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TOBACCO BUSINESS INTERNATIONAL
SEPTEMBER/OCTOBER 2014
retailers selling cigarettes at lower prices
due to manufacturer programs, the level of
competition noticeably increased in 2014,”
reports Randy Silverman, president of New
Castle, Pennsylvania-based Klafter’s,with 15
stores.
Through the 2015
Looking Glass
While no tobacco outlet retailer is
equipped with a crystal ball, plenty have
envisioned good, bad and indifferent
business outlooks for 2015.
Davoli is one who is looking forward to a
great year, expecting continued growth and
increased market share, although he does
anticipate increased costs in health care and
insurance.
Mahoney agrees and recognizes his
Puff Super Value business is “right on the
employee threshold number of Obamacare,
which is an obvious cost increase,” he says.
“The cost increase is concerning for small
business owners of 50 or 60 employees
because it is such a large number. The
government still hasn’t exactly laid down the
final plan, so we are waiting around to see
where we stand with Obamacare.”
Positively speaking, Mahoney believes
his business will continue to grow in 2015,
especially in the e-cig/vapor category. His
biggest fear is the state/federal government
imposing new taxes and new regulations on
vapers. “But the good news is, our industry
always adapts to government regulations and
taxes,” he tells
TBI
.
Wild Bill’s plans to continue to test the
waters of its Mr. Vapors section, adding it in
three to five stores in 2015.“We will continue
to add vape lounges and have monthly vaping
contests and sales,” says Samona. “We are
creating a true vaping experience for our
customers.”
Nothnagel has very little interest in R.J.
Reynolds (RJR) for 2015; in fact, he has
eliminated RJR products in all locations.
“Their new EDLP program is not a fit for
my retail sites,” he says. “We are a tobacco
outlet, and being competitive and selling
products to adult consumers at the lowest
prices available is exactly what we do. RJR
wants us to raise the prices to a Pall Mall
and compete with their brand, thus cutting
our maximum opportunity cost and profit.”
His wish is that R.J. Reynolds will become
a retail business partner of his again, but for
2015 he is not holding his breath.
Meanwhile, Metzinger has a positive Big
Tobacco outlook for 2015. “The contract
structure for Philip Morris has opportunities
for growth— cigarettes still drive the train,”
he tells
TBI
. “Introduction of limited-risk
products in 2015 may be a game changer,”
he adds.
Generally speaking, “There are so many
entities against the tobacco business that
we have to fight and stand up to,” rallies
Schmitz. “But we the tobacco business will
survive, we just need to be willing to make
many changes and understand that we have
to adapt to whatever happens in the market.”
Instead of looking through a crystal ball,
Silverman has pressing industry questions
on his mind. He feels the answers to them
might possibly shape the year, namely:
• How will the FDA handle the spectrum
of nicotine issue?
• How will the merger of RJR and
Lorillard impact RJR’s contracts and the
other manufacturers?
• What will Imperial Tobacco
(Commonwealth/Altadis) do with the
brands they are acquiring?
• Will individual counties and/or cities be
able to enact their own excise taxes similarly
to how Philadelphia instituted a $20 per-
carton tax to fund its schools?
• Will major manufacturers continue to
offer programs to drive the retailers’ margins
down?
Only time—the months of 2015 and
perhaps beyond—will tell.
TBI
Top-to-Top Comparison
Compared to 2014’s list, here’s how the tobacco outlet industry’s
Top 50 chains add up for 2015:
• In 2015’s list there are 2,265 total stores, versus 2,223 total stores in 2014’s list, a
slight increase of nearly two percent (which is in keeping with last year’s increase
and the prior year’s increase)
• No chain is new to this year’s list, although some chains’ places have shifted
• 15 chains (30 percent) have increased their store count by at least one store since
the 2013 survey; six (12 percent) have increased by more than one store
•Nine chains (18 percent) saw store declines; six (12 percent) reduced their count
by only one store
•26 chains (52 percent) have stayed the same in store count
• 82 percent of
TBI
Top 50 chains have either kept a consistent store count or
increased it; this is down more than 10 percent from last year’s 94 percent
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TOBACC USINESS INT RNA IONAL
JANUARY/FEBRUA Y 2015