Tobacco Consumers Shift to Murphy USA, CEO Says

Downtrading to cheaper cigarette brands is minimal
Photograph: Shutterstock

EL DORADO, Ark. —Tobacco consumers are leaving other retailers to instead shop at Murphy USA. President and CEO of the El Dorado, Ark.-based chain Andrew Clyde shared this insight and more during the company’s second-quarter earnings call on July 28.  

“New tobacco customers seeking greater value or shifting retail brands are coming to Murphy USA while existing customers really don't have a better value option to trade down to as targeted promotional activity helps insulate the category,” Clyde said. “As a result, we are not seeing a negative impact in the broader downtrading phenomenon making headlines.

There is a very modest 1% mix shift from premium to discount cigarette brands, he said, while customers are purchasing about 5% fewer units compared to the prior year.

“While individuals may participate in minimal downtrading across units in categories, we are seeing more than enough retailer downtrading where Murphy benefits to offset it,” Clyde said.

Those new customers tend to be sticky, or returning customers, once Murphy’s converts them to the brand and communicates with them through the Murphy Drive Rewards loyalty program to increase and reinforce their loyal behaviors, he said.

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