NEW YORK -- Though many analysts predicted convenience store cigarette sales would taper off this winter due to the "New Year's effect" of resolutions to quit (full story here), c-store cigarette sales continued to grow in February. According to Nielsen, c-store dollar sales increased by 5.9% in the four weeks ending Feb. 14, 2015 (up from 3.8% last month); unit sales grew by 2.9% (vs. 0.7% last month).
"We believe c-store unit sales have been aided by CVS's no longer selling tobacco," Wells Fargo tobacco analyst Bonnie Herzog wrote in a research note. "Further, lower gas prices continue to have a favorable impact on the category."
Lorillard Inc., Greensboro, N.C., achieved a 12-month high in terms of dollar sales growth (up 6.2% this month); Lorillard's unit sales also grew by an industry-leading 4.2%. Richmond, Va.-based Altria Group led the pack in terms of dollar sales with a 6.4% increase and grew its unit sales by 3.5%. Winston-Salem, N.C.-based Reynolds American Inc.'s cigarette dollar and unit sales grew by 5.5% and 2%.
On the e-vapor side of the business, sales growth continued to decelerate--although Herzog noted sales remained positive for the sixth consecutive period. In the four weeks ending Feb. 14, 2015, c-store electronic cigarette dollar sales were up by 2.3%, with unit sales growing by 27.9%. Pricing continues to decline, down 20% from last month.
"E-cig year-over-year pricing has been negative for 15 consecutive periods now," Herzog said. "We believe it's at least partially due to difficulty in capturing SKUs given the rapidly evolving vapor category and proliferation of vapors/tanks/mods and refills which tend to have a lower retail price/refill."
Reynold's Vuse continued to dominate, capturing 32.7% of c-store dollar sales and a 40.4% unit share. As in previous months, Lorillard's blu and the Pompano Beach, Fla.-based Logic Technologies Inc. split the No. 2 and No. 3 positions: blu had the second best dollar share (22.1%) and third best unit share (13.6%), while Logic was third in dollar share (20.3%) and second in unit share (18.8%). Rounding out the top five were Altria (9.5% dollar share, 11.9% unit share) and the Scottsdale, Ariz.-based NJOY (4.9% dollar share, 3.3% unit share).
"While we remain bullish on vapor long-term, we acknowledge some near-term profitability headwinds as companies continue to invest in the category," Herzog said.
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