The Cigarette and Smokeless Tobacco Markets in Texas Relative to the United States

Abstract

Objective

This study compares the cigarette and smokeless tobacco (SLT) markets in Texas and the United States (US) as a whole.

Methods

Nielsen convenience store sales data from 2014 were obtained for Dallas, Houston, San Antonio/Austin, and the total US. Descriptive statistics highlighted market share differences in Texas compared to the US overall.

Results

Marlboro and Copenhagen dominated the cigarette (58.9%) and SLT markets (44.8%) in Texas and had substantially higher relative market shares in Texas than nationally (46.7% and 29.8%, respectively). Camel, with sales driven largely by its Camel Crush variety, held second place in Texas (9.8%), outselling Newport (6.6%), despite Newport’s status as second best-selling brand in the US (11.5%). Copenhagen led the SLT market in Texas, outselling Grizzly 2 to 1, yet the brands hold roughly equivalent shares nationally. Whereas flavored SLT products made up nearly 60% of the US SLT market, unflavored SLT (58.6%) dominated in Texas markets. Finally, sales of fine-cut SLT in Texas were more than triple their national market share.

Conclusions

Regional tobacco market share differences are likely influenced by multiple factors such as marketing, population demographics, culture, and neighboring communities. Policymakers are encouraged to develop local tobacco control policies and programs within the context of this knowledge.

The landmark 2009 Family Smoking Prevention and Tobacco Control Act (TCA) granted the Food and Drug Administration (FDA) long-awaited authority to regulate cigarettes and smokeless tobacco products, including new restrictions on cigarette and smokeless tobacco (SLT) product marketing, labeling, and new product introduction. However, the TCA came with certain limitations and exemptions that may have limited its impact on cigarette and SLT consumption. For example, whereas the TCA immediately banned flavored cigarettes, it exempted menthol-flavored cigarettes from this ban. This is a significant omission given that menthol cigarettes make up approximately one-third of cigarette sales,¹ are disproportionately used by young people and minority groups, and appear to make initiation easier, and cessation more difficult.^2–6 The ban on flavoring also did not extend to smokeless tobacco products, despite the fact that the overall SLT market was comprised of a greater proportion of flavored products (more than 50%) compared to the flavored cigarette market prior to the flavor ban. These flavored SLT products have contributed to the recent growth of the SLT category.⁷

Understanding the diverse cigarette and smokeless tobacco market is important, as different brands or product features may have differing appeals among sub-groups. Such is the case of flavored products among youth⁸ whose preferences may be indicative of a product’s ease of use as well as targeted marketing. For example, it is well documented that the most heavily advertised cigarette brands are the same brands most popular among young people.^9–11 For smokeless tobacco products, unique features can play a role in products’ appeal. For example, evidence suggests SLT sold in pre-portioned pouches may be more attractive introductory products for new users such as young people, smokers, and women compared to loose forms of snuff, given pre-portioned pouches’ relative ease of use and their relative “neatness.”^7,12

Although some attention has been paid at the national level to cigarette and SLT brands and product features to date,^7,12–15 there have been little published data on regional variation in product offerings. Existing research suggests that youth and young adult tobacco behaviors differ regionally^16–18 and may be driven by demographic differences, cultural factors, and/or targeted marketing by tobacco companies. In this study we present data for cigarette and SLT sales, including market share by select product features, comparing 4 major metropolitan areas of Texas and the United States (US) as a whole.

Texas has a large, diverse, and growing population, with a disproportionately large concentration of youth and Hispanics^19,20 compared with the US as a whole. Approximately 10% of the nation’s children under the age of 18 years old live in Texas;²¹ the state is also home to 8% of the US Hispanic population, with about one in 6 Hispanic youth in the US living in Texas.^22,23 Moreover, Texas is, and historically has been, a valuable market for the tobacco industry; the state ranks second in tobacco industry spending.²⁴ An understanding of cigarette and smokeless tobacco sales at the regional level in Texas, as well as knowledge of tobacco marketing efforts in Texas, can inform future tobacco policy development and regulatory action in the state and nationally.

