Roll-your-own (RYO) tobacco has always been a niche segment under the broader label of other tobacco products (OTP). In recent years, some of its traditional demographic switched to more popular OTPs, such as e-cigarettes, vaping devices or nicotine-on-demand (NOD) pouches. Each of those has expanded in dollar and unit sales while RYO has contracted.
Research from IRI shows RYO incurred losses of 6% in dollar sales from the convenience store channel for the 52 weeks ending Dec. 29, 2019. Unit sales for the same period experienced a 10.7% decline. That’s on top of a 9.9% decrease between 2018 and 2019.
Plus, having the federal minimum purchase age for all tobacco products raised to 21, the RYO market share could take another hit. So, given the current conditions, Smoker Friendly Category Director of Tobacco and General Manager Tim Greene is pleased RYO sales have held firm in his stores.
“(This year’s) outlook for the OTP category is strong,” he said. Smoker Friendly’s parent company, The Cigarette Store Corp., based in Boulder, Colo., operates more than 150 stores, including 22 newly acquired Tobacco Road sites. In addition to tobacco outlets and cigar lounges, the business runs Gasamat c-stores. “We expect smokeless, moist and NOD to continue positive growth, and we fully expect the RYO market to stay steady,” Greene said.
Indeed, this subcategory could be positioned for an upward shift. The global RYO market is expected to generate a compound annual growth rate (CAGR) of nearly 8%, according to multiple reports.
At least part of that projected growth may be attributed to manufacturers trying to inject new life into rolling papers by featuring fruit and alcoholic beverage flavors. This could present an opportunity for retailers to alert consumers to OTP options in light of the ban on many flavored e-cigarettes and vaping devices. Then there’s the emerging field of legal cannabis, which is renewing interest in tobacco-related accessories such as rolling papers.
“Rolling papers and other paraphernalia are already experiencing growth in markets where cannabis is legal. Whenever a new regulated cannabis market opens, the demand for all kinds of professional services and products in those areas increases, as does the demand for products and services geared toward the consumer,” said Morgan Fox, media relations director for the National Cannabis Industry Association.
Although RYO tobacco and papers will likely remain a niche market in the overall OTP arena, at a total of nearly $42 million in c-store sales last year, per IRI data, it’s still a product sector that produces profit.