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US cigarette market to grow at a CAGR of 2%

Industry Sector

Consumer Goods

Published

3 September 2012

Author

Matt Bodimeade

Type of News

Market

The US cigarette market saw a 4% increase in the unit price of cigarettes (31% over the last three years) to help boost value sales in 2011.

Value sales grew by 1% in current terms, reaching US$90,421 million, as all three of the major manufacturers increased the price of a pack of cigarettes in early 2010 and late 2011.

However, volume sales within the US cigarette market continued to decline in 2011, registering a 3% drop. This continued the downward trend seen in 2009, when volumes decreased by 9%, due to historic increases in tobacco taxation.

The US cigarette industry is highly consolidated, with the top three players accounting for a combined volume share of 86% in 2011. Philip Morris was the clear leader with a category volume share of 46%, followed by RJ Reynolds with 27% and Lorillard with 13%.

It has been argued that FDA regulation and increased federal restrictions have given Philip Morris a competitive advantage as the company has the largest marketing and advertising budget in the industry.

US cigarette market value sales are forecast to grow at a compound annual growth rate (CAGR) of 2% between 2011 and 2016, reaching US$98 billion at constant 2011 prices.

Volume sales of cigarettes are expected to continue to decline through 2016 by an annual average of 1%.

Cigarettes have historically been dubbed "recession proof", or at least "recession-resistant", as a portion of the population is expected to continue smoking regardless of the cost or the economic outlook.

For more information on the US cigarette market, see the latest research: US Cigarette Market Report

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