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    Cigarette Shortage Hurts Retailers

    Stores report out-of-stocks are keeping customers away.

    WINSTON-SALEM, N.C. -- Since the shortage of R.J. Reynolds' major brands started nearly a month and a half ago, retailers have been unsuccessfully scrambling to accommodate loyal customers seeking their favorite brands, reported the Winston-Salem Journal.

    Low-volume brands such as Salem, Doral, Monarch and Vantage have been out-of-stock sporadically across the country due to a material supplier that has not gotten packaging supplies to Reynolds fast enough, according to David Howard, a Reynolds spokesman. "We're working hard to have this problem rectified because we certainly recognize that being out of stock is an unacceptable position for any company," he told the newspaper.

    The situation -- which has already affected stores negatively -- is expected to continue for a few more months, Howard added.

    Although limited, the shortage does pose a problem for a long-term sales dip, according to Michelle Roehm, an associate marketing professor at Wake Forest University.

    "Loyal customers, when they go to a store and don't find a brand, they'll get back in the car and keep searching," she told the newspaper. "Non-loyal customers will look at a shortage as an excuse to try a competitor's brand." She added, "But if loyal customers continue to experience trouble finding their brand, they may get frustrated and go to a substitute brand, which is where there is potential for a long-term sales dip."

    It's "definitely affecting our business," Jay Saul, owner of Jay's Place, told the Journal. Saul has displayed a sign in his store to explain the reason behind the shortage.

    "People come in here wanting their brand, and when we don't have it, they get a little agitated," he continued. "I'm a little agitated too, because you can't sell what you don't have. I've never had a problem like this before." Reynolds' brands make up 300 cartons -- 120 of them Doral brands -- of the 450 that he sells weekly at his Winston-Salem convenience store.

    Tarheel Tobacco's owner, Pat Shehan, said that the situation has had a limited affect on sales overall, even though up to 19 of his brands have been affected by the shortage. "We have had some customers walk out because they felt we just weren't ordering their favorite brands anymore," he said. "But because many customers are willing to switch brands, at least temporarily, we've been able to weather the shortages."

    Howard told the newspaper that even though the out-of-stocks amount to a small percent of its production and sales, a ripple effect is hitting the major brands as customers switch to what is available in stores.

    "While we have gotten our stock back up on some brands, we're now out of stock on some of the brands that our customers have been switching to, which we're working hard to replenish," Howard told the newspaper.

    The packaging problem is not related to the May 2005 decision to sell Reynolds' RJR Packaging LLC, the newspaper reported.

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