As the landscape of the tobacco and nicotine industry drastically shifts, convenience stores find themselves in the epicenter of these changes. Now, more than ever, it's crucial to examine key changes such as state tax increases and the burgeoning growth of modern oral nicotine (MON) products to gain a better understanding of the future of the tobacco and nicotine industry in the convenience store sector.

The Effect of Increasing State Taxes

Facing revenue shortfalls, states like Indiana and Illinois seized the opportunity to increase their state's cigarette tax in 2025[4][5]. Indiana's recent implementation of a $2-per-pack cigarette tax increase saw its rate elevated from $0.995 to $2.99 per pack—a sizeable increase of over 200%[4]. Similarly, the fiscal year 2026 budget in Illinois included a significant change. Previously untaxed, nicotine pouches are now taxed at 45% of wholesale[3]. These state policies are having significant impacts on convenience stores. According to Rick Mistretta, president of Prairie State Energy, South Barrington, Illinois, these increases have resulted in a trend of cross-border shopping, which negatively impacts retailers in high-tax jurisdictions[4].

Convenience Stores and Modern Oral Nicotine Products

While traditional convenience-store tobacco sales linger, modern oral nicotine (MON) products are rapidly gaining traction. Research showed a 56.5% increase in nicotine-pouch volume in 2024[1]. Further, this momentum doesn't seem to be slowing down, as retailers forecast a 19% increase in the oral nicotine category for 2026[1]. Products like Zyn and Velo Plus have seen a substantial rise in market share in 2025, recording growth rates of 35% and 44% respectively. Furthermore, products like On Plus and Rogue are expected to contribute to the overall MON significant market advancement, with a projected additional growth of 5% and 3% in the 2025-26 period[1]. The robust growth of these oral nicotine products has been primarily driven by their discreet and non-combustible properties. These characteristics resonate with a responsive audience keen on pivoting away from traditional combustible cigarettes.

Tightening Age-Verification Compliance

A trend of heightened age verification in convenience stores can be observed, ensuring that nicotine and tobacco products are sold responsibly. A marked 79% of 21-22-year-olds were reportedly being carded, with a substantial 58% of transactions involving ID scanning[1]. Even so, there remains work to do with rectifying gaps in visual inspections.

Pressure on Manufacturers Amid Shifting Landscape

Increased state enforcement and escalating regulator scrutiny are strongly shaping the landscape of the tobacco industry at convenience stores. Manufacturers are not exempt from these setting changes. With cigarette sales in convenience stores reportedly falling by 3.3% from 2022 to 2023[1][3], manufacturers like Altria reported a 2.1% dip in fourth-quarter revenue as they pivot towards these growing smoke‑free categories[1][4].

Keeping an Eye on Regulation Pressures

Regulatory pressures are escalating for convenience stores, with intensifying examinations from authorities like the FDA. The FDA is currently reviewing modified-risk claims for oral nicotine products like Zyn[1]. Furthermore, the increasing enforcement actions against illegal vapes are contributing to shaking up the convenience store landscape.

Expectations for the Future of Tobacco in Convenience Stores

Considering these current trends, the future of tobacco and nicotine in convenience stores points towards continued expansion of discreet, non-combustible nicotine formats, heightened regulatory scrutiny, and a shifting product mix favoring pouches over combustible cigarettes[1]. However, it is crucial for convenience stores to stay informed of these changes. The landscape continues to evolve, along with the customer's preferences, regulatory pressures, and tax implications. Staying informed will enable businesses to make strategic decisions that ensure growth and remain rooted in customer preferences. 1]: [Research on "What's next for tobacco and nicotine in convenience stores - CSP Daily News" 3]: [Illinois' fiscal year 2026 budget 4]: [Indiana’s latest cigarette tax increase 5]: [Altria reports dip in revenue

The Surging Popularity of Modern Oral Nicotine Products

Dominated by the rapid growth of Modern Oral Nicotine (MON) products, the landscape of convenience store tobacco sales is undergoing a major transformation. A significant contributor to these changes has been the volume of nicotine pouches, which rose by 56.5% in 2024[1]. Moving into 2026, the oral nicotine category is predicted to increase by 19%, led by brands like Zyn and Velo Plus[1]. Specifically, Zyn experienced a 35% jump in its growth, while Velo Plus recorded an impressive 44% increase in 2025[1]. Looking forward, retailers forecast Velo Plus to further escalate by 33% in 2026[1]. While the growth rates for On Plus and Rogue may seem less dramatic with expected additions of 5% and 3% respectively in 2025-26, their contribution to the industry remains important[1].

Shrinkage of Cigarette Sales in Convenience Stores

In spite of the strides made by Modern Oral Nicotine products, it's important to note that the cigarette sales still represent approximately 70% of total tobacco revenue in convenience stores[1]. However, cigarette sales have been in a state of steady decline, with a 3.3% year-over-year decrease from 2022 to 2023[1]. This decrease in sales has impacted traditional tobacco revenues, causing shortfalls and pushing convenience-store operators to focus increasingly on "other tobacco product" (OTP) segment. This includes cigars, smokeless tobacco, heated tobacco, and more notably, modern oral nicotine pouches[1]. The OTP segment posted a modest rise of 0.3% in the same period[1].

Impact of Regulatory Bodies and Tax System

The regulatory influence on the tobacco and nicotine industry in convenience stores has been significant[1]. The FDA, in particular, has tightened its grip with a thorough review of modified-risk claims for Zyn[1]. Furthermore, a surge in the enforcement of actions against illegal vapes suggests an increasingly strict regulatory landscape[1]. Just as influential, though, are taxing structures. A nicotine pouch tax proposed by New York, for instance, could generate up to $57 million annually by 2030[1]. If implemented, this could place considerable financial pressure on sellers of nicotine pouches.

