Wells Fargo Outlines Tobacco Sales Trends

Smokeless a “bright spot” while e-cigarette sales remain impressive.

Wells Fargo reported that cigarette dollar sales increased +1.1% during the four-week period ending May 20, 2017 (vs +0.7% for 12-weeks) as strong +5.6% pricing successfully offset weakening cigarette volume trends (-4.2% vs -3.8% for 12-weeks).

“We expect adult tobacco consumer resilience to continue through the year even as total cigarette industry volumes decline toward the high end (we project -3.8%) of historical norms of down 3-4%,” said Wells Fargo Senior Analyst Bonnie Herzog.

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Meanwhile, smokeless tobacco dollar sales remained a “bright spot” with consumers responding positively to brand extensions. Smokeless tobacco dollar sales grew +4.1% this period (vs. +4.2% 12-weeks), reflecting strong consumer loyalty to the category and acceptance of the latest line extensions.

“Importantly, sales of Altria’s Copenhagen did very well increasing +8.3% (vs 7.9% for 12-weeks) and outpaced Reynolds America Inc.’ Grizzly (+8.1%) despite the USSTC recall in January (close to resolved),” Herzog noted.

Electronic cigarette dollar sales across all channels “remained impressive” at 32.5% driven by exceptionally strong +12.3% pricing (vs +9.2% for 12-weeks) and +18% volume (vs +22.4% for 12-weeks). RAI’s VUSE maintained leadership at 34.5% market share supported by strong pricing and volume gains.

Cigar dollar sales remained solid +11.3% (vs 11.6% for 12-weeks) led by No.1 Altria’s Middleton (+12.4% volume/+0.4% pricing) and No.2 Swisher (+7.0% volume/-0.8% pricing).