In recent years, the North American tobacco market is changing. As more and more large tobacco companies launch various new tobacco products, the sales of combustible cigarettes have been affected to a certain extent. At the same time, the changing regulatory environment has an important impact on the North American tobacco market.
The scale of the tobacco market in the United States and Canada has grown steadily
According to the data statistics company Statista, the scale of the US tobacco market will reach US$107.5 billion in 2024, with a compound annual growth rate of 0.62% from 2024 to 2028. Among them, the largest market segment is still the combustible cigarette market, which is expected to reach a market size of US$82.7 billion by the end of 2024, and the “Marlboro” brand will continue to lead the US cigarette market with a market share of 50%.
Statista predicts that the scale of the USvape market will reach US$8.8 billion in 2024. From 2024 to 2028, the compound annual growth rate of the USvape market will reach 3.24%.
Last year, the retail sales of nicotine bags in the United States saw unprecedented growth. According to Euromonitor International, the market size of nicotine pouch products in the United States will be $8.58 billion in 2023, compared with $7.23 billion in 2022. The U.S. nicotine pouch market is expected to reach $11.03 billion by 2027.
Canada has a smaller population and a much smaller tobacco market than the United States. In Canada, combustible cigarettes still account for the bulk of tobacco product sales, with the country’s combustible cigarette market expected to reach $10.6 billion this year and thevape market expected to reach $1.4 billion. The Canadian tobacco market is expected to grow at a compound annual growth rate of 1.1% from 2024 to 2028.
Nicotine pouch products were approved for sale in Canada on July 18, 2023. At present, Canada’s laws and regulations on tobacco products mainly restrict the sale, use and advertising of products such as cigarettes andvapes, and nicotine pouch products are not yet within the scope of regulation. However, it is estimated that this situation should not continue.
Illegal trading issues are prominent
At the Product Expo (TPE) held in Las Vegas, the United States from January 30 to February 2 this year, Brad Sepel, executive vice president of MARC Research, said that new tobacco products have been on the market for more than ten years, and the tobacco industry is continuing to promote product innovation.
In an industry report, Goldman Sachs analyst Herzog pointed out that tobacco retailers have found that customers have visited stores less frequently, which is due to consumers turning to alternative products such as nicotine bags. Generally speaking, these products are more durable than combustible cigarettes.
The illegal tobacco trade in the United States has grown rapidly, and illegal disposablevape products have become a growing concern for tobacco manufacturers and retailers. The U.S. Food and Drug Administration (FDA) is stepping up its crackdown on flavoredvapes and non-compliant products.
Herzog said that the vast majority of retailers believe that the situation is getting worse, and the problem of illegal trading is very serious in urban areas and areas where the ban on flavoredvapes is strictly enforced.
“Many retailers have stressed that illegal disposablevape products are affecting cigarette sales. Altria Group estimates that the growth in illegal tobacco product sales has caused its cigarette sales to fall by 1.5% to 2.5% in the past 12 months. Retailers believe that this situation will not change without increased enforcement. Retailers are generally pessimistic about this situation changing, given the ubiquity of illegal products, the difficulty of tracking and enforcement, and the relatively light penalties that reduce regulatory deterrence.” Herzog said that the FDA fines violations, but the current level of penalties does not fundamentally solve the problem. Some retailers have made high profits by selling illegal products, which offsets the losses of their declining cigarette sales.
Regulatory measures need to be improved
At the Tobacco Products Law Seminar held in Las Vegas from January 29 to 30, Brian King, head of the FDA’s Center for Tobacco Products (CTP), said that they have inspected several retailers selling illegal products, issued warning letters and imposed fines.
Tim Phillips of Tamarind Intelligence, a market research agency, said in a speech at TPE that scientific enforcement is very important. While the FDA’s premarket tobacco product application (PMTA) process is time-consuming, it appears to be ineffective as the agency does little to stop products that skip the regulatory process from entering the market.
“The FDA’s current raids are just scratching the surface of the growing illegal market. There are many products on the retail market that have not been through the review process. The FDA is stepping up enforcement activities, but the reality is that the market is not well regulated. The same situation exists to a certain extent in the UK and throughout Europe.”
The upcoming menthol ban in the United States may also lead to an increase in the illegal tobacco trade. The FDA has submitted proposals to the White House to ban menthol in cigarettes and other tobacco products and to ban non-tobacco flavors in cigars. The White House is currently reviewing these proposals. Before implementing new product standards, the White House must review their potential economic impact.
In his survey, Herzog found that some retailers are tired of the menthol ban, the FDA’s actions, and the slow progress of PMTA reviews. “The FDA’s decision to impose a menthol ban may lead some retailers to sell illegal products because these products are more profitable and more affordable to consumers,” Herzog said.
“The future market is still full of hope.” Sepel said that the heated cigarette market has a lot of room for development, and the awareness and usage of these products in the North American market still need to be improved. He believes that as long as there are consumers using combustible cigarettes, there is room for the development of new tobacco products, because many consumers of new tobacco products have switched from users of combustible cigarettes.
Although the North American tobacco market is facing many changes and challenges, Veehoovapes see the potential and opportunities of the future market. They believe that as consumers become more health-conscious and demand for alternative tobacco products increases, thevape market still has great growth potential. Therefore, Veehoovapes will continue to focus on product innovation, brand building and compliance cooperation to meet consumer needs and remain competitive in the North American market.
Tags: North American Tobacco and New Tobacco Market，Current Status of New Tobacco Market，veehoo vape