In many ways, Massachusetts is a microcosm of tobacco regulations popping up in communities across the country. Prior to the statewide enactment of 21 as the legal minimum purchasing age for tobacco products earlier this year, various cities adopted the age while others remained at 18.
Way before Massachusetts Governor Charlie Baker called for a four-month statewide ban on sales of e-cigarettes and vaping devices, a number of cities passed flavored tobacco bans, including on flavored cigars and cigarillos. As of Sept. 13, Massachusetts towns had included menthol, wintergreen and mint in bans.
“More recently, they have set their sights on menthol, mint and wintergreen with some cities/towns enacting the expanded restriction. However, an active association-led opposition along with local retailer lawsuits have slowed the acceleration of additional towns adopting these ordinances, but it is a struggle every week,” said Jon Shaer, executive director for the New England Convenience Store & Energy Marketers Association (NECSEMA).
“We’ve had menthol products in the market for the last 60 years, so I don’t see why banning menthol now will make a difference. I don’t see the light at the end of the tunnel if they don’t want us to sell menthol, wintergreen and mint,” added Tarek Yatim, CEO for Yatco Energy and a NECSEMA board member.
In addition to fuel distribution services, the Northborough, Mass.-based company operates more than a dozen Yatco Food Markets, several of which are located in communities with flavor bans.
“We (continue to sell) both cigars and cigarillos, but sales have decreased since the bans,” said Yatim.
A growing number of c-stores across the country face some form of tobacco regulations affecting cigars. In addition to flavor bans, more states changed the minimum purchase age. According to Wells Fargo Securities LLC, more than half of the U.S. population currently lives within a 21-minimum district compared with less than 20% before 2019. The Food and Drug Administration (FDA) also keeps pushing ahead on regulatory processes for items newly deemed tobacco products in 2016, including cigars.
Meanwhile, cigar sales have been struggling to regain their footing recently. Wells Fargo Securities reported dollar sales in all channels fell more than 4% for the four weeks ending Sept. 7, despite Middleton’s and Nat Sherman earning 2.3% and 4.7%, respectively. Middleton’s was the only brand to post growth in unit sales for the same period. Private-label cigar unit sales, however, just keep ticking upward. Data shows jumps of 74% for the same four-week period, as well as more than 108% for 12 weeks and 60% for 52 weeks ending Sept. 7. Dollar sales for private-label cigars, though, haven’t shown comparable increases because prices continue to fall. In fact, other than Nat Sherman and Backwoods, prices have been cut for most brands.
Still, some c-stores have experienced positive performance with the cigar category.
“I think customers like the introduction of the two- and three-packs because they are able to maintain product freshness” said Lisa Dell’Alba, president and CEO for Square One Markets Inc., which runs eight stores throughout Pennsylvania.
“We only carried five-packs for a period of time, but since introducing the lower pack size, we have seen an influx in business due to the lower price points that come along with the packaging,” added Danny Rodriguez, Square One Markets’ operations manager.
He also credited pumped up packaging designs for greater interest.
“Promoting low-end price points on the packaging has made them attractive to consumers,” said Rodriguez.
As 2019 segues into 2020, c-store owners and managers are surely bracing for more proposed local and state tobacco restrictions while the wait for the FDA to finally determine which cigar and cigarillo SKUs will gain approval for future sales continues to linger.