Pandemic Gives Cigarettes a Chance to Recover – CSPDailyNews.com

Pandemic Gives Cigarettes a Chance to Recover – CSPDailyNews.com

Cigarettes

Photograph: Shutterstock

CHICAGO — The coronavirus pandemic has forced many changes to market dynamics and consumer trends in every aspect of convenience retailing and beyond, and the tobacco category is certainly no exception.

In this case, unemployment is an overriding concern as it forced smokers to trade down to discount brands as the stress of the situation has many people smoking more, according to analyst Nik Modi.

“Unemployment and the implications on trade down, we’re already seeing it,” said Modi on a recent CSP Tobacco Update webinar. “We see a pretty consistent increase” in the sale of discount cigarettes.

Specifically, Modi, managing direct and analyst for RBC Capital Markets LLC, New York, said discount cigarettes’ share of the market grew by 10 points in March and another 31 points in April.

“This is something that I think is going to be a big topic of focus for a lot of the big cigarette players,” he said. “We already know Altria is vigilant to this and trying to be proactive with price gaps. We think Marlboro Special Blend will play a significant role here to help them combat from the trade-down pressure. This is happening right now because we don’t have a lot of stimulus money that is being circulated into the economy to the smokers that need it.”

On the plus side for retailers, “you are seeing an improvement in household penetration for cigarettes,” Modi added.

Data from Numerator, a market intelligence firm based in Chicago, shows that over the
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