Smokeless tobacco sales are on the rise. The smokeless market grew at an average annual rate of 3.96% from 2014-2017, when it reached $209 million, according to BisReport Consulting Co. Ltd.’s “Global Smokeless Tobacco Market Report 2019.” The report projected the market will continue to climb to $242 million by 2022.
Convenience stores are seeing the bump in sales.
“We’re definitely up,” said Tim Greene, category director for the Smoker Friendly chain, which has 105 stores across Colorado, Wyoming, Montana, Nebraska and Florida. “We’re up about 10% over last year. … The programs that the major (smokeless) companies have put together, the loyalty and the scan data have helped volumes.”
Greene sees opportunity with sales of nicotine pouches. He said Smoker Friendly was the first retailer in the U.S. to carry ZYN back in 2015. “ZYN has really brought some excitement to the category, some margin to the category,” Greene said.
Greene also cited the continued rollout of R.J. Reynolds (RJR) Vapor Co.’s VELO and Altria’s On! oral nicotine pouches as reason for excitement in the category. RJR Vapor Co. announced recently it would expand availability of VELO to more than 70,000 outlets nationwide. Altria’s On! hit the U.S. market last year with several thousand retailers. It’s expected to expand distribution later this year.
“I would say that the traditional set won’t change much, at least in our stores,” said Greene. “But we will carve out a section for the nicotine pouches and make that a category, if you will.”
State & Local Regulations
The growing wave of Tobacco 21 laws at the state and local levels — at press time, 18 states and nearly 500 municipalities had increased the purchase-age for buying tobacco products to 21 — will likely push smokeless sales down in those areas. Smokeless doesn’t get a pass when it comes to local restrictions.
“All of the legislation at the local level that we’ve been dealing with over the past three or four years has dealt with all forms of tobacco,” said Jim Calvin, president of the New York Association of Convenience Stores (NYACS).
Retailers have recourse, though, when localities begin looking at tobacco-related laws.
“The most important thing that retailers can do now, before a local ordinance is proposed in their city, is to reach out to local lawmakers and set up a meeting with them; or invite them to their store to explain how they responsibly sell tobacco and why the tobacco category is critical to their business model,” said National Association of Tobacco Outlets (NATO) Executive Director Tom Briant.
Calvin echoed the wisdom of engaging with lawmakers.
“They need to contact their elected officials and make them aware that these tobacco issues are not purely, not exclusively, public health issues,” said Calvin. “They also are business issues, and all sides of the issue need to be examined.”
Calvin said a significant number of counties in New York are already at the minimum purchase age of 21, and the statewide Tobacco 21 law takes effect in mid-November.
While legislative and regulatory uncertainty continues at all levels of government, Greene said there could prove to be a silver lining as tobacco manufacturers jockey for valuable shelf space.
“I think we’ll continue to see more scan data and loyalty offers from the manufacturers,” said Greene. “I think you’ll start seeing some stronger offers … not that they’re bad now — I’m just saying it’s going to get more competitive.”