METHODS

Data Source

Cigarette and smokeless tobacco convenience store sales data for 2014 were obtained from Nielsen, a research company that collects national and regional point-of-sale purchase data from a representative sample of various retail outlets. Widely used by industry, financial analysts and tobacco control researchers, Nielsen’s Convenience Track System captures point-of-sale data from convenience stores. Nielsen estimates that approximately 88% of cigarette sales and 93% of SLT sales occur in convenience stores, compared to its other tracked channels, ie, food, drug, and mass merchandise.^7,25 In this study, tobacco sales estimates for convenience stores in Nielsen’s Dallas, Houston, and San Antonio/Austin designated market areas (DMAs), as well as the total US market, were generated from Nielsen’s Convenience Track System. Using a combination of in-store barcode readers, as well as audits of retail locations without such equipment, Nielsen produces sales estimates that are representative of all types of convenience stores, including independent neighborhood shops and corner stores, chain convenience stores, and convenience stores attached to gas stations.

Nielsen reports total unit and dollar sales by product universal product code (UPC) and assigns attributes to each listing, including the product’s parent company, brand, type (eg, regular or menthol, for cigarettes), style (eg, moist snuff, snus, for smokeless tobacco), and unit size. On the rare occasion that attributes were unclear or unavailable for a UPC listing, the product in question was sought online.

Statistical Analysis

National cigarette and smokeless tobacco sales data from 2014, as well as sales data for each of the 3 Texas markets, were merged into a master database and analyzed using SPSS (version 21.0). Descriptive statistics documented market share by a number of product attributes. For cigarettes, we examined the market share distribution by brand and flavor (ie, menthol or non-menthol), and explored the distribution of brands within the menthol market. For smokeless tobacco, attributes of interest included brand, flavor (ie, unflavored, wintergreen, spearmint, fruit, other), and form (ie, long-cut, fine-cut, pouch, or other). In all analyses, market share was calculated as a percentage of total unit sales, rather than dollar sales, to control for wide variations in pricing between premium and discount brands. Unlike tobacco products such as cigars and electronic cigarettes, unit sizes of cigarettes and moist snuff are standardized (ie, one unit = a pack of 20 cigarettes or one tin/can of moist snuff), so unit size is an appropriate proxy for consumption.

RESULTS

Cigarette Sales

Brand

In 2014, Marlboro held 46.7% of the total US cigarette market, but dominated in Texas, ranging from 58.3% to 60.4% of the market share in the metropolitan areas studied. Although Newport was the second best-selling brand in the US in 2014 with 11.5% of market share, it was considerably less popular in Texas, particularly in San Antonio/Austin, where Newport made up less than 5% of all unit sales. Camel and Pall Mall, other leading brands nationally, held approximately equal proportions of the market share across all Texas regions. The market share distributions of remaining brands did not substantially differ between the US and Texas, except in Houston, where the share of Kool cigarettes was notably higher than it was nationally (Table 1).

Table 1.

Cigarette Market Share^a Distribution in the United States (US) and Texas, 2014

	US	Texasb	Dallas	Houston	San Antonio/Austin
Brand
Marlboro	46.7	58.9	58.3	60.4	58.3
Newport	11.5	6.6	7.3	7.3	4.6
Camel	10.5	9.8	9.6	8.9	11.3
Pall Mall	8.5	8.9	9.2	7.1	10.3
L&M	4.5	3.9	5.1	3.1	2.6
Maverick	1.9	0.1	0.2	0.1	0.1
Winston	1.8	1.3	1.2	1.2	1.7
Natural American Spirit	1.6	1.4	1.2	0.9	2.4
Kool	1.4	2.4	1.5	4.7	1.5
Other brands	11.6	6.6	6.5	6.3	7.2
Menthol (Brand share within menthol market)	32.9	29.3	28.0	34.3	26.3
Newport	29.8	17.8	20.5	17.5	13.4
Marlboro	26.1	33.3	32.8	33.5	34.1
Camelc	14.7	20.9	21.0	16.8	26.4
Camel Crush	6.3	12.1	11.9	9.9	15.8
Pall Mall	6.8	9.0	9.0	8.6	9.5
Kool	4.3	8.2	5.4	13.6	5.6
Other brands	18.3	10.9	11.4	10.0	11.0

Note.

^aMarket share calculated as a percentage of each region’s total unit sales.

^bThe “Texas” market is the summation of the Dallas, Houston, and San Antonio/Austin markets - it does not represent all sales in the state of Texas.

^cIncludes all Camel menthol products, including Camel Crush.

