4 Reasons to Be Optimistic About Tobacco

By Angel Abcede, Senior Editor/Tobacco, CSP

 

May 2017

 

CHICAGO – Convenience retailers may feel a little down about their first-quarter tobacco numbers, but cigars were a strong performer and limited-time-offer opportunities and innovative technologies are reasons to remain optimistic. A half-dozen reasons ranging from rainy weather to disheartened Clinton voters contributed to a slower start in sales this year, said Nik Modi, managing director of tobacco, household products and beverages for RBC Capital Markets, LLC, New York. However, despite that slow start, Modi says numbers for March and April are already looking up!

 

Below are four highlights from the May 11th webinar put on by Nik Modi.

 

Cigars

 

Cigars drove 83% of OTP growth over a six-month period ending the beginning of April, said Joe Teller, director of category management for Swedish Match. Unit growth was 9.6% and dollar growth was 9.5%, he said, citing c-store figures from New-York based Nielsen. Natural-leaf and rolled-lead cigars showed the largest percentages of growth in specific categories and increasing competition from new and current players fueled growth.

 

Limited-Time Offers (LTOs)

 

Most of the drivers for cigars formidable showing were limited-time offers. With manufacturers able to develop new LTO products even under heavy regulations from the US FDA, retailers need to be ready to accommodate the fast in-and-out stock cycles.

 

Promotional Dollars

 

As new retail contracts settle in the coming weeks, retailers can expect more promotional dollars from manufacturers as they try to share up or gain market share, Modi said.

 

Heat Not Burn Method

 

While retailers in a CSP-RBC survey expressed doubt about the emerging nicotine-delivery method known as “heat not burn,” Modi still expects it to be a significant opportunity, especially as global tobacco players find success with the technology outside the United States. Also, Modi said, the technology will have an even stronger chance at success if the FDA deems it less harmful than combustible cigarettes. Consumers have responded to that product claim with other nicotine products in the past, he said.

 

 SOURCES

“4 Reasons to be Optimistic About Tobacco” by Angel Abcede, Senior Editor/Tobacco,CSP on CSP Daily News http://www.cspdailynews.com/category-news/tobacco/articles/4-reasons-be-optimistic-about-tobacco#page=0