- The most common response was a profit margin of 4-6%, with some reporting lower margins for price-marked packs of cigarettes (1-6%) and higher margins for non-price marked or premium brands (7% to over 10%).
- The average profit margin on tobacco is just 6.6%, compared to an average of 24.1% for non-tobacco products.
- Estimated Profit Margin for a Cigarette Store. In 2019, revenues from tobacco tax amounted to 12.46 billion U.S. dollars.
- The minimum markup on the wholesale price of cigarettes ranges from 2% to 6.5%, while the markup on the retail price ranges from 6% to 25%.
- Perishables like produce have higher markups, from 50% to 75%, to cover spoilage costs.
- As of 2015, 31 states regulated cigarette prices, with 27 utilizing defined markup percentages to set minimum prices. The average total markup across these states was 10.79%.
- So tobacco companies spend about 6 cents to make a pack of cigarettes and sell them wholesale to distributors for around $5 per pack. Distributors then markup the wholesale price by 20-40% and sell to retailers for about $6-7 per pack. Retailers add their own markup of 6-25%, bringing the average retail cost to around $7 per pack.
This text includes detailed information on profit margins, revenues, markups, and pricing strategies in the tobacco industry.