70
TOBACCO BUSINESS INTERNATIONAL
SEPTEMBER/OCTOBER 2014
Merger Mania
Fuels Debate
By Jennifer Gelfand
R
etailers see the potential for
both positive and negative
developments from the recently
announced deal between RJR and
Lorillard. Many feel that the industry
as a whole will benefit from having a
strong No. 2 contender competing with
Altria, according to results of a retail
survey by Wells Fargo. Respondents
representing more than 30,000 c-stores
in the U.S. expressed the hope that
the merger will bring a more rational
pricing environment, as well as greater
resources and marketing support behind
the emerging vapor category.
However, many also see potential
negatives, including the possibility
of a duopoly squeezing smaller
manufacturers and, as a result, cutting
retail cigarette margins even more.
C-store retailers also continue
to express enthusiasm about the
vapor/tanks/mods (VTMs) category,
despite a slowdown in the growth of
e-cigarette sales. “The outlook remains
robust for the vapor category, [which
is experiencing] 23 percent annual
growth, with VTMs expected to
comprise 50 percent of the vapor mix
in c-stores versus 30 percent today,”
wrote Bonnie Herzog, a senior analyst
in Wells Fargo’s tobacco division,
C-STORE CORNER
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
6%
5%
4%
3%
2%
1%
0%
smokeless Category Volume Growth (Year-to-Year)
Smokeless tobacco category volume continues to grow steadily in c-stores.
5% 5% 5% 5% 5% 5% 5% 5% 5%
% Volume Growth
Actual Figures
Estimated
The prospect
of an
R.J. Reynolds/
Lorillard
merger is
getting mixed
reviews from
c-store retailers.
