When COVID-19 first hit the U.S. in March and April, customers began stocking up on essentials and favorite items, including tobacco products like e-cigarettes and cigars — a likely combination of a few factors including decreased shopping trips as well as increased stress.
Cigars in particular saw a spike in sales in the short-term along with steady growth year over year.
According to Chicago-based market research firm IRI’s total U.S. convenience data for the 52 weeks ending June 14, 2020, cigars were up 5.7% in dollar sales and 4.2% in unit sales. And for the latest four weeks ending June 14, 2020, cigars saw a massive dollar sales increase of 22.9% and a unit sales increase of 17.1%.
Ashland, Ky. -based Clark’s Pump-N-Shop, with 67 stores in Kentucky, Ohio, West Virginia and Florida, has seen growth for both cigars and e-cigarettes, said Category Manager Mark McCarty.
“In reference to cigars, I’m seeing a 12.4% increase in volume in same-store (sales) through the end of June. For e-cigs, I’m seeing year-to-date volume growth of 18.1%,” he said. “February and March were the two big driving months for this increase with the flavor ban and the start of shutdowns due to COVID-19.”
When the pandemic began, Powell,Tenn.-based Weigel’s also saw big increases in cigars — 18.5% year to date in April, according to Weigel’s Pricebook Manager Jessica Starnes, who added that the chain was up over 100% on e-cigarettes because it added JUUL products this year.
But now that states are reopening, Weigel’s is seeing a decrease in “panic buying” and large, one-time transactions at its more than 65 locations in east Tennessee.
“We are seeing more visits and less once-a-week purchases,” Starnes said.
Market research firm Mintel’s “March 2020 Convenience Stores Report” speculates that, while tobacco products and alternatives are likely to remain a core category for c-stores, operators may not be able to count on them for growth in sales or trips due to regulations like the Food and Drug Administration’s (FDA) flavor ban and the recent Tobacco-21 rule.
IRI data supports this. Despite dollar sales growth for the 52 weeks ending June 14, 2020, (20.3%), e-cigarettes dollar sales have been down in the short-term (-8.3% for the latest four weeks ending June 14, 2020).
Anna Bettencourt, senior category manager for VERC Enterprises, with more than 30 locations throughout eastern Massachusetts and New Hampshire, said that Massachusetts’ June 1 tobacco flavor ban was a big turning point, and the chain has struggled with manufacturer out-of-stocks.
“Prior to June 1, we saw tremendous increases. People were stocking up,” she said. “Since June 1, in Massachusetts, (tobacco) business is considerably down — double digits. But in New Hampshire, I have a store that’s just over the border, and it’s up over 100% from the previous year. We have two other sites in New Hampshire, and they’re doing very well.”
States reopening, including in Massachusetts, has also led to increased commuter traffic and more customer visits, she said, but it’ll be a slow return to ‘normal.’
“It’s still dramatically down from the previous year,” she said. “But there’s a big difference between May, where we were in May, and then Phase 2, in the middle of June. And now at Phase 3, we can see business picking up.”
In the coming months, Bettencourt sees a few different tobacco trends prevailing, including natural leaf cigars and cigarillos.
“Even with the flavor ban, the thing that’s still consistent is natural leaf,” she said. “That’s always been a big trend.”
She also sees vape as a growing category for Massachusetts in particular, as well as nicotine pouches in both Massachusetts and New Hampshire.
Overall, Clark’s McCarty believes there’s potential for continued growth for e-cigarettes and cigars.
“My hope is that the city, state and federal governments will slow their pursuit of additional regulations on these categories and put their focus on re-building what we have lost through this pandemic,” he said. “Time will tell.”