales this year. While the number of smokers in the United States has steadily declined, some smokers now seem to be lighting up more. Others are turning to chewing tobacco and electronic cigarettes to supplement cigarette habits rather than quit, the report said.
This year’s apparent bounce largely reflects the improving economy, particularly rising employment, analysts said. Gasoline prices are also a factor. Smokers as a group tend to have lower incomes than non-smokers, and some are using the money they’re saving at the pump to buy cigarettes.
“Those gas price savings are a big benefit,” Vivien Azer, an analyst at Cowen & Co., told Bloomberg. Sixty percent of cigarette sales happen at convenience stores and gas stations, she said.
Tobacco companies continue to spend aggressively on marketing, and the industry — and its investors — have been profiting from those efforts. At Reynolds American Inc., the second-largest U.S. tobacco seller, cigarette volumes rose 12% during the first nine months of 2015, including sales from its recently acquired Newport brand, according to company filings. Altria Group Inc., the No. 1 seller and the maker of Marlboro, reported a 1.5% increase.
Both companies say industrywide volume actually fell marginally during the first nine months of the year. Many executives predict that over time U.S. pack sales will continue to fall by 3% to 4% annually.
Click here to read the complete Bloomberg report.
