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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.
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. Secondary analyses using piecewise regression were also conducted. On an average, 49.04% of smokers were advised by their physicians to quit smoking. We observed a statistically significant decline in varenicline use from 22.1% in year 2007 to 9.23% in 2014 (p value < 0.001). In the logistic (Adjusted Odds Ratio = 0.36, 95% CI = 0.22–0.58) and piecewise regressions (Odds Ratio = 0.64, 95% CI = 0.41–0.99) smokers who were advised to quit smoking by their physicians were less likely to use varenicline in the immediate post-BBW period as compared to pre-BBW period. While the use of varenicline continued to be significantly low in the late post-BBW period (AOR = 0.45, 95% CI = 0.31–0.64) as compared to the pre-BBW period, the trend in use as seen in piecewise regression remained stable (OR = 0.90, 95% CI = 0.75–1.06).
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