LONDON (Reuters) - Japan Tobacco International expects a shift towards cheaper cigarette brands in the United States to reach more than 40% of the market by 2027, its finance chief told Reuters.

U.S. smokers have been swapping out brands such as Altria's Marlboro and British American Tobacco's (BAT) Newport, which have been raising prices for years, for less expensive brands as high inflation and interest rates stretch their wallets.

BAT's U.S. cigarette volumes fell 10.1% last year in part due to this shift, it reported on Thursday, while Altria has also been losing market share.

Those companies hope the trend is temporary and will recede as economic pressures ease. But Japan Tobacco International expects pricier brands to continue losing ground even as affordability improves, finance chief Vassilis Vovos told Reuters.

"This is a... hard trend and we see it continuing over time," he said, adding steep price increases will continue to push consumers to trade down - a trend visible in many markets where big price gaps emerge.

Tobacco giants such as Altria and BAT have relied on increasing prices to support revenue growth in markets like the United States, the world's second largest tobacco market after China, as falling smoking rates have put the industry's volumes into structural decline.

JTI, which is part of Japanese conglomerate Japan Tobacco ( JAPAF ), expects the value and super value segment to account for 42% of the market by 2027, up from around 32% in 2022, Vovos said in an interview the day after the company reported full-year results.

JTI completed the acquisition of U.S. tobacco company Vector Group last year, which pushed its share of the super value segment to 40% by the fourth quarter of 2024, its results presentation showed.

(This story has been corrected to clarify that the share of the value and super value segment was estimated at around 32% in 2022, not today, in paragraph 7)