The Other Tobacco Products (OTP) category posted another strong year in 2024, cementing its position as the third-largest non-foodservice contributor to in-store sales and gross profit. According to the NACS State of the Industry (SOI) Report® of 2024 Data, OTP sales rose 7.0%, while cigarette sales declined 3.3%.

Yet despite OTP’s momentum, the gap between the two remains wide. In 2024, per store, per month OTP sales averaged $19,663, compared to $46,437 for cigarettes. OTP’s $1,289 monthly sales gain couldn’t fully offset the $1,600 decline in cigarettes.

“We’re still seeing a big sales gap between cigarettes and OTP,” said Emma Tainter, research manager of analytics and programs for NACS. “But if we look at gross profits, we see that they’re really close.”

In 2024, cigarettes generated $6,389 in monthly gross profit versus OTP’s $5,801. By mid-2025, that gap had narrowed further—$5,664 for cigarettes and $5,328 for OTP, per NACS CSX data presented at the 2025 NACS Show.

The reason? Margins. OTP’s average margin hit 29.50% in 2024, compared to just 13.76% for cigarettes in 2024.

“The magnitude of the change within the last 10 years is significant,” Tainter said, noting OTP’s growth from 4.2% of in-store sales in 2015 to 7.6% in 2024, and from 3.3% to 5.8% of in-store margins during that same period.

According to retailers like Jessica Starnes, director of loyalty and tobacco category manager at Weigel’s Stores Inc., innovation is the driving force.

“We’re seeing accelerated unit declines in cigarettes and explosive unit increases in innovation—specifically nicotine pouches and vapor,” Starnes said at the 2025 NACS Show.

In 2024, three segments—smokeless, e-cigarettes and other tobacco (modern oral)—accounted for most OTP sales. “Based on what we’re seeing now, 2025 will likely be very similar,” Tainter added.

Below is how the top four OTP segments performed and what that means heading into 2026.

Other Tobacco: Taking the Lead

• Share of 2024 OTP Sales: 32.4%

• In-Store Monthly Sales: $6,388

• Monthly Gross Profit: $2,087

After years as the category’s rising star, Other Tobacco claimed the top spot in both sales and profit. The segment’s sales surged 45.3% year over year, while gross profits jumped 56.1%—growth likely driven almost entirely by modern oral nicotine pouches.

“I think we’re going to keep seeing Other Tobacco pull ahead,” Tainter said. “Nicotine pouches are transforming the backbar.”

At Weigel’s, Starnes said the chain leaned into pouches. “We decided to become a ‘nicotine pouch destination,’” she said. The retailer reallocated backbar space, broadened assortments, worked with wholesalers to prevent out-of-stocks, and collaborated with manufacturers on trial and activation offers.

The payoff? “Zyn is now the number two brand on our backbar and four pouch brands are in our top 20,” she said. “We’ve offset the cigarette unit declines.”

For retailers, the data backs that strategy: Other Tobacco was the only OTP segment to post both sales and profit gains in 2024. The category’s overall 7.01% sales and 8.67% profit increases were entirely driven by pouches.

“I think we could be far from market saturation,” Tainter added. “We see it quantitatively in the data and qualitatively, from just walking around the NACS Show floor this year.”

Smokeless: Holding Steady

• Share of 2024 OTP Sales: 31.2%

• In-Store Monthly Sales: $6,129

• Monthly Gross Profit: $1,406

The former category leader, Smokeless, remained resilient—accounting for roughly one-third of OTP sales. Sales dipped 1.1%, and gross profits declined 3.3%, making it the least affected segment among those that lost ground in 2024.

“The market remains remarkably strong, stable and highly profitable,” said Matt Hanson, chief growth officer of Black Buffalo Inc. “Nonetheless, steadily rising prices are impacting consumer behavior, with some downtrading within the category away from premium brands and into discount brands.”

Some cannibalization is also at play. “We’re actually down in smokeless,” said Kathy Williams, senior category leader at Campbell Oil Co./Minuteman Food Mart. “Because major smokeless brands wanted to play in the pouch game, those consumers switched over to their nicotine pouches.”

Still, Hanson sees opportunity for innovation within smokeless itself. “MST users are interested in and experimenting with potentially reduced-risk alternatives—but many are ultimately not satisfied with other products like nicotine pouches because they can’t deliver the taste, texture and pack-dip-spit ritual that these consumers are accustomed to,” said Hanson, whose Black Buffalo line offers tobacco-free MST options. “We believe there is room for continued innovation to meet the full range of consumer preferences.”

E-Cigarettes: Illicit Woes Continue

• Share of 2024 OTP Sales: 21.9%

• In- Store Monthly Sales: $4,309

• Monthly Gross Profit: $1,378

E-cigarettes saw the steepest declines—down 11% in sales and 12.9% in profits—though the data likely excludes much of the illicit vapor market.

“We collect data from retailers who strive to do everything by the book,” Tainter explained. “The data we collect is compliant with the law.”

That’s a problem, since the FDA has approved only tobacco and limited menthol vape flavors—meaning most flavored vapes sold today are illegal.

“Despite stepped-up enforcement by FDA, DOJ and CBP, the overall situation has not meaningfully improved,” said Chris Howard, EVP of external affairs and new product compliance at Swisher. “The market remains dominated by unapproved flavored product. As long as consumers can’t access legal products in the flavors they actually use, the illicit market will thrive.”

And it’s hitting compliant retailers hard. “It’s estimated that 70% of vapor sales come from the illicit market,” Starnes said. “Stores not selling illicit vapes lose about $161 per store, per day. That’s nearly $5 million annually for Weigel’s 86 stores.”

Howard agreed: “The ambiguity doesn’t just hinder lawful businesses, it rewards the illicit market at their expense.”

Some retailers have tried to get creative. Williams said MinuteMan diversified into various nicotine-free flavored vapes. 

Cigars: Regional Strengths Keep It Relevant

• Share of 2024 OTP Sales: 11.5%

• In-Store Monthly Sales: $2,256

• Monthly Gross Profit: $748

Cigars declined more than smokeless but less than vapor—down 5.0% in sales and 4.95% in profits. The segment did receive one piece of good news: the FDA’s proposed flavored cigar ban (along with the menthol cigarette ban) was withdrawn. Still, declines persisted.

“We really haven’t seen a huge shift,” Tainter said.

Part of that is due to local flavor restrictions. “State and local flavored- cigar bans have had uneven but significant effects,” said Howard. “Retailers in those jurisdictions saw notable declines, while many consumers shifted purchases to nearby areas without restrictions.”

As a result, cigar performance is highly regional. “We’re still a big cigar retailer,” Williams said, touting the chain’s demographics, location and an overall interest in limited time offerings as the driving force. “Our cigars are still growing.”

Takeaways for 2026

Across OTP, the common thread is adaptability. Pouches are fueling category growth, smokeless remains resilient through innovation, cigars depend on geography, and vapor is mired in regulatory chaos.

For retailers, success hinges on knowing your market and managing the backbar strategically.

“It’s about looking at your data: what’s selling and what’s not,” Tainter advised. “The transition from cigarettes to OTP is happening everywhere, but it could look very different in California than it does in South Carolina.”