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48

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

48

TOBACC USINESS INT RNA IONAL

JANUARY/FEBRUA Y 2015