MarkTen XL Sparks Electronic-Cigarette Growth

Nielsen data also suggests weak cigarette volumes for ITG

NEW YORK -- The latest Nielsen data included welcoming news for a somewhat slumping e-vapor category: For the four week period ending May 21, electronic-cigarette dollar sales grew 3.2% (compared to a 12-week trend of 3.4% declines) and unit sales grew 10% (compared to a 12-week trend of 2.3% growth).

MarkTen XL

“This marks the first time we've seen dollar-sales growth for the category since July 2015,” Cowen Group analyst Vivien Azer wrote in a research note.

Any growth is certainly positive, but the Nielsen numbers may be skewed by the recent expansion of Altria Group Inc.’s new MarkTen XL. Though Reynolds American Inc.’s Vuse retained its No. 1 position in terms of dollar and unit sales, Altria saw its dollar and unit sales grow by triple digits in the last four weeks. Nielsen shows MarkTen is up 166% in terms of dollar sales (accounting for 16% of the e-cig category) and 195% in terms of unit sales (accounting for 20% of the e-cig category).

“All channel e-cig dollar sales took an abrupt turn for the better driven entirely by distribution gains by MarkTen XL,” wrote Wells Fargo analyst Bonnie Herzog. “Altria was the big surprise, posting a 9.8 point gain in dollar share to 16%.”

The news was not as great for combustible cigarettes, with unit sales down 3.1% (compared to a 12-week trend of 2.1% declines) and dollar sales growing 0.5% (compared to a 12-week trend of 1.4% growth).

“As should be expected, cigarette volume is showing signs of deceleration,” said Herzog. “As such, we continue to expect cigarette volumes to be down closer to 2% declines.”

While Altria and Reynolds’ brands both performed on or ahead of these trends, Nielsen showed sales at ITG Brands LLC are continuing to decelerate.

“Nielsen data suggests IMT continues to post significant volume declines including a 6.2% decline in the current four-week period, on top of 1.5% declines last year and 3.7% declines in the April period,” Herzog wrote. “However, Nielsen is still missing two (ITG) SKUs.”

Herzog noted that ITG’s weak numbers have been “driven by sizeable volume declines in its top brands,” specifically Winston (down 2.8%), Kool (down 1%) and Maverick (down 7.9%).  By comparison, Reynolds’ cigarette units fell 1.9% and its dollar sales grew 2.4%; Altria’s cigarette units fell 2.8% and its dollar sales grew 0.2%. 

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