Menthol

Given Newport’s relatively low sales in Texas and its position as one of the most menthlated brands on the market, one might expect that the overall proportion of menthol sales in Texas would be markedly lower than that of the US. Yet, as the data in Table 1 illustrate, the menthol market share in Texas approximated the US rate of 32.9%, and Houston slightly exceeded this proportion (34.3%). An examination of the leading brands within the menthol category revealed that nationally, Newport holds a 29.8% share of all menthol cigarette sales and was the clear leader among menthol brands in 2014. In Texas, however, likely due to the dominance of the Marlboro brand overall, one-third of menthol sales were attributed to Marlboro menthol products. Despite the roughly equivalent proportion of the overall cigarette market held by Camel cigarettes in the US and Texas, the brand held a disproportionately large share of the Texas menthol market. In Dallas and San Antonio/Austin, Camel was responsible for a respective 21% and 26.4% of all menthol sales, compared to the US rate of 14.7%. Sales of the Camel Crush brand extension appeared to drive Camel menthol sales in these regions. Kool, which held just 4.3% of the US menthol market and a minimal proportion of the menthol market in Dallas and San Antonio/Austin, notably held a significantly larger proportion of the menthol market in Houston (13.6%).

Table 2 provides a detailed look at the 3 leading cigarette brands’ mentholated varieties. In both the US and Texas, the proportions of Marlboro’s and Newport’s sales attributable to their mentholated varieties were comparable, suggesting that users of these brands in Texas had similar flavor preferences to users nationally. The contrast in the proportion of Camel’s sales attributable to its menthol products is noteworthy. Camel’s menthol styles accounted for less than half of the brand’s total US sales, yet in Texas, this share was substantially greater, with 62.3% of the brand’s sales attributable to menthol. Camel Crush appeared to be responsible for the elevated proportion of Camel’s menthol sales in Texas, as well as a main contributor to total menthol sales in these 3 markets.

Table 2.

Menthol Market Share^a among Leading Cigarette Brands, United States (US) and Texas Markets, 2014

	US	Texasb	Dallas	Houston	San Antonio/Austin
Proportion of menthol sales by brand
Newport	85.0	79.7	78.7	82.7	77.2
Camel	46.1	62.3	61.2	64.9	61.6
Marlboro	18.4	16.9	15.7	20.3	15.3

Note.

^aProportion of all unit sales that are menthol.

^bThe “Texas” market is the summation of the Dallas, Houston, and San Antonio/Austin markets - it does not represent all sales in the state of Texas.

Smokeless Tobacco Sales

An examination of the 2014 Nielsen data revealed that the distribution of brand market share and product attributes was nearly identical among the 3 Texas regions. For that reason, the cities have been combined into an overall Texas market for ease of comparison between Texas and the US.

Brand

As data in Table 3 illustrate, in 2014, Grizzly and Copenhagen led unit US sales, with nearly identical shares of the smokeless tobacco market (29.9% and 29.8%, respectively). Skoal was a distant third, with a 19.3% share of the national market. In Texas, Copenhagen was the clear brand leader with 44.8% of the market share, and outsold Grizzly 2 to 1. Skoal held relatively similar market shares between the US and Texas.

Table 3.

Smokeless Tobacco Market Share^a Distribution in the United States (US) and Texas, 2014

	US	Texasb
Brand
Grizzly	29.9	22.3
Copenhagen	29.8	44.8
Skoal	19.3	16.1
Camel Snus	3.9	3.3
Longhorn	3.6	2.3
Red Seal	3.4	6.4
Kodiak	3.2	1.1
Other brands	7.0	3.8
Flavor
Unflavored	39.6	58.6
Wintergreen	44.3	30.7
Spearmint/mint	13.2	8.9
Fruit	2.9	1.8
Other/unspecified	0.1	0.0
Form
Long-cut	69.9	56.5
Portion pouches	18.8	15.4
Fine-cut	7.6	25.7
Other/unspecified	3.6	2.5

Note.

^aMarket share calculated as a percentage of each region’s total unit sales.

^bThe “Texas” market is the summation of the Dallas, Houston, and San Antonio/Austin markets - it does not represent all sales in the state of Texas.

