PITTSBURGH-- Retailers tracking how the FDA “deeming” rules, as currently written, will affect different aspects of the tobacco category, may take heart in that their largest-volume segment in cigarettes will likely feel the least impact, according to a recently released report.
In a study tracking unit-shipping movement, the U.S. Food and Drug Administration’s newly deemed regulations will possibly affect only 4% of the volume c-store retailers sell, compared to other more hard-hit categories such as cigars (49%) and vapor (100%).
Still, the study from Pittsburgh-based Management Science Associates (MSA) released last fall, says discount cigarettes will be more affected than premium brands. Here’s a few cigarette insights from the study …
Premium cigarettes represent a major portion of the tobacco category’s volume at 64%, but the new regulations will only affect 3% of that volume. While it’s still a lot due to the sheer amount of premium sold, it’s one of the least affected subcategories within tobacco.
Discount cigarettes represent a smaller share of total tobacco volumes at 19%, with the FDA rules potentially affecting only 7% of discount-cigarette volume. Though small, it’s still higher than the 3% of premium-cigarette volume potentially affected by the FDA rules. Averaging premium and discount volumes, FDA rules may affect about 4% of the total cigarette volume.
Impact on premium by company
The MSA data also breaks down the premium-cigarette market share by major tobacco companies. Here’s the study’s rankings:
Philip Morris, Richmond, Va., is No. 1 at 59%
R.J. Reynolds, Winston-Salem, N.C. is No. 2 at 31%
ITG Brands, Bristol, United Kingdom, follows at No. 3 at 7%
Santa Fe Natural Tobacco, Santa Fe, N.M. (which is owned by Reynolds American) comes in at No. 4 at 3%.
The FDA rules will affect the volume of all four of these companies by less than 5%, the study said.
At 4%, how much the FDA rules will affect cigarette volume is small compared to the overall category. The new rules will affect 5% of other tobacco product (OTP) volumes, 49% of cigar volumes and 100% of vapor products.