To be sure, the merchandising contracts are not pushing minor brands out of stores completely. Retailers have found that some deep-discount brands offer attractive margins compared with the big boys. But for the smaller players, getting their products into the store can be an uphill climb."The big manufacturers make the contract requirements difficult for retailers to understand so they don''t know what is allowed," said Keith Grover, marketing manager for Sante Fe Natural Tobacco, maker of Natural American Spirit cigarettes. "We try to understand those programs and explain to retailers that, for instance, temporary price tags on the rack are permissible. But there''s a lot of ignorance about merchandising programs and retailers are unable to make an objective decision about profitability. Many times they don''t believe us."In a more recent development, the big tobacco companies have been pushing their merchandising away from tobacco-only outlets and toward c-stores, where price is secondary to availability for customers already used to paying a premium for other purchases, per a recent Convenience Store News survey.

RJR claims its merchandising program allows retailers to "sell not only more R.J. Reynolds tobacco products, but also to increase retailer''s sales in the entire tobacco category and total overall store sales," said Jim Boehm, senior manager of trade marketing."Philip Morris competes vigorously, but is in compliance with the law, and Retail Leaders is no exception," said PM rep Mike Pfeil. "The program offers retailers choices and flexibility to achieve a strong category presence in their stores and restrict youth access to smoking."In April, Philip Morris began its 15-cent per carton payouts to Retail Leader participants with non-self-serve tobacco sections, an effort aimed at reducing youth access to cigarettes. Retailers were required to post" We Card" signs, to certify that employees participate in an age-verification program every six months and place in-store cigarette ads no more than two feet away from tobacco products. While the new rules are garnering cautious praise from anti-tobacco activists, some marketers argue that by reducing the retail footprint of all cigarette brands, Philip Morris is grabbing first dibs on the prime shelf and signage spots behind the counter, and continuing to shrink the profile of competing brands.

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