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TOBACCO BUSINESS INTERNATIONAL
MARCH/APRIL 2016
Traditional Cigarettes
Gaining Ground, E-Cigs Slacking
T
he renaissance traditional cigarettes have been experiencing is continuing, according to the results
of Wells Fargo’s Tobacco Talk survey of tobacco retailer and wholesaler contacts, representing
more than 30,000 U.S. retail locations. Overall, the “combustible cigarette environment remains
healthy given strong industry pricing power of +6 percent in Q4 [2015] driven by a stronger tobacco
consumer, continued up-trading to premium brands, and lower retail gas prices,” reports Wells Fargo’s
Bonnie Herzog, who also cites solid industry volume.
Combustible Commotion
While more than 25 percent of retailers participating in the survey reported having recently signed
up for R.J. Reynolds’ Every Day Low Price (EDLP) program, some respondents expressed resentment
about being pressured to join. As one retailer stated, “I have not been on a program with Reynolds in six
years, but with the new Newport deal we feel we have no option.”
“The contract is designed to control fourth-tier brands,” said a retailer who opted not to sign up. “Why
would we allow Altria to control the top-end of pricing and RJR [to] control the bottom?”
Cigarettes, Vapor and More
CATEGORY MANAGER
Retailers on Reynolds
“How Will Newport Addition Affect Retailer EDLP Participation?”
Sixty percent of retailers believe EDLP participation will increase now that
Reynolds has added Newport to its EDLP portfolio
Increase
Decrease
Stay the Same
60%
50%
40%
30%
20%
10%
0%
52%
56%
34%
7%
14%
37%
Source: Wells Fargo, Tobacco Talk retail survey
1Q15
4Q15