CHICAGO-- With regard to the tobacco category, 2016 was hardly a year for smooth sailing. Retailers spent the year under a cloud known as the U.S. Food and Drug Administration’s (FDA) “deeming” regulations, which left them no answers once the rules went into effect last summer.
Then the November elections brought a $2-a-pack tax hike to California, potentially triggering price increases on list contracts from the major tobacco manufacturers. The other revelation post-election was the legalization of recreational marijuana sales in four states—tangential to c-stores, but still a trend to watch.
Then, finally, the elephant in the room. Well, more accurately, elephants swallowing elephants, as talk of mergers within the major tobacco manufacturers moved to the forefront.
As the August date for the FDA’s deeming rules came and went, retailers assessed the repercussions of the expensive and complex compliance steps. Ultimately, the future looks bleak for new products in the cigar, OTP (other tobacco products) and vaping categories.
2. California raises cigarette taxes
While four states were considering cigarette tax increases this election, California was the only state to pass its $2-per-pack proposal.
3. Four states legalize recreational pot sales
Following a larger trend, citizens in four states took to the ballot boxes and chose to legalize the sale of recreational marijuana.
4. NJOY’s bankruptcy
Potentially a sign of the times, e-cigarette maker NJOY filed for bankruptcy, citing falling demand for its products and the looming compliance to FDA regulations.
5. Big tobacco to get bigger
London-based British American Tobacco initiated efforts to buy Winston-Salem, N.C.-based Reynolds American, signaling a move to Big Tobacco getting bigger.