Recently, the Wall Street Journal noted what many in the convenience industry are seeing in real time. Pretty soon, Americans who crave nicotine will be more likely to reach for a vape or an oral nicotine pouch than a cigarette.

According to data from Marlboro maker Altria, cigarettes’ share of the U.S. nicotine industry fell to 60% last year, down from 80% in 2018. Smokers are switching to smoke-free products such as vapes in higher numbers than expected. If the trend continues, it will only take another three years for cigarettes’ share to slip below 50%.

In 2023, the number of cigarettes sold in the U.S. shrank by around 8%, double the long-term average. There is a debate within the tobacco industry about what is causing volumes to contract so fast and whether the trend is short-term, the Journal said. Inflation and price increases may have forced some smokers to cut back on cigarettes, or to quit altogether.

Both British American Tobacco (BAT) and Altria announced new price increases that took effect in January. But costlier cigarettes don’t entirely explain the collapse, because smokers have the option to trade down to cheaper brands if they are feeling pinched, the Journal said.

Phillip Morris, owned by Altria, announced net revenues for 2023 reached $35.2 billion, a 10.7% increase from 2022, with smoke-free products contributing significantly to this growth. Smoke-free product net revenues saw a substantial 26.0% year-over-year increase, accounting for approximately 36.5% of total net revenue.

The challenge for tobacco companies is that consumers have more nicotine alternatives than ever.

Philip Morris International (PMI) Chief Executive Jacek Olczak told the Journal noncombustible brands start to push out cigarettes at a faster rate once they reach around 7% of a country’s total nicotine market and become more visible in the street. In Japan, heated tobacco sticks—a technology pioneered by PMI that gives users a nicotine hit without smoke—now make up around 40% of the country’s total tobacco market.

NACS CSX data through August 2023 showed OTP sales outpacing 2022 sales during the same period—an indicator that 2023 could show category growth.

For more on OTP performance in 2023 and future insights, participate in the upcoming NACS State of the Industry Summit, April 3-5 in Chicago.