Flavor and form

Most (60.4%) of smokeless tobacco products sold in the US were flavored, with Wintergreen the most common flavor. This preference was reversed in Texas, where unflavored products made up almost 60% of the market. Additional differences in proportion of sales were attributed to the different forms, or “cuts” of smokeless tobacco. Pre-portioned pouches were responsible for a larger proportion of sales in the US compared to Texas. Marked differences existed in the more traditional “loose” forms of SLT, generally offered in either long- or fine-cuts. In the US, nearly 70% of the SLT market was comprised of long-cut styles. In Texas, however, the proportion of fine-cut products, although still secondary to long-cut, was more than triple that of the fine-cut proportion in the US overall. This may be reflective of Copenhagen’s product line, given its dominance in Texas.

Examination of the top 3 brands, which together made up approximately 80% of both the Texas and US markets, revealed that apparent flavor and form preferences largely reflected the characteristics of the regions’ dominant brands (Table 4). The popularity of unflavored products in Texas may have been driven, in part, by Copenhagen’s predominantly unflavored product line. Of note, even heavily flavored brands like Grizzly and Skoal sold a relatively higher proportion of unflavored products in Texas, and further contributed to the high rates of unflavored product sales in the state. Pouched products sales were proportionally lower in Texas than in the US, likely due to the low percentage of pouched products sold by Copenhagen.

Table 4.

Market Share^a of Product Attributes among Leading Smokeless Tobacco Brands, United States (US) and Texas Markets, 2014

	Copenhagen		Grizzly		Skoal
	US	Texasb	US	Texasb	US	Texasb
Flavor
Unflavored	72.2	83.8	22.5	39.4	17.4	19.0
Wintergreen	27.1	16.2	69.2	53.1	36.1	40.8
Spearmint/mint	0.0	0.0	8.3	7.5	33.1	28.9
Fruit	0.0	0.0	0.0	0.0	13.4	11.3
Other/unspecified	0.7	0.0	0.0	0.0	0.0	0.0
Form
Long cut	64.6	56.4	68.3	65.9	58.9	59.4
Portion pouches	8.9	10.7	19.2	12.4	27.9	26.4
Fine-cut	26.5	32.9	9.5	19.4	13.3	14.2
Other/unspecified	0.0	0.0	3.0	2.3	0.0	0.0

Note.

^aMarket share calculated as a percentage of each region’s total unit sales.

^bThe “Texas” market is the summation of the Dallas, Houston, and San Antonio/Austin markets - it does not represent all sales in the state of Texas.

DISCUSSION

This study provides national data about cigarette and smokeless tobacco sales and highlights market share differences in 3 major Texas metropolitan areas. Texas possesses unique geographic and demographic attributes, among which are its extensive southern border shared with Mexico, and its notably young and diverse population. Combined with the cultural differences manifest in Texas as a majority-minority state (that is, less than half of the state’s population is comprised of non-Hispanic Whites),²⁶ these and other factors are likely impacting the marketing of and use of cigarettes and SLT in Texas. This comparison of SLT and cigarette sales in a single state compared to the US illustrates how markedly regions can vary in tobacco use and emphasizes the importance of monitoring tobacco sales at the local and regional level to more precisely inform local policy needs.

We found that 2 brands, Marlboro and Copenhagen, dominated the cigarette and SLT markets in Texas, and that these brands, both owned by Altria, held substantially higher relative market shares in Texas compared to their national shares. From Marlboro’s iconic Marlboro Man and Western backdrop, to Copenhagen’s feature of cowboys and rodeos,^27,28 both brands’ advertising similarly highlights traditional American themes, while conveying messages of masculinity and independence, elements that might be expected to be appealing to Texans. However, advertising is likely only part of the equation in Texas. Texans’ greater preference for unflavored and fine-cut SLT products in Texas deserves attention and is largely attributed to strong market share for Copenhagen. Fine-cut products, with their high nicotine content and steep learning curve, are often considered to be the more traditional, authentic, and masculine style of SLT, favored by experienced, usually nicotine-dependent, SLT users.^7,12 At the high end of the nicotine content spectrum, fine-cut products’ greater surface area facilitates nicotine absorption,^12,29 which these users often find more satisfying.²⁹ Thus, the large relative share of unflavored and fine-cut products sold by SLT manufacturers in Texas, most notably Copenhagen, whose products are characteristically unflavored and fine-cut, hint at a deeply-rooted Texas SLT culture and a population of relatively more experienced, possibly more nicotine-dependent, SLT users relative to the US as a whole. Despite unflavored products’ dominance in Texas, the allure of flavors, pouches, and longer cuts, which are easier for new users to manage as they become acquainted with SLT^7,12,27 cannot be dismissed. The attraction of entry-level SLT products^7,12,29 can be powerful to Texas’ young people and acculturating newcomers who aspire to take part in one of the rituals of Texas adulthood. The “graduation process” strategy employed by US Smokeless Tobacco (Altria) indicates that SLT manufacturers have intended to attract new users with the intent to move them through a continuum of increasingly stronger SLT products as they become increasingly nicotine-dependent¹² and more accustomed to using SLT. Whereas Texas SLT users do appear to have an affinity for unflavored SLT, Texas’ youth and Hispanic population remain susceptible targets of products intended for beginners, as marketing of SLT has shifted over the past decade to include not only the traditional target of hardworking rural men, but also sophisticated and glamorous urban men and women.^30–34 Ongoing attention must be paid to sales data for these products, and consideration given to whether a ban on flavored products, thereby potentially eliminating the starter products in the “graduation process,” is warranted.

