Cigarette pricing remains strong.
All channel (mass channel + c-stores) e-cig dollar sales growth continued to accelerate sequentially to +28.9% in the period ending May 16, 2015, driven by +66.5% unit growth, partially offset by -22.5% net pricing, according to Wells Fargo Securities and Nielsen data.
While year-over-year e-cigarette pricing has been negative for 12 consecutive periods, Wells Fargo believes it’s at least partially due to difficulty in capturing SKUs given the rapidly evolving vapor category and proliferation of vapors/tanks/mods (VTM) and refills, which tend to have a lower retail price/refill.
“We remain encouraged that category dollar sales continue to grow, driven by Big Tobacco’s national e-cig rollouts and believe the trial and awareness generated by Vuse and MarkTen should help elevate the entire category and drive incremental trial. Importantly, we note that VTMs are under-represented in Nielsen but are growing faster than the vapor category based on our ‘Tobacco Talk’ surveys,” said Bonnie Herzog, managing director, beverage, tobacco and convenience store research for Wells Fargo.
All channel cigarette dollar sales rose +2.4% (in line with +2.4% last period and -0.2% last year) during the recent four-weeks, driven by +2.8% pricing, partially offset by -0.3% equal units. “We continue to expect strong manufacturer pricing in 2015 which should generate robust profitability growth,” said Herzog.
Smokeless tobacco dollar sales grew +6.6% during the period ending May 16, 2015, driven by +30.7% unit growth, partially offset by -18.4% net pricing.
