A new report from UBS looks at “10 Reasons To Stay Bullish On Tobacco.”
One reasons is tobacco’s “unique leverage at retail.” Cigarette packs get prime placement not only because of trade contracts, but also due to profitability.
A Marlboro buyer makes an average of 10 trips per month to gas stations or convenenience stores and spends $17 on each trips, according to Altria. 82% of these consumers buy beverages, 63% buy food, 56% buy gas and 36% buy lottery tickets.
Retailers across the country rely on this revenue, and they’re willing to reduce margins to keep down prices. Here’s a chart from Altria: