Inflation pressures eased modestly for tobacco manufacturers in January


The recent heightened pressure on overall tobacco industry volumes and sales eased off modestly during January, according to the latest Nielson report released Tuesday.

The latest Nielsen analysis of convenience-store data covers the four-week period ending Jan. 28.

According to Barclays, Nielsen largely covers the big chains. For the smaller chains, the group extrapolates trends, which is why trend changes don’t appear immediately in Nielsen.

Consumer demand for tobacco products has ebbed and flowed over the past 12 months, mostly from the impact of inflation and recent upticks in traditional cigarette prices.

The latest report found a 7.4% year-over-year decrease in traditional cigarette volumes, compared with an 11.2% decrease in December.

R.J. Reynolds Tobacco Co. increased its list price four times during 2022 and again at a higher-than-typical level on Jan. 2.

The list price is what wholesalers pay manufacturers for their traditional cigarette products. The increase typically is passed on to customers at retail.

For Newport and Camel, the latest list price hike was up 15.6 cents per pack, while the non-menthol brand of Newport rose 25.6 cents per pack.

“Sales growth across the nicotine industry remained under pressure, but declines eased modestly,” said Goldman Sachs analyst Bonnie Herzog.

“Volume trends appear to reflect modestly lower consumer elasticities as pricing remained broadly stable.”

Reynolds fared the worst with an 11.9% decline, which was an improvement from the 16.3% decline in December.

The declines were 22% for No. 4-selling Pall Mall, 10% for No. 3-selling Camel and a 21% drop-off for No. 2-selling Newport.

By comparison, Philip Morris USA was down 8.3% and ITG Brands was up 1.4%.

Herzog cautioned that Nielsen recently “fixed UPC data previously not captured related to Camel, but it is still in the process of adding new/promotional Newport brand High UPCs introduced in January to the database.

“This is incorrectly showing an expansion in Marlboro dollar share, thereby overstating the brand’s performance.”

Philip Morris’ top market share dropped from 52.2% to 51.9% in the latest report, with top-selling Marlboro representing 46.3% of overall market share, down from 46.6%.

Reynolds inched up from 32.6% to 32.7%. Newport dropped from 13.4% to 12.1%, while Camel rose from 7% to 8%, Pall Mall from 4.3% to 4.5%, and No. 5 Natural American Spirit unchanged at 4.1%.

ITG was unchanged at 8.4%, although ITG has said its market share is closer to 10%.

Its No. 7 Winston brand was unchanged at 2%, while No. 8 Kool was unchanged at 1.9% and No. 9 Maverick was unchanged at 1.8%.

Electronic cigarettes

The top-selling Vuse electronic cigarette of R.J. Reynolds Vapor Co. continued to expand the market-share gap with Juul in both monthly and yearly comparisons.

Vuse’s market share rose from 41.1% in the previous report to 41.5%, compared with Juul declining from 26.7% to 26.4%.

Over the past 12 months, Vuse’s market share was 36.6%, compared with 29.5% for Juul.

In recent months, the shadow of a potential banning of Juul Labs Inc.’s e-cigarettes from U.S. retail shelves, as well as a potential Juul Labs Inc. federal bankruptcy filing, has accelerated the market-share gains of Vuse.

No. 3 NJoy was unchanged at 2.7%, while Fontem Ventures’ blu eCigs was unchanged at 1.4%.

Juul’s four-week dollar sales in the latest report have dropped from a 50.2% increase in the Aug. 10, 2019, report to a 25.7% decline in the latest report.

By comparison, Reynolds’ Vuse was up 34.1% in the latest report, while NJoy was down 8.7%, blu eCigs down 39.5% and Japan Tobacco’s Logic down 4.9%.

As recently as May 2019, Juul held a 74.6% U.S. e-cig market share.

That’s when a series of regulatory actions led to product-reduction concessions by Juul Labs.

On Sept. 30, Altria Group Inc. cleared the way to re-enter the e-cigarette marketplace after choosing to permanently end its non-compete agreement with Juul Labs.

Read full article here.

Richard Carver – Winston-Salem Journal – 2023-02-07.

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