22
TOBACCO BUSINESS INTERNATIONAL
MAY/JUNE 2014
NEWS & TRENDS
MAY/JUNE 2014
Royal Agio Cigars and DrewEstate Partner
Royal Agio Cigars and Drew Estate Tobacco Company enter exclusive distribution agreement.
Wells Fargo analysts recently re-
ported that based on their analysis
of the Henley Vaporium in Manhat-
tan’s SoHo neighborhood, e-cigs are
losing share to vapors/tanks/mods
(VTMs) in the e-vapor market. This
development raises questions as to
“how the Big Three will or could get
involved, especially given part of the
vaping culture is a disdain for Big To-
bacco and not wanting to be associ-
ated with smoking or be considered
a smoker,” says a report released
by the analysts, who added that the
“cig-alike e-cigs as they are today are
already becoming ‘your father’s e-
cig,’ [making it] critical that ‘cig-alike’
technology continues to evolve to
bridge the performance gap relative
to VTMs.”
Other findings by analysts based on
a recent Wells Fargo survey of retailers
and wholesalers suggest that:
1. U.S. cigarette industry volumes
are expected to be down 4.5 percent in
the first quarter of 2014 (1Q14).
2. Of the survey respondents, 63
percent saw a slightly more competi-
tive environment in 1Q14 compared to
51 percent in 4Q13, while 44 percent
reported an increase in down-trading
pressure on premium cigarettes in
1Q14 compared to 41 percent in 4Q13.
3. Wells Fargo sees the most upside
potential for Lorillard in 1Q14 from the
continued strength of Newport Menthol
and “incrementality” of Newport Gold.
4. Lorillard’s 13-week extension to
June 27 of its Newport Gold promotion
is expected to help drive awareness
and trial.
5. The next cigarette list price in-
crease is expected to be about six cents
per pack and occur in the week of June
2, led by Philip Morris USA, and net
price realization for 2014 is expected to
be a “flattish” four percent.
6. The e-cig category is slowing
down, but its growth outlook remains
robust with its shelf space increasing
18 percent year over year.
7. More than 40 percent of retailers
are holding off on carrying additional e-
cig brands in anticipation of Vuse (RAI)
and MarkTen (Altria).
8. MarkTen, currently sold in Arizona
and Indiana, is expected to be shipped
to 25 additional Western and Midwest-
ern states starting June 2nd.
9. 2014 could be a pivotal year for
the e-vapor category as the vapors/
tanks/mods sub-segment is growing at
twice the rate of the overall category,
and 65 percent of the respondents said
vape shops are either currently or soon
could be impacting c-store traffic.
Highlights FromWells Fargo’s Report on Tobacco Trends
E-cigs are losing share to tank-style products, and more.
Under a new agreement, Drew Es-
tate will market, sell and distribute
all Royal Agio Cigar brands in the
United States. The arrangement
expands Royal Agio Cigars’ reach
across the broad channels of to-
bacco distribution throughout the
U.S. and provides the opportunity
to market Panter, Mehari’s and Bal-
moral brands.
“Although our companies are
quite different, there was an im-
mediate chemistry between our
two family businesses,” explains
Boris Wintermans, CEO of Royal
Agio Cigars. “Both companies aim
for creating purposeful brands for
the long run and are committed
to making a difference. We both
have the ambition to expand in
the U.S. market and the Royal
Agio portfolio complements the
Drew Estate brand portfolio per-
fectly.”
“Drew Estate Tobacco Company,
including both the Drew Estate
premium division and the popular
market side called ‘Half a Sand-
wich,’ has tremendous respect for
the Royal Agio team and the special
family tradition behind all of their
fine cigars,” adds Jonathan Drew,
co-founder of Drew Estate.