Age-verification Compliance and Consumer Behavior

Another key trend impacting the tobacco and nicotine industry in convenience stores is the stricter age-verification compliance[1]. Now, out of every five customers aged between 21 and 22, four (79%) are being carded and more than half (58%) of transactions involve ID scanning[1]. Still, there remain gaps in visual inspection processes, which would need to be addressed to ensure full compliance[1].

Shifting Consumer Preferences

Changes in consumer behavior have had considerable implications for convenience stores' strategies for tobacco and nicotine products. As traditional tobacco revenue shortfalls deepen, and with the impending tax changes and enhanced enforcement measures, convenience store operators have begun leaning more heavily into nicotine pouches and e-cigarette assortments[1]. Major brands have also followed suit, with manufacturers like Altria reporting a 2.1% dip in fourth-quarter revenue as they pivot toward these growing smoke-free categories[1].

Frequently Asked Questions

What's causing the growth of Modern Oral Nicotine (MON) products?

Driving this growth is an increase in consumer demand for more discreet, non-combustible nicotine formats. Brands like Zyn and Velo Plus are leading the way, showing substantial growth in 2025 and predicting further increases into 2026[1].

Why are cigarette sales falling in convenience stores?

Cigarette sales are shrinking due to a combination of issues, including increased state tax rates and changes to FDA regulations[1]. Simultaneously, the rapid growth of MON products reflects a shift in consumer preferences towards non-combustible nicotine formats[1].

What role is regulatory compliance playing in the tobacco and nicotine industry?

Regulatory compliance has become a critical factor in the tobacco and nicotine industry. The FDA has increased its scrutiny substantially, while states like New York are proposing new taxes on nicotine pouches[1]. Compliance with age-verification standards has also become more stringent[1]. In conclusion, the future of the tobacco and nicotine industry in convenience stores is being primarily shaped by the rapidly growing MON products. As these changes take shape amid regulatory shifts and evolving consumer behavior, it's crucial for convenience stores to adapt strategically. As the landscape evolves, convenience stores will need to ensure they stay up-to-date with the latest trends, regulations, and consumer expectations in order to thrive in the changing market. 1]: [CSP Daily News

Shift in Consumer Preferences: A Reshaping Effect

Traditional tobacco products continue their downward trend amidst the rise of modern oral nicotine (MON) alternatives, marking a significant shift in consumer preferences. The data suggests a consistent pattern of decline in regular cigarette sales, with a 3.3% year-over-year drop from 2022 to 2023[3]. This shift undoubtedly prompts fundamental changes for convenience stores that have relied heavily on cigarette sales as a revenue stream. In contrast, the market for nicotine pouches experiences an uptick, thanks to their adaptability to changing smoking norms and regulations[1].

Replacement of Traditional Tobacco Products

Consumers' preference for MON over traditional tobacco products is increasingly evident. Reportedly, nicotine-pouch volume soared by 56.5% in 2024[1], making MON the dominant segment in convenience-store tobacco sales. Brands such as Zyn and Velo Plus saw year-on-year sales leaps of 35% and 44%, respectively, in 2025[1]. By 2026, Velo Plus is projected to experience another surge in sales by 33%[1]. Shifting market dynamics reflect the convenience, novelty, and perceived safety of nicotine pouches, driving consumers away from cigarettes towards smoke-free alternatives. Major tobacco manufacturers, including Altria, reported a 2.1% dip in their fourth-quarter revenue as a response to these market movements[4].

Oral Nicotine: The New Revenue Driver

Despite the modest rise of 0.3% in the “other tobacco product” (OTP) segment from 2022-2023[3], the increased acceptance of MON products suggests an encouraging potential for OTP to eventually drive in-store revenue. This trend casts a ray of hope for retailers amidst the deepening shortfall in traditional tobacco revenue. As a clear nod to the changing landscape, Walgreens executed a nationwide e-cigarette relaunch[4], indicating a lean towards e-cigarette and nicotine-pouch assortments in response to consumer demand and market trends[4].

Regulatory Impact on the Tobacco Industry

The tobacco and nicotine industry is under constant scrutiny and regulatory constraints, an aspect that can significantly influence product availability and consumer behaviour. One of the most notable regulatory impacts is the proposed nicotine-pouch tax in New York. If implemented, it could generate up to $57 million annually by 2030[3]. This economic windfall could prompt other states to implement similar taxes, which may translate into price hikes for consumers and potentially dampen sales. Simultaneously, the industry experiences escalating enforcement against illegal flavored vapes and tightening age-verification compliance. Approximately 79% of 21-22-year-olds were carded in a recent year, and 58% of transactions involved ID scanning[2]. Strict compliance and enforcement actions against illegal sales may contribute to the migration of consumers towards safer and compliant nicotine alternatives. Looking ahead, the FDA's current review of Zyn's modified-risk status could signify a game-changer for the brand and MON industry. If the FDA authorises Zyn as a modified risk tobacco product, it could boost the product's popularity among adult consumers while reshaping both the perception and acceptance of MON products.

The Future of Tobacco and Nicotine in Convenience Stores: A Synopsis

Given the intersection of shifts in consumer preferences and the evolving regulatory environment, the future of tobacco and nicotine products in convenience stores reflects an undeniable shift towards alternative nicotine delivery formats. Non-combustible nicotine products like pouches and e-cigarettes are likely to continue to expand their share of the market at the expense of traditional combustible cigarettes. However, alongside these promising trends, convenience stores must be prepared for challenges, including potential tax increases and stiffer regulatory constraints. In an industry characterized by frequent changes in regulations and consumer behaviours, staying ahead of the curve is crucial to maintaining profitability and relevance. Note: This article does not endorse or promote the consumption of tobacco or nicotine products. For reference and informational purposes only.