Tobacco – Regulation and Opportunity
In an early morning “wake up” session sponsored by BIC Consumer Products, USA and Commonwealth Brands, Inc., the many changes in tobacco that are now taking place were discussed by a panel of industry experts led by David Dresser, vice president purchasing & tobacco, Core-Mark International, Inc.
Joining Dresser on the panel were Bill Melton, Commonwealth Brands; Angelo Verzoni, regional sales manager, Pine State Trading; and Miguel Martin, senior vice president and general manager, Altria Sales & Distribution, Inc.
“Many opportunities still abound in the industry,” said Melton, contending that growth of alternative products will drive the industry in the future. He acknowledged that the new law giving FDA the authority to regulate tobacco is often “difficult to understand and subject to interpretation.”
Verzoni said his company’s key challenges with respect to tobacco include confusion within the category, which complicates efforts to train sales reps to be category managers for the stores that they serve. “Product mix has changed,” he said. “The opportunity in other tobacco products (OTP) is great, but retailers are confused by taxes and legislation, and they really need our help.”
Martin pointed out that the tobacco business in the U.S. is $90 billion, and that tonnage is only down 1%, despite the pressure on cigarettes. “While there has been a decline in cigarettes, smokeless and cigars are growing impressively,” he said. “There is a huge upside in the smokeless category, and stores that are in stock do exceedingly well in this new environment.”
With regards to the FDA, Dresser pointed out that “the next big threshold” would be the health warnings that will be required on cigarette packages. By June 22, the FDA must publish rules governing this requirement, and then, he said, manufacturers will have 15 months to implement them.
“To the best of my knowledge, this will be a sell-through type of changeover,” Dresser predicted.
Still up in the air, he added, is possible regulation of menthol. An FDA scientific advisory committee is to propose non-binding rules that the FDA may, or may not, accept. “I believe this will be in discussion for a long time, if it is ever changed from what it is today,” Dresser said.
Dresser and Martin commended AWMA for helping to win passage of the PACT Act, designed to help regulate the tobacco industry from Internet sales. “That was a big achievement,” Dresser said.
