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LAS VEGAS -- The American Wholesale Marketers Association (AWMA) 2009 REAL DEAL EXPO, held last week here, put forth a theme of industry collaboration in order that retailers, manufacturers and wholesalers could meet the challenging times head-on.
"I don’t remember a more perilous time than we are facing today," Sherwin Herring, AWMA’s 2009 chairman, stated in the opening general session. He urged attendees to avoid "the strong temptation to stay home and hunker down" in the face of tough economic times and instead "stand together through AWMA" and be prepared to fight back.
The show’s opening-day sessions centered on pertinent c-store topics—tough tobacco times and candy category opportunities—both requiring the joining together of distributors, manufacturers and retailers.
Regarding tobacco, with Congress and President Barack Obama considered being strongly anti-tobacco, all segments of the industry were urged to put aside specific differences and come together to combat additional government actions that could cause further harm to businesses dependent upon tobacco sales.
In a panel discussion focusing on key tobacco issues, representatives from Altria Inc., R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. relayed the federal excise tax (FET) increase set to take effect April 1, would have occurred much sooner without the industry’s opposition.
"All of your efforts were not wasted," said AWMA president Scott Ramminger, who moderated the panel.
But attendees were warned to "buckle up" by Dave Riser, vice president of external relations at R.J. Reynolds, who noted the prevailing atmosphere in Washington is to further regulate tobacco and discourage tobacco sales.
Henry Turner, vice president of state government affairs at Altria Client Services Inc., pointed out 46 states are now dealing with revenue shortfalls and may consider tobacco taxes as a way to close the gaps.
"We’ve got to keep fighting," he urged.
Noting illegal tobacco activity typically follows price increases, John Hoel, vice president of government affairs at Altria Client Services Inc., urged support of new legislation in Congress by New York Democratic Rep. Anthony Weiner that would ban delivery of cigarettes by the U.S. Postal Service and end Internet sale of cigarettes.
But Hoel also defended Altria’s support of legislation sponsored by California's Rep. Henry Waxman that would give the Food and Drug Administration (FDA) the authority to regulate tobacco, an initiative that is opposed by AWMA and most of the tobacco industry. Hoel said Altria has fought a federal standard "so all manufacturers would play by the same set of rules."
Hoel did point out, however, there is a bipartisan alternative measure to place control at the Department of Health and Human Services, rather than the FDA, and that legislation may come out as the issue moves through Congress.
Riser let it be known RJRT is opposed to the Waxman bill and urged attendees to express their opposition by contacting their congressmen and senators.
Industry consultant Kit Dietz outlined preliminary findings of a new study aimed at outlining the steps that could increase the sale and profitability of candy, gum and mints in the convenience channel.
Dietz said there is a $410.1 million "incremental growth opportunity" if c-stores and their distributors could increase the distribution and in-stock position of the best-selling 50 SKUs in the category.
A consumer insight study using video technology was highlighted by Dietz at the session. It demonstrated the potential to further boost candy sales and profits by improving the position of the candy aisle and by adding a secondary display containing the top-selling items near checkout.
As much as $1 billion in increased sales could be realized if the c-store channel could speed-up the process of bringing new products to market, to at least the level currently performed in the drug channel, Dietz added. "We should own trial," he stated. "It’s big money for all of us if we can do that."
More profit could also be generated if products that fail were marked down at the retail level, rather than returning them to distributors for credit, Dietz maintained.
The intent is for distributors to play a larger role in helping retailers improve category management by serving as unbiased consultants between the retailers and their candy manufacturers.
The AWMA candy study, cosponsored with the National Confectioner’s Association (NCA) and the National Association of Convenience Stores (NACS), is expected to be published in late April.