Demand for traditional cigarettes fell only slightly during October despite higher prices from the top tobacco manufacturers, according to the latest Nielsen convenience store report released last week.
There was an overall 1.5% industrywide decline in sales volume for traditional cigarettes, according to the report for the four-week period that ended Oct. 31.
On Sept. 28, R.J. Reynolds Tobacco Co. raised by 13 cents the list price that wholesalers pay manufacturers for their products. The increase typically is passed on to customers at retail. Altria Group Inc. matched the price increase during October.
Goldman Sachs analyst Bonnie Herzog has cautioned in her reports in recent months that there has been increasing consumer demand for lower-priced traditional cigarettes during the pandemic. She referred to the trend as “downtrading” from many top brands.
Cowen & Co. analyst Vivian Azer said consumer downtrading in traditional cigarettes “remains a central theme in the U.S.
“This trend slowed down in the second quarter that could be attributed to increased consumer disposable income, primarily from stimulus checks and lower gas prices. We expect that the trend will be relatively short lived with the expiration of the ($600 weekly unemployment benefit) federal stimulus.”