Tag: cigarettes

Susan Cameron Reynolds (CSP Daily News / Convenience Stores / Tobacco)
Tobacco
Company also vows to fight $23.6 billion damages in Florida case
Electronic cigarette (CSP Daily News / Convenience Stores / Tobacco)
Tobacco
Many N.C. doctors recommend e-cigarettes for cessation, another study reveals

Data Uncovers the Main Cause of Cigarette Volume Decline

Published in: 
RBC weighs e-cigarette competition vs. price increases

NEW YORK -- Since early 2013, cigarette volume declines have averaged 4.1% per quarter and have recently accelerated to down 4.5%, according to new data from RBC Capital Markets, New York. Historically, cigarette volumes have declined in the range of 3% to 4%, with pricing averaging around +4%. “Many investors have expressed concern about the above-trend decline rate.” The main culprit is typically believed to be the e-cigarette category, RBC reported in a recent Picture of the Week report.

 While we have no doubt the emergence of e-cigs has had some impact on overall cigarette consumption, we believe today's higher rate of decline has more to do with higher than expected price realization,” RBC said. “Initially, we had expected industry volumes to be down about 4% this year on +4% pricing; however, we have seen price realization closer to 6%.”

When adjusting for the increased pricing using historical price elasticity of -0.35, RBC noted that “volume declines have actually moderated to within their historical range. Said another way, we believe it is the increased price realization that is driving the higher volume declines vs. consumer shift to e-cigarettes.”

Here, a look at RBC’s model on cigarette volume decline rates adjusted for higher prices.

Cigarette Volume Decline Rates Adjusted for Higher Price Realization

  1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Pricing change 3.0% 2.8% 3.5% 2.7% 3.8% 4.3% 3.8% 4.0% 4.6% 5.9%
Volume change -2.5% -3.0% -3.5% -3.0% -4.5% -4.0% -3.5% -4.0% -4.5% -4.5%
                     
Volumes adjusted for elasticity -2.8% -3.4% -3.7% -3.5% -4.6% -3.9% -3.6% -4.0% -4.3% -3.9%
   2-year average -3.1% -3.6% -3.9% -3.2% -3.7% -3.6% -3.6% -3.7% -4.4% -3.9%
   3-year average NA NA NA NA -3.6% -3.7% -3.6% -3.5% -3.9% -3.7%

Source: RBC Capital Markets

Note: Pricing calculated as the average of the big 3 net realized pricing. Volumes are industry adjusted volumes. Volumes adjusted for elasticity calculated as the total industry volume growth rate less the impact of incremental pricing above or below the historical average of 4% using an elasticity of -0.35.

Source: 
RBC Capital Markets
Pantry Kangaroo Express (CSP Daily News / Convenience Stores)
Corporate News
Foodservice, smokes stoked sales; dispensed beverages need work
Menthol Cigarettes
Tobacco
Financial analyst breaks down what FDA panel decision means for Reynolds, Lorillard and Imperial
Camels and Newport Cigarettes
Tobacco
A CSP tobacco survey showed that retailers were incredibly divided on whether this potential new No.
Reynolds American Vuse digital electronic cigarette (CSP Daily News / Convenience Stores / Tobacco)
Tobacco
Continues to pin hopes on digital vapor cigarette, despite "drag".
U.S. Congresswoman Rosa DeLauro
Tobacco
Sets April 2015 deadline to ban sales to minors
Menthol cigarettes
Tobacco
Appointment of tobacco panel members ruled "arbitrary and capricious”.

Pages