Bonnie Herzog's new data show e-cig sales at convenience stores sharply increased in Sept and Oct (due to Vuse and MarkTen)

[Bill Godshall]

After reporting that e-cig sales in US convenience stores barely increased during the summer, Well Fargo's Bonnie Herzog reported this week that convenience store volumes of e-cigs increased by more than 50% in September (compared to 2013) and increased by about 75% in October (compared to 2013), although increases in e-cig sales revenue were only about half that (because the average price of e-cigs continues to fall).

Herzog's data attribute the huge increase to Altria's MarkTen and Reynold's Vuse, which were recently launched nationwide.

CSP published an article about this at
http://www.cspnet.com/category-news/tobacco/articles/vuse-markten-continue-drive-e-cig-sales

This is more good news for vaping, as many MarkTen and Vuse users are likely to switch to Personal Vaporizers and e-liquid once they realize that there are many superior and less expensive vapor products available.

 

[Clark Kent]

I was wondering if the massive coupons in Mark ten and Vuse marketing would have anything to do with these numbers were seeing here. I recieved quite a few coupons for free starter kits and refills for these products as did many people I know. If the coupon Is used is it still considered a (sale).

 

[Nate760]

What remains to be seen is what percentage of those "sales" are from people redeeming coupons for free kits and cartos, millions of which have been passed out by RJR and Altria in the past few months.

Speaking of which, last week I received a free MarkTen kit in the mail along with a coupon for a free pack of cartos (both of which I promptly threw away, of course). I do not have the faintest idea how they got my name and address, and I'm kind of creeped out about it. I sent them an email and said "I did not sign up to be on your mailing list, I don't want to be on your mailing list, I have no interest in your product, I never authorized you to have my personal info or to send me anything, and I demand to be removed from whatever list you put me on without my knowledge or consent. As I have never given my personal information to your company or to anyone associated with it, the possibility exists of a criminal act on your part, and should I receive any further communications from you, be assured I will be pursuing legal recourse."

Yeah, there was more than a little hyperbole in there, but it made me feel better.

 

[Bill Godshall]

All products sold (including those with coupons) are included in the volume data.

The free coupons are also probably a key reason why e-cig sales revenue only increased by 42% (compared to a 75% volume increase) in October.

But free coupons will encourage some smokers to try using an e-cig, and some of those customers are likely to make future purchases (if they like the product).

 

[Bill Godshall]

Nate wrote:

I do not have the faintest idea how they got my name and address, and I'm kind of creeped out about it.

Altria and Reynolds have enormous databases of many/most cigarette smokers in America.

 

[FlamingoTutu]

Nate, you will probably just be adding to their mailing list again and receive two next time.

Humble suggestion to anyone that receives these or other stuff and you don't want it, pass it on to the homeless. Even if it's a one time use thing, they will appreciate it.

Thank you for the report Bill.

 

[Bill Godshall]

Another article
Wells Fargo Weighs In On E-Cigarette Sales - Convenience Store Decisions

 

[Nate760]

Nate wrote:


Altria and Reynolds have enormous databases of many/most cigarette smokers in America.

That's kind of why I was confused. If I got something like that from RJR, I'd probably chalk it up to the fact that I smoked a Reynolds brand for 25 years and never any other, and I'm sure at some point over the years I participated in some sort of promotion or free offer. But I've never in my life bought anything from Philip Morris/Altria, much less given them any personal info.

 

[pamdis]

That's kind of why I was confused. If I got something like that from RJR, I'd probably chalk it up to the fact that I smoked a Reynolds brand for 25 years and never any other, and I'm sure at some point over the years I participated in some sort of promotion or free offer. But I've never in my life bought anything from Philip Morris/Altria, much less given them any personal info.

Short answer: Data Brokers

Longer answer: You don't have to have bought anything from them. Here's a blurb from a seller of direct marketing mailing lists on how they insure the quality of their lists:

Consumer Data
We use 29 billion records from over 100 different sources to aggregate
our database every year. We gather raw data from:

Real estate and tax assessments
Voter registration files
Utility connections
Bill processors
Behavioral data
And many other sources
With a full rebuild every month, our U.S. Consumer database sets the standard for quality, while our comprehensive demographic and lifestyle attributes give you the power to create the
perfect mailing list for your needs.