We also found that although the menthol market share in Texas approximated that of the US rate (32.9%), notable differences in brand preferences existed, with Marlboro and Camel the menthol brand leaders in Texas, rather than Newport. Of particular interest is the disproportionate market share of Camel menthol cigarettes in Texas, where more than 60% of Camel sales are for mentholated styles such as Camel Crush. A relatively new style, Camel Crush appears to be driving Camel menthol sales in Texas, and is twice as popular in Texas than in the country overall. Camel Crush is a product with a menthol capsule in the filter, which can be crushed by the user at any point during smoking to “transform” a non-mentholated cigarette into a menthol flavored one. Research has shown that young adult menthol smokers in the US perceive Camel Crush as fun and entertaining to use, “more minty” than other menthol cigarettes, and a style which would appeal to young, new, or inexperienced smokers.³⁵ The appeal of this product in Texas may be explained, in part, by its large youth population, but may also be the result of targeted marketing of its Hispanic population, or marketing activity in neighboring Mexico. Research reveals that from 2012 to 2014, while remaining stable in the US, preference for capsules more than doubled in Mexico.³⁶ Capsuled products enjoy a positive appeal among users in Mexico, and are often perceived as lower risk than those without capsules.^36,37 Given Texas’ close proximity to and ties with Mexico, the markedly greater proportion of Camel Crush comprising Camel’s share of the menthol market appears to be evidence of the influence that naturally exists between neighboring communities.

This study is subject to a few limitations. First, only one year of sales data is analyzed. Second, Nielsen’s Convenience Track system, although reliable, does not capture 100% of tobacco retail sales. Third, comparisons between tobacco preference trends in Texas and the US also were based solely on sales data. Future research should explore if similar trends can be found using survey data and to explore further if and how these trends may vary by demographic factors.

IMPLICATIONS FOR TOBACCO REGULATION

Overall, the data presented here suggest that menthol cigarettes and flavored smokeless tobacco remain a sizeable part of the tobacco market nationally, as well as in local regions with young and diverse populations such as those present in Texas. Such flavored products continue to be popular in youth: 58.8% of middle and high school students nationwide who used SLT in 2014 used a flavored product,³⁸ and 53.6% of middle and high school students who used cigarettes smoked menthol cigarettes.³⁸ Previous research also has suggested that a ban on menthol cigarettes would likely motivate a considerable number of menthol smokers, including young adults, to quit smoking altogether.^39–43 As such, any future FDA regulation of menthol cigarettes and flavored SLT could have a substantial impact on cigarette smoking and SLT rates. However, states and local municipalities need not wait for federal regulation to begin addressing flavored tobacco in their communities. In December 2013, Chicago became the first major US city to successfully ban sales of all flavored tobacco (including menthol cigarettes) in stores within 500 feet of schools.^44–46 In addition, researchers and regulators should continue to research whether capsule technology, a relatively new feature in cigarettes, is disproportionately appealing to youth and should be subject to restrictions.

This study also highlights that preferences for tobacco brands and products may vary regionally, and are likely influenced by multiple factors such as marketing, population demographics, culture, and exposure to tobacco activities in neighboring communities. It suggests that although national tobacco educational campaigns and federal regulation on product features can have wide-reaching effects, researchers, tobacco control professionals and lawmakers alike should consider the unique profiles of their communities and legislative options in designing effective local tobacco control policies and programs.