Goldman Sachs’ “Nicotine Nuggets” survey of roughly 40,000 U.S. convenience-store outlets (Q3 2024 data) shows 41% of respondents reporting a negative outlook on tobacco and nicotine categories. Drivers include inflation-induced downtrading to discount cigarette brands and suppressed overall foot traffic.
Consumers are trading down to lower-tier cigarettes and seeking deals more aggressively, while many are switching to oral nicotine pouches or budget vape disposables. Simultaneously, the illicit market is expanding, particularly in flavored disposables and oral nicotine products, which cuts into retailers’ margins.
Retailers also report that vape volumes have slowed significantly, despite promotional gains in oral products. Disposable flavored e-cigarettes, often illicit, have proliferated, bypassing regulatory channels and complicating compliance for c-store operators.
Retailers expressed frustration at the slow pace of enforcement, particularly by the FDA, creating competitive imbalances with legally compliant businesses. The combined pressures of inflation, shifting consumer preferences, and illicit product availability are reshaping tobacco category dynamics in convenience retail.