Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from John Heinbockel – Goldman Sachs.
John Heinbockel – Goldman Sachs
The merchandise comp looks like it slipped back a little bit from the prior quarter. Is that more tobacco utilization or soft drinks, the rest of the store or what?
Frank Paci
One of the things it's certainly softer and we talked about it is the package beverage category soft drinks, especially the take-home. We had very aggressive promotion last year. This year, with some of the cost increases that we've seen in that area, we're basically running about $1.00 higher per pack and we've seen a big decline in volume as a result of that. So it's really being weighed down the package beverage business as one of the big pieces that's dragging that down.
John Heinbockel – Goldman Sachs
You think that will take time to cycle or you think that's going to be more seasonal with regard to you'll see more promotional activity because volumes are down and volumes will pick back up?
Frank Paci
Well, we've already gotten a little bit more promotional on that. But again I think some of this, its difficult to separate how much of this is the general economy and how much of this is kind of overall industry trends, especially in the carbonated soft drink area and in our take-home.
Our take-home business wasn't a high margin business. It was a relatively low margin business for us but we think it did drive some traffic. Like I said, we've gotten a little bit more promotional in that but certainly its going to impact us from a seasonality standpoint more in Q3 and Q4 than it will in other parts of the year.
John Heinbockel – Goldman Sachs
Now on the excise tax, so volumes are down, low double-digit. You said average selling price is up to mid-20s. So your revenue is up double digit, correct, for tobacco?
Frank Paci
Yes.
John Heinbockel – Goldman Sachs
Now did you see a material shift from cartons to packs in the last three months?
Frank Paci
Yes, you're seeing a shift from cartons to packs and we also have multi-pack specials that we have. You've seen a lot of people who may have been coming in and buying a carton, you know coming in and buying a 2-pack special or a 3-pack special.
John Heinbockel – Goldman Sachs
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