NEW YORK -- The first quarter of 2013 has come and gone, and with it, a UBS-CSP survey of a variety of c-store operators--whose sizes ranged from one store location to more than five hundred--on a range of tobacco-related issues. The exclusive study brought good news for industry leader Philip Morris and even better news for the growing electronic cigarette segment.
When asked which of the Big Three premium cigarette brands would gain the most market share in 2013, the majority (54%) of retailers surveyed named Marlboro; By comparison, 27% picked Camel and 18% picked Newport.
"Philip Morris is the true leader in this business," said one retailer. "Everyone else tries to follow but they are not able to promote like Philip Morris."
While many agreed that history shows Philip Morris as the industry leader, several retailers commented on the company's MLP program, believing that's truly behind an increasing market share.
"MLP will continue to drive share growth," said one respondent. "It's programmed into the contract," said another. "You either go along with it or disadvantage yourself in the market."
Still, the majority of survey respondents expected only modest market share for Philip Morris' new offerings: 60% anticipate Marlboro NXT (the company's capsule cigarette) to have a .25-.5% market share by the end of 2013; 71% believe Marlboro Southern Cut will have a .25-.5% share.
"This is tough; I think they were too late in response for Camel Crush," one retailer wrote. "I don't believe there is a huge market of consumers who want both full flavor and menthol at the same time. Besides based on reviews, it seems like Camel Crush was a better choice."
Meanwhile, retailers see more opportunity for Marlboro Southern Cut--but only if Philip Morris puts some promotional support behind the brand.
"Right now it is about .3%; if they do some promotion, it can go up toward 1%," said a respondent. "Southern Cut has been steady out of the gate," said another. "I expect Altria to maintain or increase the level of promotional spending and advertising on this brand style."
E-Cigarettes
The news was even more positive for e-cigarettes: more than three quarters of surveyed retailers are carrying at least one e-cigarette in their stores and over half are carrying more than one brand. The study results showed retailers are trying a multitude of e-cigarette brands, although blu and NJOY are leading the way.
"Blu is going like gangbusters right now," said one retailer. Another said he liked the Lorillard-owned company's "combination of good merchandising and marketing."
Meanwhile, retailers like the wide availability and distribution of NJOY, along with the fact that the new NJOY Kings product "feels and looks like a real cigarette."
While retailers were somewhat mixed on which brand will lead the pack, they largely agreed that the segment is here to stay: 95% said they believe electronic cigarettes will continue to grow as a category. When asked to explain their opinion, respondents cited the high cost of cigarettes, smoking bans and health concerns as reasons for continued growth.
One retailer summed up the appeal of electronic cigarettes by saying "whether is it a smoking cessation aid or just helping the customer deal with situations where they can't smoke a regular cigarette, it keeps getting trials and repeat customers."
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