Clearing Up Misperceptions About Fourth-Tier Cigarettes

The deep discount subcategory boasts sales growth.

April 11, 2024

Cheyenne-International-logo-for-copy.pngThis article is brought to you by Cheyenne International.

Fourth-tier, or deep discount cigarettes, are bucking the overall trend in the category and are growing in sales. “Now is a great time for retailers to take a fresh look at this subcategory,” said Ernie Teague, vice president, sales and marketing, Cheyenne International.

The NACS State of the Industry Report of 2022® Data shows 1% growth for the fourth-tier subcategory, even though the overall category dipped 3.2%.

“As long as you pick the right partner when you’re working with a fourth-tier or value provider, you’re working with someone that is reliable. It’s also going to be a partner that is not only compliant but who has a long history of compliance,” Teague said.

“In my years in the industry, I’ve learned that there are some misperceptions about this subcategory,” he added. “Many people hear the term ‘price-value’ and automatically associate it with lower quality products. Adult consumers have become more educated than ever about the brands they buy and are realizing that quality products can come at a lower cost.”

Regardless of brand or value proposition, customers are really looking for a quality product that tastes good and is consistently available—all within their budget, Teague noted. Each buyer has a different budget, and retailers should adjust their mix to meet consumers where they’re at today.

“To clarify: You don’t have to sacrifice margin. But more importantly, you don’t have to sacrifice penny profit either,” Teague said.

A value cigarette provider will also be able to provide promotions. For example, Cheyenne International offers incentive and marketing programs to support the retailer in many ways.

Fresh thinking for this subcategory also involves merchandising. “Merchandising isn’t always easy on a tobacco set, but there are other ways to get the word out there and support visibility on shelf: point-of-sale signage, digital marketing and educating your cashiers. Sometimes you need to think outside the box … or think outside just the shelf … in order to get the most from your valuable shelf space,” Teague shared.

Learn how deep discount cigarettes are growing in a category that dipped in 2022 in part one of this two-part series brought to you by Cheyenne International.