Cigarettes 2010-08-12

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Despite new laws and competition, more heavily taxed cigarettes witnessed a near 4% dollar sales increase in supermarkets during the past year. Meanwhile, drug store sales are soaring, climbing 31% for the most recent 52 weeks. What could help retailers even more is legislation President Obama signed in March banning the U.S. Postal Service from shipping cigarettes. While mail-order cigarette businesses can still use FedEx or the United Parcel Service, the measure will certainly help brick-and-mortar stores.

Still, the road ahead is a tough one at a time of new laws restricting where cigarettes can be sold and how they can be marketed. San Francisco, for instance, has banned the sale of cigarettes and other tobacco products in Walgreens, Rite-Aid and other pharmacies. The law does not apply to supermarkets or big-box stores. A California appeals court recently gave Walgreen Co., Deerfield, Ill., the go-ahead to proceed with a lawsuit challenging the law. Walgreens claims the law is anticompetitive.

Meanwhile, the Food and Drug Administration this year issued new rules restricting tobacco marketing to kids. In addition to prohibiting the sale of cigarettes to those under 18, it prohibits the sale of cigarette packages with fewer than 20 cigarettes; distribution of free samples of cigarettes; and tobacco brand-name sponsorship of any athletic, musical, or other social or cultural events.