Sales trends in the tobacco market have been revealed and discussed in Wells Fargo’s Tobacco Talk.
New data from the Wells Fargo Tobacco Talk survey has been released. The data from the survey has highlighted a number of trends in the tobacco industry and has discussed the impact of these trends on the market.
Some of the key findings discussed in the Tobacco Talk survey include:
- All channel cigarette dollar sales increased +3.1% during the recent four-week period ending Jan. 23, 2016 (+3.3% for 12-weeks; +2.6% for 52-weeks), on very strong +3.8% pricing offsetting slightly weaker equal unit volume of -0.7% (-0.3% for 12-weeks).
“As discussed in our Tobacco Talk surveys, tobacco consumption and pricing remains healthy. We expect strong manufacturer pricing and profit growth to continue this year,” said Bonnie Herzog, managing director, beverage, tobacco & convenience store research, Wells Fargo Securities LLC.
- Reynolds American cigarette dollar sales increased +4.0% this period outpacing the industry’s +3.1% growth, driven by strong +3.6% pricing and healthy +0.4% volume trends (+0.4% for 12-weeks; 0.1% for 52-weeks). Newport was the big contributor, with dollar sales up +4.8%, a tad below its 52-week average (5.2%), but healthy nonetheless seven-months after the Lorillard acquisition. Natural American Spirit volume up an impressive +26.8% despite incrementally stronger pricing (+2.5% versus +2.3% 12-weeks). Camel dollar sales were up 3.4% on strong +3.2% net pricing and unit volume growth of +0.2%, a significant improvement versus -0.3% for 12-weeks.
- Altria cigarette dollar sales continue to be driven primarily by pricing +3.3%), offset by soft volume growth (-0.3% versus flat for 12-weeks). Marlboro dollar sales (+2.5%) reflected strong pricing (+3.5%), offset by -1.0% unit declines. Marlboro lost 30 barrels per second of retail share in the four-week period, bringing its unit share to 47%, roughly unchanged versus the December period.
- Imperial Tobacco Group volume continued to be weak, down -2.9% (versus -3.3% for 12-weeks) as volume for three of its top cigarette brands (Maverick, Kool and Salem) declined 2.9% on average Imperial Tobacco Group dollar share declined 40 barrels per second year-over-year to 7.5% with Winston holding its dollar share relatively flat at 2.1% despite steady promo activity (pricing unchanged at -2.0%).
- Smokeless tobacco dollar sales grew +8.1% this period, marking the segment’s strongest four-week perform in last 52 weeks, albeit entirely on pricing. Reynolds American’s Grizzly and Altria’s Copenhagen led the pack with Grizzly dollar sales up +11.1% (versus +10.9% for 12-weeks) and Copenhagen up 10.7% (versus +9.8% for 12-weeks).
- Electronic Cigarette Dollar Sales Growth Remains Negative on Persistently Weak Pricing – All channel electronic cigarette dollar sales were down -17.7% in the recent period (-15.5% for 12-weeks) driven by negative net pricing of -14.9% and -3.3% unit declines.
“Though electronic cigarette year-over-year pricing has been in persistent decline, we believe it is at least partially due to difficulty in capturing SKUs of the evolving vapor category and proliferation of vapors/tanks/mods (VTM) and refills which tend to have lower retail prices,” Herzog said.
- Reynolds American reinforced its position as the share leader in all channel electronic cigarettes with 38.5% dollar share, reflecting its strongest share position achieved to date for VUSE. Fontem U.S. (blu eCigs), a subsidiary of Imperial at 20.7%, Logic at 14.6% and NJoy 3.8%. Altria’s 7.6% dollar share was impressive given that it lapped a tough year ago compared (14.3%) and reflected strong consumer uptake of its new MarkTen XL (+3.7% share in December) and a small boost from Green Smoke (+0.1%).
“While Nielsen’s data is useful directionally, we believe the electronic cigarette unit and pricing data is difficult to rely on given Nielsen is still not reporting “equivalent” units in this category,” said Herzog.