Tobacco sales up due to low gas prices
Cigarette companies and retailers are benefitting from cheaper gas prices as consumers spend their fuel saving in buying tobacco.
According to CSP Daily News, the second-largest U.S. tobacco seller Reynolds American Inc. posted a 12% rise in cigarette volumes during the first nine months of 2015. Tobacco sales of Altria Group Inc., parent company of Philip Morris and Marlboro, meanwhile, went up by about 1.5%.
“When gas prices come down, people have a little more money in their pocket. They feel a little more comfortable spending that money,” said Dan Wood, a senior associate equity analyst at Morningstar, in a report by news.wbfo.org.
Wood added that about 70% of cigarettes are sold at convenience stores where people usually get gas.
However, low gas prices are only one of the factors. Improving job markets, reductions in government’s anti-smoking program, and aggressive marketing on the part of tobacco companies have also contributed positively in increasing cigarette sales.
