Jump to full article: Convenience Store News, 2009-07-14
Author: Mehgan Belanger
Intro: In this special report featuring exclusive interviews with retailers and executives from Altria Group -- the industry's largest tobacco supplier -- Convenience Store News analyzes how recent tobacco supplier consolidation will affect retailers' sets; the current challenges facing the tobacco category in convenience stores; what these hurdles mean to the future of the tobacco category; and whether or not the demise of tobacco has been pronounced prematurely.
Putting aside the issues of onerous taxation and FDA regulation for the moment (see CSNews' Tobacco Roundtable coverage for more on those topics, page 31), consolidation of suppliers could be one of the biggest retailer concerns. . . .
Moving forward, the main goal for Altria Sales & Distribution is to roll out the new trade program and freshness system. "The retailers benefit when we implement such programs," Paoli said. "I'm providing direction to the sales force that selling the program should be among their top priorities for August. With that will come improved business performance for the retailer."
Retailers can also expect more new products from the three Altria tobacco companies. PM USA is testing L&M roll-your-own tobacco in Michigan and Maine, while it also unveiled Marlboro No. 54 -- a menthol cigarette line extension in King and 100s sizes. John Middleton will also release line extensions for its Black & Mild brand of machine-made large cigars. In addition, USTTC's Red Seal, a value-positioned moist snuff, will see its distribution expanded to new markets.
Future new products will address "pure consumer expectations and needs," which is a benefit to retailers, since they won't carry an item that won't sell. Meanwhile, Altria can put more effort into its new products, knowing they will sell, according to Paoli.
And Altria's research and technology facility, which opened in 2007 and operates under Altria Client Services, will facilitate research for all three tobacco companies.
The multitude of changes to Altria's businesses as a result of these acquisitions will have an impact on the tobacco category in convenience stores. Paoli said it will improve attention paid to the category, especially to cigars and moist snuff, which will ultimately drive additional sales and profits as the space at retail becomes more organized.
Convenience store retailers, however, don't all agree.
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