BOULDER, Colo. -- The stars are aligning. Everything from taxation to manufacturer consolidation, new-product development to changing societal norms is converging in a multi-punch wallop that according to one observer will initiate more change in the tobacco industry over the next five years than we have seen in the past 20.
Industry consultant Kit Dietz, along with co-presenter Nik Modi, addressed retailers gathered for the CSP Tobacco Category Roundtable held late last month, saying that the changes will affect the entire supply chain and are unfolding [image-nocss] sooner than expected.
Noting how pending taxation and declines in volume are forcing manufacturers to change their pricing models, Dietz said these developments can impactdistributors who relied onpromotional money from the big tobacco companies. There are consequences for distributors, retailers and every manufacturer of consumer products that does business in the convenience channel, he said.
[Editor's Note: Since the roundtable concluded, Philip Morris USA announced a decrease of 50 cents percarton in itspromotional program for certain brands.]
Dietz, of Dietz Consulting LLC, Huron, Ohio, addressed 11 retailers and 17 suppliers gathered for the forum, which was held in tandem with a corporate and franchisee convention put on by Boulder, Colo.-based Smoker Friendly International.
Attendees for the CSP event sat in on Smoker Friendly general sessions and then broke off into a discussion lead by Dietz and co-panelist Modi, of UBS Investment Research, New York. Modi addressed issues currently putting pressure on the tobacco industry, including changing demographics, global influences and the cultural shift away from smoking.
For a picture of what the United States may see, Dietz turned the discussion to Canada, which has enacted many prohibitive measures including extensive taxation and heavy restrictions on merchandising and labeling. Such extensive regulation and taxation has lead to increases in black market activity, he said.
As the United States moves in this direction, especially with regards to new taxes, Big tobacco is now the government.
Earlier in the day, attendees sat in on Smoker Friendly sessions on legislative issues and general tobacco topics. Panelists discussed Congressional measures that could increase the regulatory powers of the Food & Drug Administration (FDA) over tobacco products, as well as talk of an increased federal excise tax.
About 350 attendees were present for the Smoker Friendly convention and trade show, which was held from August 27-29 in Boulder, Colo.
For more from the convention, watch for next week's CSP TV program, which will include commentsabout challenges and opportunities in the tobacco category fromZane Power of ConocoPhillips, Tom Briant of NATO and UBS Tobacco Analyst Nik Modi.
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