Tobacco Forecast for the Remainder of the Year

CHICAGO — In a presentation during a CSP Tobacco Update webinar, RBC Capital’s Nik Modi projected that cigarette volume will decline by 5% in 2020, and Joe Teller, director of category management for Swedish Match North America, predicted sales volumes of other tobacco products (OTP) will grow 5.6% over the coming 52 weeks.

Here’s a look at expectations for four specific nicotine and tobacco segments …

“E-cigarette volume will remain under pressure,” Modi said, noting e-cig sales peaked in 2018. He cited the change of the federal legal age to buy such products from 18 to 21, momentum to ban flavored pods and continued pressure on Juul as headwinds for the segment.

“For moist smokeless tobacco (MST), the trends are suddenly getting worse,” said Teller. He said after years of resilience, MST is finally giving up share to vape products and nicotine pouches. “I’m hoping MST volume is flat for the next year,” he said.

After growing “gangbusters” for years, the cigar segment took a hit over the past 24 months or so, Teller said. “It was homogenized tobacco leaf (HTL) products that took the hit,” he said, leaving rolled-leaf and natural-leaf cigars to make up the difference. “Retail is still too heavy with HTL regular items,” he said, leaving him to predict an “upside to only 1.2% volume growth” in 2020.

The young nicotine pouch segment has grown by more than 500% over the past year or so, but off a very small base and with presence in only about half of the c-stores in the United States, according to Teller. As retailers begin to wrap their arms around the products, he loosely predicts 165% growth over the next 52 weeks. This is “still growing too fast to get a good next-year projection,” Teller said. “Dedicated nicotine pouch sections will help.”

Click here to view the Tobacco Update webinar.