Tags: cigarette | sales | vaping | illnesses

Cigarette Sales Yet to Rebound as Vaping Slows Amid Illnesses

Cigarette Sales Yet to Rebound as Vaping Slows Amid Illnesses

Wednesday, 02 October 2019 05:33 PM

As the Food and Drug Administration’s plan to restrict the e-cigarette industry takes shape, driven by a spate of vaping-related illnesses, cigarette sales aren’t yet reflecting smokers’ concerns that vapes might not be the safer alternative to traditional smoking that marketing campaigns were built around.

Sales trends for the past month, including the period since the FDA’s Sept. 11 announcement that it would pursue a ban on flavored vapes, suggest that the combustible cigarette market has yet to see a boost in demand following the Centers for Disease Control’s public health warnings about vaping.

Sales of e-cigarettes have slowed, meanwhile, as regulators weigh their options to regulate the nascent phenomenon.

Recent IRI data show that cigarette volume declines for the four-week period ending Sept. 22 stayed “roughly unchanged” from the prior four weeks, at down 7.7%. Piper Jaffray analyst Michael Lavery said he was “surprised that cigarette volume trends did not yet show a more obvious benefit from sequential vapor declines”.

Similarly, Wells Fargo says the latest Nielsen data suggests cigarette industry volume declines moderated only slightly, to down 6.7% in the four weeks ended Sept. 21, against a 12-week contraction of 7%. Analyst Bonnie Herzog continues to believe that more bad news for e-cigarettes, as well as an FDA ban, could still result in improved cigarette volumes, as vapers potentially return to cigarette smoking -- which is “not the FDA’s desired outcome.”

Deferred Demand

Growth in tobacco alternatives “may be deferred a little,” says Bloomberg Intelligence analyst Duncan Fox, adding that several more months of weakness need to be seen “before a panic from tobacco companies.”

As several states move to ban flavored vapes that appeal to teenagers, traditional cigarettes are likely to benefit, but “the growth will not be linear,” Fox says. New devices are likely to spur growth in the industry, and the market for heat-not-burn, vapor and cannabis, will probably remain “the growth engine for a heavily regulated industry for some time.”

For now, e-cigarette sales are already slowing, and Juul, in particular, is suffering from a crackdown after the FDA accused it of illegally marketing e-cigarettes as less harmful than traditional cigarettes. IRI data show an 11% decline in e-cigarette sales in the four-week period ending Sept. 22, while Nielsen suggested e-cigarette sales volumes rose about 38% in the latest 12 weeks, slowing from growth of 48% in the prior period.

The decline was led by Juul, which most “feels the pressure” from the recent crackdown together with increased competition, said Wells Fargo’s Herzog. Juul’s dollar share, which declined sequentially, has been picked up by competing e-cigarette companies Blu, NJOY, Vuse and Logic, she said.

But there are still a lot of unknowns, analysts say. “The numbers have fallen as retailers have stopped selling,” said BI’s Fox. “Whether that is what is actually happening, though, is tough to know,” since sales over the internet or at small shops, for instance, may not be reflected in the data.

“Stronger regulation is needed, fast,” Fox said. “I can see why the FDA is taking some time to get it right. Get it wrong and they may make things worse.”

© Copyright 2019 Bloomberg News. All rights reserved.

   
1Like our page
2Share
StreetTalk
As the Food and Drug Administration’s plan to restrict the e-cigarette industry takes shape, driven by a spate of vaping-related illnesses, cigarette sales aren’t yet reflecting smokers’ concerns that vapes might not be the safer alternative.
cigarette, sales, vaping, illnesses
522
2019-33-02
Wednesday, 02 October 2019 05:33 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved