BARRINGTON, Ill. -- Smokeless tobacco posted positive gains across all key performance metrics for the four weeks-ending March 29, 2015, according to the Balvor Retailer Composite (BRC).
Dollars sales increased 8% versus the previous year, aided by moist smokeless tobacco growing at nearly similar rates, snus increasing more than 12%, and loose-leaf tobacco remaining essentially flat for the month. Given the contribution that these segments make to smokeless, moist contributed more than 90% of the growth with the balance coming from snus.
Retail units sold advanced nearly 2% with moist reporting slightly lower growth for the period while snus grew just over 5% and loose leaf declined by 5%.
Penny profits grew between 4% and 5%, adding nearly a nickel of additional profits to each retail unit sold during the month. Higher-weighted average retail prices of 6% more than offset the 1.1 percentage-point decline in gross margins.
Digging into the largest component of smokeless tobacco, moist smokeless, by price segments:
- Premium brands, the largest of the segments on both a dollar and unit basis, saw dollars grow around 2.6% while retail units declined approximately 1%. This is in light of the fact that premium’s weighted average price gap narrowed by more than five percentage points and now stands at 20% versus mid-priced brands.
- Mid-priced brands—those retailing between 40% and 60% above the lowest-priced brand in the mix—experienced the strongest gains in both dollar sales and units sold of more than 22% and 13%, respectively. “Balvor’s mid-priced segment includes sub-brands—like Skoal Xtra—as they retail at a discount to their premium-brand counterparts and as such are captured and reported separately,” David Bishop, managing partner of Balvor, said.
- Discount brands were up nearly 10% on a dollar basis due to mid-single-digit increases in retail prices. Retail units were essentially flat, attributed partly to narrowing price gaps with premium, but more likely to improving economic conditions that motivated demand shifting to the mid-priced segment.
Another potential sign of improving conditions for the tobacco consumer is evident in the strong retail unit sales growth of moist rolls versus moist cans, which are up more than 5% and less than 2%, respectively, compared to last year.
“When a greater number of consumers are able and willing to spend more to save more, that’s generally a good thing for everyone,” said Bishop.
The composite is based on item-level data from 14 convenience-store retailers, representing retailers of different sizes and from various regions across the United States. Barrington, Ill.-based Balvor uses custom segmentation and equalizes chain-wide data to an “average-per-store-week” (APSW) basis. This approach removes much of “noise” associated with changes in store count between periods, minimizes sample bias that would skew toward larger-store operators, and provides more actionable insights.
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