The number of American adult smokers has fallen by about 20m over the past decade. The number of cigarettes sold in America has fallen by more than a third. Few Gen-Zers smoke cigarettes, and industry insiders expect the decline over the next decade to be steeper still.
Despite this, the industry is thriving. The operating margin on a cigarette sold in America has grown from about 50% to about 60%. Cigarette- and cigar-makers were expected to make $22bn of operating profit in America in 2025. As more casual smokers have quit, only the most committed remain; these price-inelastic consumers allow companies to raise prices at an ever-quicker pace. In 2017 the price of a packet of Marlboros rose by 2.9%, only slightly above overall inflation of 2.1%. In 2024 overall consumer-price inflation was 3%, but the price of Marlboros rose by more than 7%.
Imperial Brands, which produces Davidoff cigarettes and Rizla rolling papers, has said it "can continue to take pricing to offset volume declines". British American Tobacco, maker of Lucky Strike, said that in America "price/mix more than offset volume decline". The strategy cannot work indefinitely: at some point even the most determined smokers will die, quit or switch to black-market cigarettes.
One hundred dollars invested in American tobacco companies in January 2024 would have been worth some $165 by late October 2025, outperforming the tech-heavy Nasdaq, where the same sum would have been worth $160. See also nicotine.
China is the world's biggest tobacco market. Some 300m Chinese are smokers, consuming 40% of the world's tobacco. The China National Tobacco Corporation (CNTC), a state-owned giant, dominates the entire supply chain and made 2.4trn cigarettes in 2023. Tobacco taxes have accounted for almost 7% of central-government revenue since 2000. The head of China's tobacco regulator is also the boss of CNTC; the two organisations share an office, creating an obvious conflict of interest. The cheapest pack of 20 costs 15 yuan ($2). As many as 2.6m Chinese die early every year from smoking-related illnesses, costing roughly $300bn a year in treatment and lost productivity. See China: smoking and public health.
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