Cigarettes Selling Better Than Expected
Cigarette sales continue to perform better than expected despite a slight decline in recent weeks.
The U.S. sales volume for traditional cigarettes was down 2.1 percent for the four-week period that ended Aug. 22, according to the latest Nielsen survey of convenience stores. By comparison, the sales volume was down 0.8 percent in a four-week period in May.
The recent decline in cigarette sales is likely linked to a June list price hike by the leading tobacco manufacturers. Philip Morris USA raised its list price by $0.11 a pack for several brands. R.J. Reynolds Tobacco Co. and ITG Brands raised their prices by a similar amount.
Despite the recent acceleration in the contraction of cigarette volumes, the rate of decline is considerably lower than it was last year.
“The Nielsen data continues to show the decline in cigarette sales moderating to a pace that is only about a quarter of the rate of contraction in the second quarter of last year—before the much-enhanced attacks on vaping,” David Sweanor, an adjunct law professor at the University of Ottawa, was quoted as saying by The Winston-Salem Journal.
“This is fascinating as there is very strong evidence that current tobacco control policies are leading directly to higher rates of smoking than would have otherwise been the case.”
Meanwhile, sales of electronic cigarettes declined 17.4 percent for the four-week period. The category has struggled since the Food and Drug Administration (FDA) tightened regulations on Feb. 6.
The FDA regulations have depressed the demand for closed pod cartridges.
Traditional cigarettes had $60.27 billion in sales at convenience stores over the past 52 weeks, representing 80 percent of all U.S. tobacco sales, according to the Nielsen report.
Moist snuff and chewing tobacco were at $7.59 billion and 10 percent while electronic cigarettes were at $3.72 billion and 5 percent and cigars at $3.63 billion and 5 percent.
When the first round of stay-at-home orders were issued by numerous governors in mid-March to slow the spread of the Covid-19 virus, the sales volume of traditional cigarettes rose 1.1 percent for the week that ended March 22.
