This interview is brought to you by Xcaliber International, a NACS Hunter Club member.

Fourth-tier cigarettes are growing in a shrinking category. What’s the reason for that from your perspective?

Joe Nicolaus: In a word? Price. We’re seeing customers rapidly shift toward cheaper cigarette options. We all felt inflation rates hit multidecade highs in 2022–2023, raising the cost of essentials like gas, groceries and housing. While the rate of inflation has relaxed, prices on those things haven’t changed much. We saw large-scale downtrading to fourth-tier brands in 2023—sales jumped nearly 36% year over year, while premium brands witnessed a roughly 4% decline. There’s no getting around the fact that customers are prioritizing affordability above all.

Another interesting note is that the available data suggests that once a customer switches to an affordable brand, they stick with it. As NACS Magazine reported last December, even as inflation has started to cool off, most retailers reported no reversal in downtrading—customers keep buying lower-tier cigarettes even after seeing some relief at the gas pump. Once smokers switch to a cheaper brand, they realize they’re getting much better value for their hard-earned cash and keep listening to what their wallets are telling them.

Within the Xcaliber portfolio, are you seeing any interesting trends?

Nicolaus: I think we’re seeing a seismic shift in customer perceptions of cheaper brands. In our discussions with retailers at the store level, they’re telling us that the typical smoker today is less influenced by social status or image and more by saving money or outright financial necessity. The old idea of premium brands as a status symbol is fading rapidly, especially as smoking itself has become just one of many ways to consume nicotine.

Continue reading “High Quality, Low Prices” in the June 2025 issue of NACS Magazine.