"Marlboro is expensive too," they complain, but wealthy Americans are 'mansion shopping'

Marlboro Market Share Declines as Low-Cost Cigarette Sales Rise
High Prices Drive Exodus from New York
Sales of Ultra-Luxury Homes Over $10 Million Surge

[Asia Economy Reporter Kwon Haeyoung] Americans, whose household budgets have become tight due to high inflation, are even cutting back on cigarette expenses. Meanwhile, the wealthy are actively shopping for ultra-luxury homes priced over $10 million (approximately 12 billion KRW). The economic slowdown appears to be deepening polarization between social classes.

Let's at least cut back on cigarettes

Malrobo will be sold at 4,500 won starting from the 19th.

According to the Wall Street Journal (WSJ) on the 1st (local time), Altria Group, the largest tobacco company in the U.S. and manufacturer of Marlboro, reported that cigarette sales fell by 12% in the fourth quarter of last year. Despite the rise in cigarette prices, the decline in sales volume offset this, resulting in only a 2.3% decrease in revenue during the same period.

Billy Gifford, CEO of Altria Group, explained, "Consumers are reducing their daily smoking due to economic pressure," adding, "There is a trend of switching to low-priced cigarettes as an alternative."

In fact, sales of premium cigarettes decreased while sales of low-priced cigarettes increased. Marlboro, which costs about 10,000 KRW (8.46 USD) per pack, held a 42.5% market share in the U.S. cigarette market in the fourth quarter of last year, down 0.4 percentage points from the previous year. Meanwhile, low-priced cigarette brands such as Maverick and Montego saw their market share rise by 1.7 percentage points to 27.8%. WSJ reported, "Smokers began switching to low-priced cigarettes early last year," and "This trend is accelerating as price increases narrow consumers' choices."

Since people are cutting back on cigarettes, affording housing costs in major cities is out of the question. According to the National Association of Realtors (NRA), New York State saw a population decline of 299,557 (-0.9%) last year. This was the second-largest population outflow among the 50 U.S. states, following California. Nearby New Jersey also experienced a net population decrease of 64,231, ranking fourth in terms of outflow size. The burden of housing costs is driving an exodus from major cities.

120 Billion KRW Ultra-Luxury Home Shopping

While ordinary citizens are tightening their budgets by even cutting back on cigarette expenses due to soaring inflation, ultra-luxury home sales priced over $10 million are surging in Brooklyn, New York. The economic slowdown is considered to have a limited impact on the wealthy.

According to Compass, a U.S. real estate brokerage, the number of home sales priced over $10 million in Brooklyn increased from 3 in 2021 to 13 last year. Ultra-luxury home sales exceeding 12 billion KRW have more than quadrupled. The highest-priced home sold in Brooklyn last year was transacted at $18.3 million (approximately 22 billion KRW).

In other regions, transactions of homes priced over $10 million also increased. In Austin, Texas, the number rose from 4 in 2021 to 5 last year, and in northern Florida near Jacksonville, it increased from 1 to 4 during the same period.

Leonard Steinberg, a Compass broker, said, "Wealth is spreading," adding, "Prices of high-end homes and goods have dramatically increased over the past decade, playing a significant role in the growth of the market for homes priced over $10 million."