RANCHO PALOS VERDES, Calif. -- Cigarette sales in convenience stores were down 2.4% this year on a per-store per-month basis, and total gross profit was down 4.6%, according to NACS CSX figures comparing January through May 2010 with January through May 2011.
Jeff Miller, president of Miller Oil Co. and NACS chairman, shared those numbers and explained at CSP's 2011 Outlook Conference that last year at this time, the category was emerging from the effects of the SCHIP increase. "We're coming back to a normal trend," he said.
Miller also highlighted some challenges retailers are facing:
Darkness in Canada. As the FDA continues to finalize the details of its regulatory oversight of cigarettes, Miller highlighted the experience of c-store retailers in Canada who contended with not only a big increase in taxes but also the category being forced to go "dark." As a result, 30% of cigarettes sold in Canada today are contraband, Miller said. "Tobacco is a moving target" in the United States, he said.
Store signage. Miller also cited a Department of Justice decision to require cigarette manufacturers to acknowledge they misled consumers on the health qualities of light cigarettes. Retailers would display three 18-inch x 30-inch placards on their counters with the statements. Although the statements are being finalized, they include:
• We manipulated cigarettes to make them more addictive.
• We falsely marketed low tar and light cigarettes as less harmful than regular cigarettes to keep people smoking and sustain our profits.
• We control nicotine delivery to create and sustain smokers' addiction, because that's how we keep customers coming back.
• We also add chemicals, such as ammonia, to enhance the impact of nicotine and make cigarettes taste less harsh.
Miller said that NACS has filed an amicus brief, a court document filed by someone not directly related to a case under consideration, in litigation concerning the statements.
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