This article is brought to you by Cheyenne International.

As cigarette sales continue to decline year to year, there’s a bright spot for the backbar—fourth-tier cigarettes. Fourth-tier cigarettes are one of the only subcategories of cigarettes seeing growth, accounting for 4.2% of cigarette sales in 2024 compared to 3.7% in 2023, according to the NACS State of the Industry Report® of 2024 data. Premium cigarettes, by comparison, declined from 78.9% to 78.4% of overall category sales during the same time period.

Fourth-tier cigarettes also contributed some of the highest gross profit margin to cigarette sales at 21.64% in 2024, compared to 12.94% for premium brands.

“Cigarette smokers are more price-sensitive than ever. Inflation and excise tax increases are pushing many to downtrade to fourth-tier cigarettes, where they feel they can get more value for their money, with price being the biggest driver of this trend,” said David Brinkley, VP of sales at Cheyenne International. “Many longtime smokers are unwilling to give up cigarettes altogether, so they’re seeking lower-priced alternatives rather than leaving the category. Fourth-tier products allow them to stay within their budget without compromising on the experience they’re used to.”

Fourth-tier cigarettes are also growing even as modern oral products continue to gain share of the backbar.

“Modern oral users and cigarette smokers are often distinct consumer groups, though there is some overlap. Smokers who downtrade to fourth-tier cigarettes are typically loyal to the smoking experience, and many aren’t ready to switch to a new format,” said Brinkley. “Price-conscious smokers tend to stay with what they know, which has allowed growth in fourth tier to continue alongside modern oral expansion.”

And despite yearly incremental declines, cigarettes are still the top in-store merchandise contributor to convenience, bringing in an average of $46,437 per store, per month. As retailers continually look to balance premium offerings with value-driven products in a high-pressure economic environment, fourth-tier cigarettes can offer an avenue for boosting sales, Brinkley noted.

“Retailers that diversify their backbar with both trusted premium brands and value options are capturing a wider range of shoppers and protecting overall value. Fourth-tier cigarettes attract a highly price-sensitive shopper who might otherwise leave the category—or the store—altogether,” Brinkley said. “By stocking value-priced options, retailers can keep these customers engaged, drive incremental sales and increase basket size as these shoppers often purchase additional convenience items.”

This is the first in the two-part article series from Cheyenne International. Look out for part two, which will explore Other Tobacco Products, on Thursday.