Altria reports 5% decline in cigarette volume for Philip Morris USA in 2Q14

[Bill Godshall]

Altria reports 5% cigarette volume decline by PM USA in 2Q14, 1.2% smokeless tobacco volume increase by USSTC
http://www.altria.com/Media/Press-Releases/Pages/PressReleaseDetails.aspx?reqID=1949623

Although Reynolds and Lorillard will report their 2Q14 results next week, Wells Fargo's Bonnie Herzog reported that overall cigarette volume declined by 4.5% in the US in 2Q14.

Of course, this wouldn't have happened if not for e-cigs, which is precisely why Altria has been urging FDA to impose the deeming regulation since 2010, and to impose the deeming regulation on e-cigs since 2011.

Altria also reported that its new MarkTen e-cig (a cigalike) is now being sold by 60,000 retailers.

 

[DrMA]

Wow! this kind of decline in cigarette volume hasn't been seen in decades. I'm convinced it is entirely attributable to ecigs and I venture a guess that Altria knows it too.

 

[NorthOfAtlanta]

Don't forget that it will mean a 4.5% reduction in MSA and tax payments if Bonnie Herzog's figures are correct. I also would be curious as to what has happened to NRT sales during that period after what happened to them in France.



BT, BP and BG's reaction:

 

[Kent C]

And... NRT sales dropping (in EU, anyway) from earlier leveling in 2012

Electronic Cigarettes Affecting Nicotine Replacement Therapy Sales | E-Cigarette Reviews and Rankings

... and expected lower for 2014 and 2015....

 

[Jman8]

Altria reports 5% cigarette volume decline by PM USA in 2Q14, 1.2% smokeless tobacco volume increase by USSTC
http://www.altria.com/Media/Press-Releases/Pages/PressReleaseDetails.aspx?reqID=1949623

Although Reynolds and Lorillard will report their 2Q14 results next week, Wells Fargo's Bonnie Herzog reported that overall cigarette volume declined by 4.5% in the US in 2Q14.

Of course, this wouldn't have happened if not for e-cigs, which is precisely why Altria has been urging FDA to impose the deeming regulation since 2010, and to impose the deeming regulation on e-cigs since 2011.

...and the black market. Don't forget about that piece of the puzzle.

 

[Hattivatti]

Bear in mind that ANTZ's will take all the credits of this decline, not e-cigs.

 

[Bill Godshall]

NorthofAtlanta wrote

Don't forget that it will mean a 4.5% reduction in MSA and tax payments if Bonnie Herzog's figures are correct

While cigarette tax revenue declines at the same rate as cigarette volume declines, the MSA has a very complex mathematical equation (that includes a cigarette volume decline adjustment and a 3% annual inflationary adjustment, the latter of which increases payments to states) to determine the amount of money each year that different participating manufacturers pay in, and the amount of money each of the 46 states receives.

Although MSA payments to states are declining, its by a lesser amount than cigarette volumes have declined (as the manufacturers now pay about $.55/pack into the MSA kitty, but they only paid $.35/pack from 1998-2000).

 

[Jman8]

Bear in mind that ANTZ's will take all the credits of this decline, not e-cigs.

Forgot about that. ANTZ will take the credit for the decline citing their work as only reason that needs to be considered. As much as I utterly despise ANTZ rhetoric and most of their tactics, I still think they would be part of the reason for the decline.

So, the list for the decline (in legal sales) would be:

- existence of eCigs
- black market sales of combustibles
- ANTZ work / BP's NRT's
- existence of OTPs
- perhaps something else

 

[twgbonehead]

...and the black market. Don't forget about that piece of the puzzle.

Not to mention RYO. However both of these have been around for years, and cig sales haven't budged downward.

The timing would suggest that it is e-cigs that are making the difference? Would be nice to know for sure!

 

[Kent C]

...and the black market. Don't forget about that piece of the puzzle.

Depending on what exactly you mean by the black market, some of those sold on the black market were produced and sold to wholesalers/retailers by PM, stolen and sold on the black market. I don't know how PM would figure that, but I know most department stores, for example, have a pretty good idea on the percentage of shop lifting and take that into account when doing their finances, where a decline is sales would already account for that.

RYO would affect manufactured cigarette sales but figures on overall 'tobacco sales' (including smokeless) may not have dropped.

 

[Bill Godshall]

It appears that about half of the cigarette volume decline since 2010 has been due to smokers switching to vaping.

 

[Stosh]

It appears that about half of the cigarette volume decline since 2010 has been due to smokers switching to vaping.

We keep hearing how e-cigs have become a billion dollar industry, and if it's not from non-smokers taking them up (and the stats say it's not) then the drop in cigarette sales would have to be expected.
You can't put an e-cig and a regular cig in your mouth at the same time, and there's just so much "smoke break" time in a given day.

 

[AndriaD]

It's funny... my regular brand is Virginia Slims, an Altria brand; from 3rd-wk Feb till 3rd week June, I bought no cigarettes. A few years back, they were sending me coupons all the time, but they had stopped doing that, for the last couple years. I've been smoking about a half pk a day since June 23, and last week, for the first time in a couple years, they sent me some cigarette coupons -- so for the last 2 pks I intend to buy, I got $1 off a pack! Haha! I love it. Considering I've been helping to support that company for over 30 yrs, it's about time they did something to support me! But I'm sure they never would have imagined losing a 30+ yr customer -- until the stupid things finally killed me, that is.

Andria