And even if you always pay cash for the product being marketed, they have very, very good predictive algorithms. Do you remember this kerfluffle?
How Target Figured Out A Teen Girl Was Pregnant Before Her Father Did - Forbes

And once someone can predict that you are a smoker or vaper, they are free to sell that info to anyone willing to buy it:
Could Target Sell Its 'Pregnancy Prediction Score'? - Forbes

 

[Bill Godshall]

Due largely to Altria's MarkTen and Reynolds' Vuse, I anticipate that convenience store sales of e-cigs in the US will increase by 100% or more in November, December and especially in January (compared to the previous year).

 

[Nate760]

Due largely to Altria's MarkTen and Reynolds' Vuse, I anticipate that convenience store sales of e-cigs in the US will increase by 100% or more in November, December and especially in January (compared to the previous year).

After they stop giving out massive numbers of freebies, I could picture Vuse having some staying power as a short-term entry-level product (it will probably supplant Blu as the #1 product in that role). But MarkTen will pretty much drop off the face of the earth within one year's time. That product is so bad I honestly can't imagine what would possess a person to go back and buy it a second time.

 

[erikajeanT87]

Its a shame that these products ever came out but the big bad cig companies had to get their hands in that vape money somehow. And the fact that there's a convenience store on every corner doesn't help either but I totally agree. If people want an alternative to analogs they're gonna realize the bigger and better REAL e cigs out there that don't taste horrible and are actually satisfying.

 

[sofarsogood]

The modern cigarette business is 100 years old. The product has been stagnant for most of that time. There are a billion smokers. They spend $750 billion a year. The business was ripe for disruption. I belive well over half the money goes directly for taxes. Vaping technology puts all those customers and all that money in play. Governments and tobacco companies are trying to get their share of the business. The tobacco companies might do okay but the government share is in serious jepordy. Vaping is hard to control and wil be even harder to tax. That's why we see politicians threatening to ban it.

Until three months ago I spent $3000 per year on tobacco company products. Half that money went to taxes, $1,000 to Michigan and $500 to the Feds. The rest would be divided among manufacturing, distributing and retailing. Now I vape but nothing I buy comes from those channels and I spend a fraction of the $3,000. My road map includes DIY and it turns out I love reading about the new hardware but I'm not turning into a big spender. To counter cheapskates like me are plenty of people who spend more on vaping than they ever did on cigarettes. Vaping is going to be a big business regardless of what happens in the US because it's global. The only suspense is who is getting how much money.

Is the most important player for american vapers the FDA? They know all about nicotine and they know al about junk science. Are they going to make science based decisions all in favor of the public health or are they going to appease the people who are the beneficiaries of the status quo?

Federal, State, and local governments should be rolling out the welcome matts for ecig startups instead of trying to protect revenues that are going to disappear.

 

[LaraC]

Are they [FDA] going to make science based decisions all in favor of the public health

No.

or are they going to appease the people who are the beneficiaries of the status quo?

Yes.

Federal, State, and local governments should be rolling out the welcome matts for ecig startups instead of trying to protect revenues that are going to disappear.

They should be rolling out the welcome mats, but that ain't the nature of the beast. Pulling the rug out from under ecig startups keeps the government tobacco revenues rollin' in.

 

[Placebo Effect]

I was at speaking at a vaping conference put on by CSP for convenience store retailers and I asked the audience about whether people were actually buying Vuses and MarkTens, or if they were simply redeeming the coupons. According to them, a good number of people actually are buying them.

 

[Kent C]

I beli(e)ve well over half the money goes directly for taxes.

The government per-pack profit from cigarettes in 2013 was $3.80 (or 66 percent of the cost of a pack of cigarettes); more than six times the profit of R.J. Reynolds Tobacco Company
https://www.rjrt.com/taxpays.aspx


Nailing down (searching for and finding) the 'invoice price' or 'base cost' of a pack of cigarettes from the manufacturer is a tough job. I recall seeing a $2.20 price per pack a few years ago. But that is all guessing since the manufacturers keep that information secret (as much as they can anyway). I've also have seen $0.062 per cigarette (which would be considerably less than the $2.20 a pack). The consumer price can range from $4+ (Virginia) to $16+ per pack (NY)

 

[DrMA]

US cashes in $33Bn in tobacco tax http://www.who.int/tobacco/surveillance/policy/country_profile/usa.pdf?ua=1
And another ~$30Bn from the TMSA racket.