E-cigarettes and vape made a lot of noise — and a lot of money — in 2019, while cigars quietly rolled along in steady fashion befitting their staid, classic profile.
“Cigars, the sticks, are up,” said Tim Greene, category director with Smoker Friendly, which has 105 stores across Colorado, Wyoming, Montana, Nebraska and Florida. “The unit volume is up, but the sales numbers or sales dollars in margins are relatively flat.”
Cigars quietly gained in unit sales over the past four years, growing at 8.3%, with dollar sales up 6.6% for the same period, according to Nielsen.
“Promotion activity is heavy in large cigars, and that really has helped to attract a lot of consumer attention to that category and has helped it to grow,” said Don Burke, senior vice president at data management and analytics firm Management Science Associates (MSA), which tracks sales in about 400,000 retail sites across the U.S.
E-cigarette dollar sales rose a hefty 56.9% in the 52 weeks ending Nov. 23, 2019, a jump that pales compared to the previous 52 weeks’ 155.1% leap.
“What we’ve seen in 2019 is that cartridges, disposables, kits are all growing across almost every class of trade. Convenience was very strong in terms of cartridge sales,” Burke said.
Look no further than Smoker Friendly to confirm that trend.
“We finished (2019) strong on vape,” Greene said. “January is soft, but we’re always soft in January, and … I would anticipate that we’ll have a solid January leading up to the flavor ban.”
The Food and Drug Administration (FDA) announced Jan. 2 that it will ban flavored pods from small, cartridge-based e-cigarettes because they claim the sweet, fruity flavors appeal to high schoolers. Only tobacco-flavored and menthol cartridges will be legal nationwide. At press time, enforcement was to begin 30 days from the announcement.
The flavor ban applies to flavored pods but exempts larger, more expensive specialty devices that use a tank-based system that users fill with their chosen flavor.
The new rules are causing confusing for customers and retailers alike.
“It’s hard for our clerks to understand it,” said Dyson Williams, director of merchandising for Dandy Mini Marts’ 65 stores in New York and Pennsylvania. “Some of the customers understand it, but it’s hard to communicate with the ones that don’t. It just seems like it’s the category in need of regulation. The government needs to step in and clearly define more things.”
Burke shared a similar observation.
“2020 will be an interesting year for the vape category and particularly convenience,” Burke said, “because we will need to understand what items are continuing to sell and what aren’t.”
Ultimately, that will determine what vape products are carried and where they are sold.
Adapting to Tobacco 21
The new federal mandate for a 21 minimum age to purchase tobacco will hurt sales initially, but it isn’t necessarily a bad thing.
“We’ve done research on what happens when the purchase age increases from 18 to 21,” Burke said, “and, in most cases, we’ve seen a 1% to a 1.5% decline in cigarette sales because of that age increase.”
For Williams and Dandy Mini Marts, the national age standard removes the scattershot patchwork of Tobacco 21 state and local laws.
“It made it easier in the state of New York for us because several counties had already gone to 21,” Williams said. “At least, we can make the whole state and the whole company 21 now.”
Williams hinted that it’s not necessarily the governmental regulation that’s a problem; it’s a lack of consistency and a constantly shifting playing field that frustrates retailers’ efforts to do business.
For Tim Greene and Smoker Friendly, the way to cut through the fog is to keep on top of sound business practices.
“You go back to the basics,” said Greene. “You make sure you have inventory on the stuff that sells, obviously. You introduce new products where you can, and you just do a really good job with customer service, and hopefully you grow your market share as far as the customers go.”