TRENTON, NJ – The cost of a pack of cigarettes in New Jersey is now $8.06, but for the first time, the state doesn’t lead the nation. That distinction goes to New York, where a pack of smokes will cost you $10.53. That’s why smokers in both states are now fleeing brands like Marlboro and going to cheaper off-brands to save money.
New Jersey ranks 14th in the nation in the cost of a pack of cigarettes, and the $2.07 per pack state tax isn’t helping those who still take their tobacco and nicotine fix the old-fashioned way. In New York, the state taxes each pack at $4.35.
Inflation isn’t helping the industry as nationwide smokers are ditching the big brands.
Altria Group, the maker of Marlboro cigarettes, reduced its annual profit forecast on Thursday, leading to a drop in its pre-market shares. The revision comes as smokers increasingly opt for cheaper brands and alternative smoking products.
The company lowered its expected adjusted profit for the year to $4.91 to $4.98 per share, compared to its previous estimate of $4.89 to $5.03 per share. The move comes as the tobacco giant grapples with falling sales in its traditional cigarette business. Altria reported a 5.3% decrease in net revenues from smokeable products in the third quarter, attributing the decline to lower shipment volumes and higher promotional spending.
To offset the decline, Altria has raised prices on its traditional products. However, the strategy led to a decrease in Marlboro’s market share, as inflation-conscious consumers switched to less expensive brands such as USA Gold. Chief Executive Billy Gifford said the cigarette business remains “highly profitable,” supporting the company’s pivot to smoking alternatives.
Analyst Rae Maile of Panmure Gordon noted that the pricing strategy has not failed. Altria’s profits remain similar to last year’s levels despite the volume decline. “The model is not broken,” Maile said.
This update follows Altria’s ongoing efforts to diversify its portfolio into smoking alternatives. After losing billions in its 2018 investment in e-cigarette maker Juul Labs, the company acquired pod-based vape NJOY ACE in June. However, NJOY’s market share remains significantly smaller than Juul’s, with shipment volumes for NJOY ACE reported at 7.5 million pods in the third quarter.
Analysts from Jefferies highlighted that the lack of significant updates on NJOY, along with slower growth in the nicotine pouch product on!, could be perceived negatively. While shipment volumes for on! increased by 36.7%, this was less than the 47.8% growth seen in the second quarter.
Overall, Altria’s third-quarter revenues, net of excise taxes, stood at $5.28 billion, slightly below analyst expectations according to LSEG data. Altria shares fell around 2% in pre-market trade.
