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There is a bit of good news in the economy for convenience store retailers, according to Nik Modi, sector analyst at New York City-based UBS Securities LLC, during CSPNetwork's Tobacco Update CyberConference. . . .

Food prices have come down slightly in the past year, and gasoline prices have nearly been cut in half, loosening the wallets of 60% of cigarette smokers—who make less than $40,000 annually. According to Modi, last year at this time gasoline prices were about $3.74 per gallon, and they are currently around $2.24, with the savings equating to the price of 209 packs of Marlboros or 142 tins of Copenhagen per year.

Modi also addressed the big question on most tobacco retailers' minds, how the federal excise tax (FET) increase will impact the industry. Based on historical price elasticity calculations, he said that he expects the tobacco industry to decline 8% to 10%, which would roughly be 4% to 6% worse than the normal trend rate of decline. After the next 12 months, Modi expects industry decline rates to return more or less to normalized levels, however.

Premium cigarette brands will likely be "less affected,"

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