How Has California’s Flavor Ban Affected Cigarette Sales?

RBC Capital Markets’ Modi analyzes the trends
Menthol cigarettes
Photograph: Shutterstock

Cigarette volumes are down in 2023, likely due to the flavored tobacco ban, which includes menthol cigarettes, that took effect Dec. 21 in California, according to research from Nik Modi, analyst at RBC Capital Markets, New York. However, Modi found that given Marlboro’s lower exposure to menthol products compared to Newport and Camel, it seems to be benefiting from California’s ban so far.

Modi used Circana (formerly IRI) and Numerator data to analyze how cigarette trends in cigarettes have shifted since the ban.

Looking at change in volume share on a year-over-year basis in California, among Newport, Camel and Marlboro, scanner data indicates that Marlboro gained 525 basis points (bps) and 360 bps in January and February, respectively. Newport lost 300 bps in January and 280 bps in February and Camel lost 180 bps in January and 100 bps in February, Modi said. A basis point equals 0.01%.

“The gains and losses for each brand are greater in magnitude than seen in [January and February] of 2022, which is likely attributable to the menthol ban,” Modi said. “Newport's shares saw the most negative pressure and Camel shares were also impacted notably, while Marlboro significantly gained share.”

Newport’s share increased in November and December, though, which likely reflects consumers stocking up on menthol cigarettes in anticipation of the ban, he said. Richmond, Virginia-based Altria sells Marlboro in the United States while Winston-Salem, North Carolina-based Reynolds Tobacco Co. sells Newport and Camel.

Scanner data volumes in California tell a similar story, Modi said. Year-over-year volumes for the cigarette category in all brands in California were down to a greater extent at the start of 2023 versus 2022, likely due to the menthol ban. However, in January, Marlboro performed better than the category, down 5.8% compared to 14.4% year-over-year for the total category, Modi said. February saw similar trends.

“Further, a look at Numerator Insights data for the overall tobacco category in California shows that in the [approximately] two months after the ban vs. [approximately] two months before the ban there was a 12 [percentage point] increase in lapsed menthol households purchasing non-menthol cigarettes/loose tobacco. This directionally suggests that lapsed menthol product users are shifting to non-menthols,” Modi said.

In August 2020, California Gov. Gavin Newsom signed a bill into law to ban the sale of flavored tobacco products in the state. The ban includes the sale of everything from menthol cigarettes to all e-cigarette flavors, except tobacco. It excludes hookah and some cigars. After more than 1 million voters signed a petition in January 2021 advocating for a referendum to allow voters to decide whether to overturn the state’s flavored tobacco sales ban, the referendum was put on the Nov. 8 ballot.

California voters upheld the ban with about 62% yes votes and 38% no votes. Several tobacco companies have tried to invalidate the law.

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