Rethinking the Backbar?

Deep-discount cigarettes are trending up.

April 09, 2024

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

The backbar is changing. Smokers are looking for greater value, and intense brand loyalty is a thing of the past. That means now is a great time for retailers to expand their selection of fourth-tier, or deep discount cigarettes, said Ernie Teague, vice president, sales and marketing, Cheyenne International. “As the backbar evolves, value cigarettes are a natural area to focus on.”

One factor, according to Teague: “The price gap between premium cigarettes and value cigarettes is the highest it’s been in almost a decade.”

The NACS State of the Industry Report of 2022® Data shows 1% growth for the fourth-tier subcategory. That’s particularly impressive given that every other cigarette subcategory fell, and the category overall dipped 3.2%.

“I’ve also seen other well-respected data sets that show deep discount growing more than 4% year over year,” Teague said.

When it comes to the product itself, Teague says that retailers can feel confident about what they’re offering. “Brand authenticity is a key to success in the current environment, and product quality is a big part of that,” he said. “With more information at their fingertips (thank you, Internet and social media), consumers have dictated the expectation of high quality, and manufacturers have responded, especially in fourth-tier products. If the quality isn’t there, a repeat purchase isn’t happening. Stable manufacturers that have been in business a long time rely on that repeat purchase, and so quality is a key part of the formula for success.”

Retailers can expect quality partnerships, too, Teague said. “We’re a smaller tobacco company, but we can offer promotions just like the big companies, but with a more personalized touch.”

Cheyenne International offers a range of tobacco products, including cigarettes, cigars, and moist snuff. The same factors boosting fourth-tier cigarettes are at work in non-combustibles, too. “We’re seeing the same trends with moist snuff as with cigarettes,” Teague said. “People are looking for value. They’re educated. They’re making an informed decision to down trade but still expecting a quality product.”

This is the first article in a two-part series. Keep an eye out for part two, which will clear up misperceptions on fourth-tier cigarettes. Learn more about Cheyenne International.