Retailers search for alternative tobacco opportunities.
October 09, 2018
LAS VEGAS – Increasing regulations could dampen future growth of cigarette sales in convenience stores. Today, however, the category continues to change, opening the doors to new opportunities in nicotine sales. Navigating those opportunities was the focus of Sunday’s session “Planning Past Cigarettes: Surviving and Thriving in the New Era of Nicotine.”
According to NACS State of the Industry Report of 2017 Data, cigarettes still account for 31% of in-store sales, averaging $50,740 in monthly revenue per store. Additionally, there’s lots of buzz surrounding new, tech-savvy vaping products, said session moderator Melissa Vonder Haar of iSee Store Innovations LLC, who has been covering the tobacco category for six years. The possibilities leave retailers with a number of options.
“Cigarettes are the No. 1 driver for in-store sales. It’s what brings people into the store, and it’s incredibly important to this channel,” said Vonder Haar. “Unfortunately, it’s no longer as profitable.”
Cigarette and nicotine product sales have had their ups and downs in recent years. For example, the U.S. Food and Drug Administration (FDA) recently granted an extension to complete complex premarket tobacco product applications for noncombustible products, as required under its deeming regulations. The new deadline has moved from 2018 to 2022. On the other hand, the FDA now is considering lowering nicotine levels allowed in combustible cigarettes.
“The question for retailers is, do you want to disrupt what you currently have going on with cigarette sales, or do you want to expand without hurting that core category?” Vonder Haar said.
Session speakers, Anne Flint, director of category management, tobacco for Cumberland Farms Inc., and Lou Maiellano, president of TAZ Marketing and Consulting Group, explored the possibility of making space for a category in decline without sacrificing current cigarette sales. The panel also led discussions on creating back bar space to spotlight innovative products, managing the tobacco category as it exists today, preparing for the future and identifying current trends and new products in the tobacco, nicotine and e-vapor space.
According to Maiellano, the field for the next generation of alternative products is wide open. Items such as nicotine gums, mints, toothpicks and pouches can deliver satisfaction to those who seek the satisfaction of tobacco. He also recommended new and improved vaping devices as another way to make up for traditional cigarette sales. E-cigarette products, once ranked No. 1, have recently lost market share because of advancing technology in units and liquids.
“There are people who enjoy the satisfaction of tobacco. How do we meet the satisfaction of tobacco and nicotine users, and where do we put those products in the store?” Maiellano said.
Maiellano encouraged attendees to look outside the box when considering the future of cigarette and tobacco sales and alternative products. He believes retailers have a tremendous opportunity to grow their businesses with new products, including the possibility of adding hemp-based products in the future.
“Learn about the alternatives and be open to the opportunity,” he said. “Open your eyes, take a cautious approach, partner with the right partner, watch inventory levels and be willing to expand your business. So many products fail because they are not properly marketed.”