Respondents to a recently conducted survey of tobacco retailer and wholesaler contacts representing more than 45,000 U.S. convenience stores revealed that the competitive environment improved during fourth-quarter 2012, with fewer respondents indicating a competitive environment versus the third quarter. The survey also showed:
Total cigarette industry volumes should be down about 3% during the fourth quarter, in line with long-term trends;
52% of survey respondents suggested overall cigarette category volume was flat-to-up during the quarter, in line with survey responses during the third quarter when 48% of respondents indicated similar trends.
Marlboro volume and promotional trends were solid in the fourth quarter, the survey said. Wells Fargo contacts indicated that Marlboro year-to-year volume increased 1.2% in fourth-quarter 2012, accelerating from 0.7% in the third quarter, demonstrating PM USA’s continued success leveraging innovation on Marlboro and driving incremental share gains. A trade contact told Wells Fargo that promotions on certain Marlboro lines are decreasing in January and February by $1 per carton.
Newport Menthol promotions are working to drive volume growth, said the report. Year-to-year volume accelerated to 1.9% during the fourth quarter compared to about 0.5% in the third quarter, driven by higher promotions; 45% of the contacts indicated that volume increased in the fourth quarter compared to only 37% in the third quarter. Promotional support for Newport increased 2.3% in quarter four versus 1.1% in quarter three.
Camel volumes picked up in fourth-quarter 2012 driven by higher promotions. Year-to-year volume trends are up 0.2% in quarter four from a decrease of 0.1% in quarter three, driven by higher promotional support for the brand.
The electronic cigarette category growth is accelerating, with annual growth estimated at more than 20%, said Bonnie Herzog, New York City-based managing director of beverage, tobacco and consumer research for Wells Fargo Securities LLC. Also, it appears that retailers are continuing to carry more SKUs. More than 50% of survey respondents indicated that e-cigarette purchases are repeat purchases versus trial. “We continue to expect consumption of e-cigs will surpass consumption of traditional cigs in the next decade, Herzog added. (CSP Daily News)