OAKBROOK TERRACE, Ill. -- We’re approaching the most wonderful time of the year! The days are longer, the weather is warming after the chill of winter and, in less than five weeks, many of us will board Vegas-bound planes for the tobacco industry’s version of spring break. Yup, I’m talking about the 2016 NATO Show.
This year marks my fifth NATO Show and, as always, I’m expecting quite a bit of news to break. In 2012, it was the boom of electronic cigarettes, highlighted by Lorillard’s acquisition of blu eCigs (the first major tobacco company to get in the business); in 2013, Mitch Zeller was appointed director of the U.S. Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP) weeks before the show; in 2014, we just barely missed the long-awaited announcement of the FDA’s proposed deeming regulations; and in 2015, it was all about the soon-to-be-finalized merger of Reynolds and Lorillard.
Here are six questions I’m hoping the 2016 NATO Show can answer:
1. What’s the over/under on a deeming-regs announcement? Easily the most pressing question of the year: When will the FDA announce the final deeming regulations on cigars, electronic cigarettes and other unregulated tobacco products? Whether it’s before or after Zeller’s 2016 NATO Show appearance, those regulations will be a hot topic at the conference.
2. How much worse can it get on the local level? While Zeller’s session will focus on federal regulations, we’ve also seen a major increase in regulatory activity on the state and local levels. In the past year, more local legislatures have attempted (and often succeeded) in raising taxes, upping the minimum purchase age and enacting flavor bans. Look to NATO executive director Thomas Briant to give an overview of these local regulations, as well as insights on how retailers can best fight back, during his "State of Tobacco and OTP" general session.
3. Which channel poses the biggest threat? Don Burke of Management Science Associates (MSA) has been something of a guru in breaking down the biggest competitive threat to tobacco sales. In 2014, he cited the rising dollar channel as a valid competitor. Last year, he teased the data from MSA’s vape-shop survey. Which channel will he zero in on this year?
4. Will the cigarette renaissance continue? The industry has now enjoyed more than a year of the “flat is the new up” cigarette trend, which I expect to feature prominently in Wells Fargo analyst Bonnie Herzog’s general session. We know the data from 2015, but will “flat is the new up” continue into 2016 and beyond?
5. What are this year’s “it” product trends? The NATO Show isn’t just about the educational sessions; it also offers a look at the latest products on the show floor. In years past, we’ve seen the rise of vaporizers, hemp and heat-not-burn products. I’m excited to hit the floor and scope out the hot trends for 2016.
6. Will we see e-cig shrinkage? Every year, I’m amazed at the growing presence of e-cig and vaping companies at the NATO Show. Many analysts have predicted that the looming cost of FDA compliance will result in the consolidation of the industry. Will 2016 mark the first year that there are fewer e-cig companies at NATO than there were the year before?
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