Big Tobacco Sparks a Fire on Wall Street Despite a Shrinking Smoker Base

Old habits die hard — that’s probably why Big Tobacco is still outperforming on Wall Street. Cigarette sales have been declining for decades, smoking rates hit new lows every year, and most investors won’t touch tobacco stocks on principle. Yet this maligned sector managed to deliver some of 2025’s strongest returns.

Cleared for growth: This September, US regulators rolled out a trial program designed to speed up the greenlight process for nicotine pouches, trimming timelines from several years to just a few months. The initiative tackled the drag where new products were stalled in regulatory review while rivals could capture market share with unauthorized alternatives. This has opened the door for companies to compete more directly in the country’s fastest-growing tobacco category as these oral alternatives have quickly gained traction.

• Credit Suisse research shows tobacco dominated US markets from 1900 to 2015, compounding a single dollar into $6.3M and proving its resilience against shifting habits and regulation.
• Even during economic uncertainty, tobacco stocks maintain their appeal as defensive plays, with the sector delivering consistent returns regardless of broader market conditions.

Dragging Out Wins

The regulatory push has lifted the entire sector, with manufacturers racing products to market ahead of clearance in hopes that eventual approval would legitimize their presence and reduce enforcement risks. A select group of global tobacco names has returned an average of 43% this year, outpacing the S&P 500’s underwhelming ~12% rise during the same period. Philip Morris InternationalPM

has surged ~37% on runaway demand for its ZYN brand, while AltriaMO

added 27% after lifting guidance on stronger-than-expected uptake of smokeless options. Even rivals are benefiting from the boom:

• Turning Point BrandsTPB
  has soared 70% YTD as modern oral products jumped to 26% of sales, while British American TobaccoBTI
  rallied 53% with smokeless now over 18% of revenue.
• Japan TobaccoJAPAY
  rose 25% on the success of Ploom AURA, while Imperial BrandsIMBBY
  advanced 34% thanks to a rebound in cigarette sales.

Breaking the habit: Tobacco has long been the market’s ultimate contrarian play — thriving precisely because everyone assumes it’s on the verge of collapse. Now, a study in JAMA Network Open suggests the story may be shifting again as smokers and vapers are adopting nicotine pouches at much higher rates than non-users, with recent quitters nearly four times more likely to use them daily. Products like Zyn and Velo aren’t marketed as quit aids, yet they’re increasingly serving as substitutes for more harmful habits. It’s the rare case where Big Tobacco’s future may depend on helping people quit.