2020 proved a tough year for the roll-your-own (RYO) tobacco segment at convenience stores.
“Looking at same-store sales of 2020 versus 2019, we continued to see a downward trend on the RYO category, down 6%; however, that trend slowed some in Q4,” noted Tim Greene, category director of tobacco and general manager for Smoker Friendly. Its parent company, The Cigarette Store Corp., based in Boulder, Colo., operates more than 160 retail stores across seven states, including Gasamat convenience stores, as well as tobacco outlets and cigar lounges.
Data from IRI confirms RYO tobacco units are down nationwide impacted by COVID-19. Convenience stores sold 8% less for the calendar year ending Dec. 27, 2020, compared with the same period the previous year. It is worth noting, though, that’s a slight improvement over the -10.7% recorded for the end of 2018 and the -9% the year before.
Similar to RYO, pipe tobacco doesn’t account for a large percentage of what’s regarded as other tobacco products (OTPs), which covers smokeless tobacco, modern oral tobacco, e-cigarettes and vape items. Also similar to RYO, pipe tobacco declined in both dollar and unit sales, 8.3% and 15.0%, respectively, per IRI. Interestingly, the research shows that RYO inched up approximately two points in dollar shares over the past year.
Catering to RYO Customers
Still, carrying these specialty OTPs pays off for some c-stores through nurturing customer loyalty. In communities that lack tobacco specialty shops, convenience stores may be the only outlets stocking RYO and pipe tobacco. Not only do consumers come in for these OTPs, but they’re likely to add other basket items to each purchase, which drives greater transaction totals, and that makes the investment worthwhile.
“I probably won’t phase RYO out because I have regular customers who buy it,” said John Archer, who owns the Shell Food Mart in Hinsdale, Ill., a town 20 miles west of Chicago.
He added that rolling papers continue to perform well. “I’m sure cannabis being legalized has a lot more to do with that than roll your own.”
Despite the less-than-encouraging figures from last year, Greene hopes the OTP niche segment will turn around this year in response to Colorado’s Proposition EE. The new regulation, which took effect Jan. 1, 2021, raises taxes and sets minimum prices on tobacco
products, including packaged cigarettes.
“We do expect to see increased sales on both (RYO and RYO accessories) in Colorado due to the erroneous tax changes,” said Greene.