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Tobacco Regulation: What's Next?

The c-store industry has historically benefited a great deal from the sale of cigarettes and other tobacco products.  Despite the extremely harmful nature of the products, the profit that they bring is something most c-store owners refuse to pass up.  However, the use of Tobacco remains the leading cause of preventable disease and death in the United States, causing more than 480,000 deaths every single year.  In response, the health care industry and government have continued to tighten their regulation on tobacco products in an attempt to reduce usage amongst consumers. A vital piece of the FDA’s more recent approach to reducing the harmful effects of tobacco is demonstrating a greater awareness.

Thus going forward, the FDA has issued new tobacco regulations that must be followed by c-stores, and they are as follows:

  1. Products packages and adverts must contain the addictiveness warning statement. This implies that c-stores who direct their adverts must bear the addictiveness warning statement beginning from August 10, 2018. Products like cigarette tobacco, roll-your-own tobacco, and covered tobacco products (other than cigars and those covered tobacco products that do not contain tobacco) must comply with this.
  2. C-stores especially those who do not manage their adverts, cannot sell or distribute products with non-compliant packages beginning from August 10, 2018, unless the store falls within the “retailer safe harbor.”
  3. Product packages and adverts of covered tobacco products that do not contain nicotine may bear an alternative warning statement. The implication of this entails that c-stores who direct their adverts and product labels must display the alternative warning statement from August 10, 2018. The stores are also not allowed to sell or distribute such products from this same date unless the store falls within “retailer safe harbor.”
  4. There must be rotational cigar warning statements on product packages. For cigars and tobacco products sold individually without product packaging, c-stores must post the warnings at the point of sale instead of directly on the product’s package. C-stores especially those who bear their adverts must do this, beginning from August 10, 2018. Stores will not be able to sell non-compliant products from the same date too.
  5. FDA regulation also requires that c-stores must follow specific placement and formatting requirements. All signs must have all six required warnings starting from August 10, 2018. This is for cigars sold without packaging. Plans on how Cigar warnings will be randomly displayed, distributed on packages and rotated on advisements must be presented to and approved by FDA. Currently, many c-stores are still struggling to get this approval from FDA due to high cost and operational bottlenecks.
  6. Refusal on the introduction into interstate commerce of products that contain light, low, mild or other similar descriptors on the label. C-stores must stop distribution into interstate commerce by December 8, 2017. This is for all tobacco products.
  7. There has been a continued hike in excise taxes for tobacco products, and this has a significant impact on c-store cigarette sales and the industry as a whole.  This has resulted to more cigarette smuggling and smokers now going to states with cheapest excise tax to buy their product. The convenience industry currently pays more to buy cigarettes from manufacturers. ITG Brands LLC, Reynolds American Inc. (RAI), and Liggett Vector Brands took wholesale list price to 8 cents per pack. This increase is approximately 2-3% on their crucial cigarette brands due to increased taxation.
  8. Furthermore, the convenience industry is also facing a price hike on smokeless tobacco. Whereas smokeless tobacco has given the convenience stores nearly two-thirds share of dollar sales in the time past, consumers of this product now see significant changes in price list as a minus. For example, Altria, a major smokeless tobacco producer recently announced a 7-12% increase on majority of their core smokeless tobacco brands.

The Bottom Line

No new tobacco product will be marketed by c-stores unless a manufacturer demonstrates that the products meet the relevant public health standard while the convenience industry will have to comply with the FDA on an approved variety of products as cessation aids to help reduce dependence on nicotine.

in Building Your Business, Consumer Trends, Industry News