Retailers who refuse to put up the signs could also lose millions they receive from tobacco companies under agreements that give stores rebates to help lower cigarette prices and payments for prominently displaying products. For example, the owner of 50 stores in Indiana that has an agreement with the nation's top three cigarette makers received nearly $1.8 million in payments in one year, in addition to free promotional displays and fixtures, according to court documents.
"You can't take up valuable selling space and impact my bottom line to achieve your goal of having these corrective statements out there," said Andy Kerstein, who operates five tobacco outlet stores in New Jersey. He is president of the National Association of Tobacco Outlets, which represents about 20,000 tobacco stores, convenience stores and other stores that sell tobacco.
Retailers estimate the industry could lose $82 million per year in sales for every square foot of counter space taken up by the signs. The public health groups, however, said that would average out to only about 65 cents per day per retailer, according to court filings.
"If the government and the legal system wants to do something to the tobacco companies, do it to the tobacco companies," said Larry Southard, who opened Papa's Healthy Food & Fuel in western Massachusetts in 2004. "I don't know why they'd take it to that level when there are so many laws in place, there's so much information [about the health impacts of smoking] already, what is the purpose? To punish the retailer now?"
Fifty-six-year-old Southard, who smoked from about 16 until his mid-20s, didn't want to sell cigarettes in his upscale convenience store but reluctantly decided to stock them under the counter when he realized customers were going down the street to pick up their smokes.
"The customers want them. ... It is unfortunately a part of the American culture," Southard said.
In their court filings on the issue, the tobacco companies, including Philip Morris USA, owned by Richmond, Va.-based Altria Group Inc., R.J. Reynolds Tobacco Co., owned by Reynolds American Inc., and Newport cigarette maker Lorillard Inc., said the retailer requirements would vary by store that they wouldn't be workable or fair.
Customers also could forgo profitable impulse items like candy or gum by the register, if the displays rub them the wrong way, retailers argue."If you walk in someplace and you all of the sudden don't feel as good as you did a minute earlier, you're going to buy less. And we're not talking about tobacco," said Jeff Lenard of the convenience store association. "We're talking about a drink, we're talking about a sandwich."