Year Outlook Shows Promise For
Cigarette Vendors
By Walter Hurd
The passing of the first quarter of 1949
offers some suggestions as to the outlook for
cigarette vending during the rest of the
year. The principal conclusion from reports
seems to he that the business is getting
back to a prewar sales curve, only there are
a lot more people and the per capita rate
of cigarette smoking is still climbing.
Cigarette operators for the nation over
may expect to share fairly well in the gen-
eral sales trends in total cigarette sales.
Checks with REVIEW readers in the last
year have suggested that such a rule holds
true for many of the states. State tax sy -
terns give a kind of check on sales of
smokes in such areas, and reports from
operators of cigarette machines seem to fol·
low the trend suggested by state reports.
At this writing, government reports on
total cigarette revenue are available to give
a tip on how the year started off. Cigarette
operators know that the normal sales curve
calls for a drop in January, following the
heavy sales of cartons for the holidays.
M any retail trade reports have shown that
cigarette sales dropped for the first two
months and then started to gain in March.
Only, the drop and the subsequent gain was
lower than for the same period last year.
Cigarette operators have tended to make
reports that agree with the reports of store
sales. The drop this year was heavier and
the seasonal gain has been slower but the
gain has definitely come about.
'
Federal revenue reports for January
show a gai n of nearly three per cent over
Jan. 1948. This is a creditable ~ain for the
time of year and should give encourage-
ment to all who sell cigarettes. The federal
revenue report covers withdrawals and is
often taken as an index to sales. It does
not always coincide, however, with factory
output, as revenue reports last year and
sales reports differ, with output reports
showing total above the revenue totals by
several billions.
Tbe federal tax year also begins on Julv
1 and hence reports for January complete
a 7·month period in the current fiscal year.
bow that total cigarette
Revenue report
withdrawals have gained slightly more than
2 p~r cent over the same period a year
earlier.
ote that this 7·month period
would sugge t that the rate of sales gain
for cigarettes is now declining from the rate
of gain (3.8 per cent) for the entire year
of 1948.
Sales Ou tlook - The above comparison
raises a general question that experts have
speculated on since the end of the war. How
l~ng will the ~otal annual consumption of
clgarettes contlllue to rise? Reports issued
by the Bureau of Agricultural Economics
are often cited as an expert view on what
may happen to cigarette sales.
Government experts in the BAE have
been sa~ing sin~e 1945 that gains in cig.
sales wlll ~ontlllue at a creditable per-
centage untIl a real depression hits the
land. They ay also that records over past
years show that people will cut many other
expenses, even c lothing and car expenses,
before they cut down on smoking.
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Operators thus have some assurance that
times will have to get mighty bad before
people buy fewer cigarettes. But recently
there is much talk of a business rece sion
under way now and some operators express
the view that many smokers are already
beginning to cut on smokes.
A majority of operators eem to hold
the view that present conditions are not
causing smokers to smoke less, so much as
machine sales are affected by fewer people
or less trade in the locations. It appears
that the country has a long way to go yet
before there is a real depre sion and hence
1949 may be counted on to sbow another
year of gain in total cigarette sales.
The BAE prediction foresees peak buy·
ing of cigarettes to continue through the
year, and another annual record set by
manufacturers in total output.
But there is one limiting factor in the
BAE forecast:-the rate of annual gain in
sales will probably not be as great as that
in recent years. But the probability of a
slower gain in sales should be viewed in
the light of how much sales have increased
in five years, in ten years. Total cigarette
output last year was 30 per cent greater
than five years before, and 125 per cent
greater than that ten years ago.
Such a heavy percentage gain in sales
over ten years is much greater than the rate
of population gain, hence many more
people are using cigarettes. Market experts
say the war greatly increased the total use
of cigarettes and that there are still many
more millions that will learn to smoke that
the gain in sales should be at a highe; rate
than the gain in population.
Lo cation s-The most encouraging news
in the location field l·elates to the big post-
war increa e in new plants, and expansions
of existing ones, and the opportunity thus
afforded for placing more vendor. This !"!Ite
of increase has been stupendous in recent
yea.rs, bu.t there were reports late last year
wh.lch aid tha.t the rate of new plant being
bllllt was slowlllg up, as was all commercial
building.
Early reports on the construction outlook
for 1949 are more encouraging, as will be
seen from the Business Review column in
this issue. But it does appear that the total
Ta.te of new plants to be built this year
will be mailer than in the two previous
postwar years. However, the rate of new
locations being built now is so far ahead
of the prewar rate of bui lding that it must
be considered a great background support
for cigarette vending.
The rate of new restaurants, taverns, drug
COIN MACHINE REVIEW