By Timothy S. Donahue

Top Takeaways:

• Cigarettes lead: Sales held at $50.8 billion despite falling volumes.
• Pouches surge: Nicotine pouch sales jumped 27%.
• Vapes slide: vaping and heated tobacco device units fell 14%.

Cigarettes remain the largest tobacco category in U.S. convenience stores, but nicotine pouches are increasingly driving growth as cigarette volumes continue to fall and vape sales lose ground.

Cigarette sales totaled $50.8 billion in the c-store channel for the 52 weeks ended June 14, essentially flat year over year, according to Circana. Unit sales, however, fell 5.3%, while the average price per unit increased 5.6% to $10.18.

The numbers illustrate an increasingly familiar divide in the U.S. nicotine market: higher prices are supporting cigarette revenue even as consumers buy fewer packs, while modern oral nicotine continues to grow rapidly.

Smokeless tobacco sales reached $13.4 billion during the period, up 12.7%, with unit sales up 10% to 1.86 billion.

Growth was concentrated in spitless tobacco, a category increasingly driven by nicotine pouches. Spitless sales rose 27.2% to $7.29 billion, and unit sales increased 25.8%. The segment now accounts for more than half of smokeless tobacco dollar sales in U.S. convenience stores.

Retailers are witnessing the shift firsthand.

“Cigarettes remain the No. 1 driver in overall sales, however [they are] still in a decline over the prior year,” Jessica Starnes, director of loyalty and tobacco category manager for Tennessee-based Weigel’s, told C-Store Decisions. “The most outstanding performer is the nicotine pouch segment.”

Weigel’s has already reorganized its tobacco strategy around that growth. Starnes previously said that ZYN had become the chain’s No. 2-selling behind-the-counter brand, trailing only Marlboro, with four nicotine pouch products among its top 20 tobacco SKUs.

“We knew we had an opportunity to be the nicotine pouch destination in our market,” Starnes said. “That way, our opportunity was 100% of the market.”

Plaid Pantry is experiencing a similar transition. At the Oregon-based chain, cigarette dollar sales were down 2% and units were down 8% through May, while moist smokeless tobacco declined 7% in dollars and 12% in units.

“Modern oral nicotine pouches continue to be the category offsetting those major declines,” marketing director Jon Manuyag said.

Plaid Pantry’s modern oral nicotine pouch sales were up 29% in dollars and 17% in units, according to Manuyag.

Vapor is moving in the opposite direction.

Electronic smoking devices generated $6.22 billion in c-store sales over the 52-week period, down 6%, with unit sales down 14%. The broader vaping-products segment fell 7.4% in dollars and 15.3% in units.

The decline comes as the legal vapor market continues to face competition from unauthorized products and regulatory uncertainty about which products can remain on store shelves.

Nicotine pouches, meanwhile, are becoming an increasingly important part of tobacco companies’ growth strategies. Philip Morris International, Altria, and British American Tobacco are investing heavily in the category as cigarette consumption declines. BAT estimates that global industry pouch revenue could reach £11 billion by 2030.

Economic pressure is also changing what consumers buy in traditional categories.

Retailers report increased downtrading as price-conscious smokers shift to lower-priced cigarette brands. Starnes said fourth-tier cigarettes, along with nicotine pouches, are among Weigel’s largest current growth opportunities.

The changing economics are also increasingly important for retailers. Other tobacco products generated an average gross margin of 29.5% in convenience stores in 2024, compared with 13.76% for cigarettes, according to NACS data. OTP’s share of inside-store sales rose from 4.2% in 2015 to 7.6% in 2024.

Cigarettes aren’t disappearing from the backbar anytime soon, but Starnes expects the mix around them to continue changing.

“I believe, in the next five years, we will still have cigarettes on the backbar,” she said, along with the possible addition of heated tobacco, continued expansion of nicotine pouches and, she added, “hopefully a regulated vapor space.”