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America's Smokers: Still 40 Million Strong

America's Smokers: Still 40 Million Strong

07/16/2014

 By Mike Esterl, Karishma Mehrotra and Valerie Bauerlein 

The U.S. adult smoking rate has plunged to below 20% from more than 40% half a century ago. Increasingly, smokers are poorer and less educated. And many smokers call themselves "occasional" or social smokers, consciously reining themselves in to try to avoid getting hooked.

Still, there are more than 40 million smokers in the U.S. today. And beneath the broad trends are pockets of growth and opportunity that are generating great interest in the tobacco industry.

Smoking rates are higher in gay, lesbian and bisexual groups, which are being targeted by the industry. More Americans are switching to menthol cigarettes like Newport, Lorillard Inc.'s biggest brand. Indeed, Newport is the hot brand that Reynolds American Inc. expects to add to its portfolio with its planned $25 billion acquisition of Lorillard, announced Tuesday.

At a time when Americans crave extreme taste in products that range from candy to beer, it isn't surprising that the only flavored cigarette the FDA allows--menthol--is also the one that is growing fastest. Menthol cigarettes have grown to 31.4% of the cigarette mix, up from 28.7% in 2008, according to Citi Research. The Food and Drug Administration is weighing restrictions on menthol, amid studies suggesting it cools the mouth and throat, making it easier to start smoking and harder to quit.

"It just tastes good," said Jay Oh, a 29-year-old waitress in Kotzebue, Alaska, who smokes Kool menthols and lives in the county where U.S. smoking rates are the highest: 41.5% for men and 40.8% for women, according to a recent study by the Institute for Health Metrics and Evaluation.

Menthol cigarettes are particularly popular with African-Americans, who smoke them 80% of the time. Small-business consultant Bo M. Marshall, 40, bought a pack of Camel Crush Menthol cigarettes at Tobacco & Gifts in Raleigh, N.C., on Tuesday morning. The Crush cigarette, made by Reynolds, tastes like a regular Camel until you crush the logo on the filter, releasing a menthol burst of flavor.

Reynolds also has been cultivating its niche Natural American Spirit brand by pitching it as "organic."

Russell Mick, a 27-year-old environmental sciences major at the University of Arkansas, rolls his own cigarettes with organic Natural American Spirit tobacco. "It's 'healthy,' " said Mr. Mick, making air quotes with his fingers.

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