A lot of the major tobacco companies reported their third quarter stats for 2013 just recently and there’s a certain trend showing up across the board. It seems everyone is reporting a decline in tobacco (specifically cigarette) sales.
Cigarette sales have been on the decline since around 1982. But around 2005, the decline plateaued a bit. But in the last couple years (interestingly, as e-cigs have grown into a national industry), the trending decline in tobacco use has returned. How much?
Altria (the company behind Philip Morris) reported a 3.6% decline in cigarette revenue in the U.S. over the first 3 quarters of the year. The company sited the industry-wide rate of decline as the primary culprit behind the sales drop.
For the same period, Reynolds American reported a 6.3% decline in R.J. Reynolds cigarette sales. In the same report, Reynolds claimed that the highlight of the quarter was Reynold’s VUSE, its stab at the electronic cigarette market. The VUSE is currently focused on Colorado as a testing ground for the product. Reynold’s claims that the VUSE has already established market leadership in the state.
Meanwhile, Lorillard (the tobacco company that purchased Blu eCigs) seems to have saved itself from much of the market decline, reporting only 0.2% U.S. cigarette sales between these past 3 quarters and the same quarters last year. The decline from 2012’s third quarter to 2013’s however was closer to 2.7%. That still hurts, but the company is certainly doing well diminishing the pain with its e-cig business — which grew from $14 million in the third quarter of 2012 to $63 million this quarter.
British American Tobacco stuck more solidly with the trend set by Altria and Reynolds however. It reported a 3 quarter decline in cigarette sales of 3.2%. It also claimed that sale increased in a number of countries despite declines in Brazil, Russia, Turkey, Ukraine, Egypt and Western Europe.
It’s no wonder the tobacco companies seem to be scrambling to take advantage of the rising electronic cigarette market. If things continue as they have been for tobacco, these companies will have to diversify to maintain the size they’ve become.