Cigarette dollar sales up 2%.
E-cigs dollar sales growth across all channels (mass + c-stores) re-accelerated sequentially to +9.6% in the period ending March 21, 2015, driven by +40.5% unit growth, partially offset by -22% net pricing, reported Wells Fargo Securities LLC, quoting the latest Nielsen data.
“Though e-cig year-over-year pricing has been negative for 10 consecutive periods, we believe 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. However, 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 three times faster than the vapor category based on our ‘Tobacco Talk’ surveys,” said Bonnie Herzog, managing director of beverage, tobacco and convenience research.
Wells Fargo continues to believe vapor consumption could surpass combustible cigs in the next decade (by 2025), driving total profit pool growth & generating a 6.6% CAGR.
Meanwhile, all channel cigarette dollar sales were up +2% (up from +2.1% last period and -0.1% last year) during the recent four-weeks on +2.7% pricing, partially offset by -0.7% equal units.
Wells Fargo noted lower gas prices continue to have a favorable impact on the category. “We continue to expect strong manufacturer pricing in 2015, which should help offset broad volume declines and generate robust profitability growth,” Herzog said.
