Altria and the British American Tobacco on Nielsen cigarette stocks down

Tobacco stocks slipped on Tuesday after Nielsen's new data showed that cigarette sales fell sharply last month.

Sales volume, defined by the number of cigarette packages sold, declined 11.2% over the four-week period ending May 18, according to Nielsen. Total sales declined 6.9% to $ 59.27 billion and have now declined for 18 consecutive months, according to Cowen analyst Vivien Azer.

Shares of Altria slid 5% and those of British American Tobacco in the US 4% Tuesday.

"This key figure of a 11% drop is very uncomfortable," Azer said in an interview. She said that Nielsen's numbers tend to be overestimated. Even in this case, it is a sharp drop and much more pronounced than the 4% to 5% of tobacco companies expected.

The data highlight the disarray of tobacco companies. Their core businesses are shrinking faster than expected, threatening their usual strategy of raising prices to offset lower sales.

Altria raised the price of a pack of Marlboro cigarettes to 11 cents at the end of February, bringing the average price nationally to $ 7, said Azer. Tobacco companies blamed lower volumes for higher gas prices. The gas averaged $ 2.85 per gallon over the four-week period, Azer added, adding that gasoline prices were higher last summer until the end of the year. Autumn and that the decreases in the volume of cigarettes were less important.

Altria's Marlboro cigarettes gained a bit more market share, although sales volumes dropped by 10.9% over the period, according to Nielsen data published in a note by Bonnie Herzog, an industry analyst. Wells Fargo. At the same time, British American Tobacco's Newport cigarette volume decreased by 9.8%.

Electronic cigarettes are booming, which has led Altria to invest $ 12.8 billion, or 35% of the capital of the undisputed market leader, Juul. The volume of the entire category has risen by 46.4% over the most recent period, according to Nielsen data included in the Azer memo to customers.

Juul achieved 74.5% of sales at Nielsen's stores, which includes convenience stores and superstores, but not vape or online stores. Altria said that she estimates Juul's market share at over 40%.

And even if Juul sales increase, the gains do not make up for the losses suffered by Altria when someone buys a package of Juul pods instead of a pack of Marlboros.

"For every Marlboro package converted into Juul pods, Altria loses 100% Marlboro and earns 35% of it," said Azer. "It is not possible for calculations to be calculated to make it a perfect offset."

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