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Tobacco Category: Cigarette Sales, Trips, and Units Trends

Cigarette purchases are a major driver of c-store revenue and trips throughout the year. Today we analyze cigarette sales, trips, and units trends with a focus on pack size and pricing.

If you don’t have the time today to dive deeper, here’s a brief snapshot of the key takeaways:

  • Cigarette cartons units sold growth vs. year-ago increased as much as 21% while single pack units sold growth was comparatively flat
  • Retail cigarette prices in 2020 are growing at 5% per year
  • Newport and Pall Mall lead single pack sales growth vs. year-ago at 10%

Carton Units Sold Growth Spiked in the Crisis
Carton units sold vs. year-ago grew beginning early in the crisis, showing an increase from 8% to 21% from March to June. Similarly, single pack sales were flat to negative. The increase in carton units sold reflects consumers limiting trips away from home during the pandemic. We have noted a similar pattern previously in beer (check it out here) and packaged soda (read more here). This trend appears to be moderating.

Single Pack Retail Prices Continue to Rise
Cigarette manufacturers continue to test price elasticity with wholesale price increases. The average retail price of a single pack of cigarettes has increased from $6.15 in January 2019 to $6.74 in August 2020, representing a 5% increase annually. Naturally, average prices mask a significant range of prices across brands, states and retailers, amongst other factors such as promotions and taxes, but the trend at the register is clear.

Single Pack: Newport and Pall Mall Lead Sales of Selected Brands
Digging more deeply into single pack sales, we see a consistent pattern across four established cigarette brands: trips are down from 2019. Newport and Pall Mall (RJ Reynolds) and to a lesser degree Marlboro (Altria) have all grown single pack sales and units sold vs. year ago levels. Note that some of this growth is a function of price increases discussed earlier and in many cases, established premium and discount brands have outperformed the category in 2020. In short, not all brands are experiencing 2020 in the same way.

Tobacco remains a critical test for retailers in 2020 as a massive category reflecting multiple forces of potential disruption: consumer behavior, regulatory, and category innovation trends. 

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