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The new normal for the core tobacco category is a generalized “trading down,” according to conversations heard around the roundtable.
“We’re seeing more of a decline in premium cigarette sales,” Zielinski said.
The trend was noticed in Canada by Chappell at least a year earlier. “Premium sales were flat, while discount sales were up significantly,” he said.
Price-sensitive shoppers are apparently responding to the fact that “manufacturers are cutting down significantly on promotions,[link widoczny dla zalogowanych],” according to 7-Eleven’s Kailey.
Another observation is the category has moved from cartons and is now packing on the pack sales. “Carton sales are almost nil,” said Kailey. “Smokers are making more trips to buy cigarettes but they’re also shopping around.”
Traditional cigarettes were not the only topic addressed by the panel — electronic cigarettes were identified as a “surprising” growth segment for chains such as 7-Eleven,[link widoczny dla zalogowanych], which is conducting a 104-store test on a $29 starter kit and a $14.99 refill package,[link widoczny dla zalogowanych], according to Kailey. “It’s way too early to tell who exactly is buying these, but it looks like they are smokers looking for an alternative,[link widoczny dla zalogowanych],” he said.
Weiner applauded electronic cigarette manufacturers for countertop point-of-purchase vehicles that offer customers informative pamphlets and even “talking displays” that are operated by the push of a button. “One customer pushes it and four or five other people in the store hear about it,” he said.
“Snus is a whole new category in the U.S.,” said Thomas Russo,[link widoczny dla zalogowanych], a partner with Gardner Russo & Gardner in Lancaster, Pennsylvania. “In light of the limited venues for smoking,[link widoczny dla zalogowanych], there is an opportunity to attract the people who use a variety of tobacco products.” Russo manages more than $3 billion in assets, including Altria shares.
Swedish Match is giving away samples of General snus at New York bars such as the Red Lion,[link widoczny dla zalogowanych], Dempsey’s Pub and Tonic, as well as at ski resorts in Colorado, Vermont and other U.S. states, Flaherty said. He wouldn’t disclose sales projections for General snus.
The company sells General in cigar stores and specialty tobacco shops, as opposed to convenience stores where shelves can be “cluttered” by a variety of tobacco products and clerks aren’t trained to explain the differences between snus and traditional snuff, Flaherty said. The average retail price for General snus is about $5 a can, he said.
In a joint venture with Philip Morris International Inc.,[link widoczny dla zalogowanych], the company will start selling smokeless tobacco in an Asian country this year and plans to enter about five additional test markets, Swedish Match Chief Executive Officer Lars Dahlgren said in an interview March 12 in Stockholm. He wouldn’t specify the test market, except to say it won’t be China.
Swedish Match advanced 1.30 kronor to 167.4 kronor at 1:36 p.m. in Stockholm trading. Shares of Altria, based in Richmond, Virginia, rose 17 cents to $20.37 yesterday in New York Stock Exchange composite trading. Reynolds, based in Winston-Salem, North Carolina, climbed 53 cents to $52.84.