The fortunes of the roll-your-own (RYO) tobacco market are tied to a disarming number of factors, ranging from the overall health of the economy to cigarette taxes, age restrictions, competition from tobacco outlets and dollar stores, available shelf space and consumer migration to other tobacco products.

Tim Greene, general manager and category director-tobacco for Smoker Friendly International in Boulder, Colo., reported that total RYO units at his stores were down 4%, but total ounces had dipped by only 0.5% at Smoker Friendly locations. Retail dollars and margins were up slightly.

“Consumers are purchasing bigger units,” Greene noted. “I suspect the category will continue to be stable, with little anticipation of growth. I believe we’ve also seen fewer consumers enter the category, and a migration to other categories such as vapor and smoking alternatives.”

Throughout the rest of 2018, Greene predicted, consumers who stay in this category can be expected to continue to purchase large sizes. “You will always have consumers on a budget purchasing pouches; however I believe we are seeing a percentage of the six-ounce to eight-ounce consumers moving to 16-ounce offerings.”

SOLID 2017
According to Don Burke, senior vice president of information management solutions for Management Science Associates Inc. in Pittsburgh, last year wasn’t a bad one for RYO tobacco. “We actually saw an increase of 2.7% during 2017, so it was actually a pretty good year.”

Increases in state excise taxes (SET) on cigarettes helped fuel RYO growth in different regions. “In a lot of cases, as states increase SET on cigarettes, a lot of consumers move to roll-your-own,” Burke said. “That benefits the category.”

Burke and his colleagues expect that trend to continue in 2018. “In fact, we expect even a little bit better growth than that 2.7% we saw.” The strongest growth for roll-your-own was in the dollar stores, he noted, which have added quite a few SKUs.

“Therefore, their business is up almost a third, 32.4%.”

The consumer psycho-dynamics in this category are telling, Burke acknowledged. “What we find is that when a state increases its excise tax, some consumers say, ‘My God, if I am going to be paying this much I’m just going to buy premium.’ You find that those consumers who are smoking the discount brands either move up or they will move down to roll your own. Those that continue to be very price-conscious will move down to RYO, of course, and with SETs likely to increase, RYO could actually be a very strong category in the next few years.”

Burke said c-stores should stock a good selection of RYO-related products, accessories such as papers, tubes and wraps that consumers need.