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Home » Recent CSD Articles » Categories » Today's News » Wells Fargo Anticipates Cigarette Price Increase Wells Fargo Anticipates Cigarette Price Increase Could the next cigarette price increase appear this September? Convenience store retailers should expect the next cigarette price increase to arrive sooner than the normal November cycle, according to a report by Wells Fargo Securities LLC. Wells Fargo conducted a survey of its tobacco retailer and wholesaler contacts representing approximately 60,000 U.S. convenience stores to gauge expectations for the next round of cigarette pricing increases. Bonnie Herzog, managing director – equity research, beverage, household & personal care, tobacco & c-stores for Wells Fargo noted, “According to our contacts, the next cigarette list price increase is expected to be led by PM USA during the week of Sept 18 at $0.08/pack (+2-3%). We agree as we don’t expect manufacturers to wait till the normal November cycle to take a price increase, especially given the severity of volume declines in Q2,” which were related to the outsized impact of California’s $2-per pack increase in excise tax. “As has been the case in past tax cycles, we expect the industry to further mitigate California tax-driven volume declines with list price increases, partially offset by stronger promo efforts. Longer term, we see further downside to combustible cigarette volumes if the U.S. Food and Drug Administration succeeds with its new nicotine mandate. However, we believe this could be mitigated by smokers potentially smoking more in an effort to get the nicotine levels they require—an ‘unintended consequence’—and increased conversion to reduced-risk products,” she added.
The authority estimates market share using surveys that are based on prevalence of use and not stick count. The government statistics are based on officially imported tendu leaves, according to Ridley. Since there has been evidence of a local source of tendu leaves as well as seizures of smuggled tendu leaves, these are “additional components” that need to be included in the calculation, she said. Some smokers of Capstan cigarettes, the company’s lowest-priced brand, have cut back on the number of sticks they buy after the price increases and also purchase beedis, said K.K. Badra, 58. She runs a kiosk that sells soft drinks, packaged snacks and other food items apart from tobacco products in Maligawatta, a Colombo suburb. Ceylon Tobacco is looking to contain the impact from higher levies. It has shut some of its leaf depots and reduced factory shifts to curb costs. To sustain profitability it’s working on “smart cost management, streamlining processes, identifying consumer segments and addressing their needs,” said Ridley.
We examined the trends in use of bupropion and varenicline before and after the BBW. We observed a significant decline in the use of varenicline after the passage of BBW. The BBW was not associated with decline in the use of bupropion. Passage of BBW may have a substantial impact on the utilization of certain medications. In 2009, the FDA required a black box warning (BBW) on bupropion and varenicline, the two commonly prescribed smoking cessation agents due to reports of adverse neuropsychiatric events. We investigated if there was a decline in use of bupropion and varenicline after the BBW by comparing the percent using these medications before and after BBW. We conducted a retrospective observational study using data from the Medical Expenditure Panel Survey from 2007 to 2014. The study sample consisted of adult smokers, who were advised by their physicians to quit smoking. We divided the time period into “pre-warning”, “post-warning: immediate”, and “post-warning: late.” Unadjusted analysis using chi-square tests and adjusted analyses using logistic regressions were conducted to evaluate the change in bupropion and varenicline use before and after the BBW.
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