Smokeless sales, driven by the spitless segment, are trending up at convenience stores with help from ongoing innovation in the segment.
Dollar sales in the convenience channel rose 8.9% for the 52 weeks ending Feb. 27, 2021, totaling $7.37 billion, up from $6.77 billion for the previous year, according to data from NielsenIQ. Unit sales for the same period rolled in flat (0.8%), a dip of 0.1% over the previous year.
“Moist tobacco cans are still king in our stores,” said Lisa Dell’Alba, president of Square One Markets, operating seven stores in Pennsylvania. “We are seeing steady consumption and slight growth in the category.”
While form and flavor options seem popular with smokeless consumers, manufacturers may be wise to not mess with that classic, pocket-perfect tin or its price.
“I think it was about a year and a half ago they offered some bigger cans,” said Vince Segura, general manager and retail director for Fuel City’s seven stores in the Dallas-Fort Worth metroplex. But the bigger cans didn’t resonate as well with customers.
“They didn’t really move because I think the price point was a little high for the customer,” Segura said.
But that doesn’t mean consumers aren’t looking for options in form and flavor. Innovation is alive with the rising popularity of tobacco-free pouches and some highly creative flavor options like dragon fruit, citrus burst, coffee, bourbon, peach and others.
Some products will see a lull from time to time. For Fuel City, snus sales have cooled a bit.
“Snus is slow,” Segura observed. “I don’t know if it’s just the market’s not there or (something else). A lot of our convenience stores, I don’t see very much movement in snus at all.”
Still, that may be a temporary dip. Spitless tobacco products at c-stores roared through 2020 with a 66.9% dollar sales increase for the calendar year ending Dec. 27, 2020, according to IRI liquid data. Whether that’s a reflection of consumers seeking a more discreet oral tobacco product during pandemic lockdown or a shift toward tobacco-free nicotine products, demand remains strong.
Nicotine Pouch Popularity Climbs
“I am seeing more of a switch to nicotine pouches from tobacco users,” said Rick Staley, merchandising manager for Nashville, Tenn.-based Tri Star Energy’s 144 Twice Daily, High Tail and Sudden Service convenience stores in Tennessee, Kentucky, Alabama and Georgia.
Segura backed that up for his stores as well, seeing the same switch for some customers while others stay loyal to more traditional moist tobacco. Location, he’s found, is a factor.
“We’ve seen some good results with the ZYN coming in,” Segura said. “It depends on the store, too. For us, our Dallas stores, our inner-city stores aren’t big sellers on your moist snuff, but our stores in Fort Worth are big on that — Copenhagen, Grizzly, all those — they do really well out there.”
He also noted that nicotine-free options do well, too. “We did Grinds,” said Segura. Grinds nicotine-free coffee pouches are a chewing-tobacco alternative. “Those actually did pretty well in our Fort Worth c-stores because I think a lot of people that were looking for an alternative to quitting altogether were really buying those.”
And manufacturers are helping with promotions, too.
“R.J. Reynolds has been very helpful,” Segura noted. “Swedish Match — we just signed a chain contract with them, and they’ve helped us out quite a bit.” He added that Fuel City is getting a lot of help with rebates and signage.
Twice Daily’s Staley said that R.J. Reynolds has been more aggressive with promotions, too, as well as with retailer help resetting the store. Friendly price points, though, are the most helpful. “The two-for promotions,” said Staley about what really revs up sales. “Buy two and save!”
First and foremost, retailers need to stay diligent about checking IDs. “Most (c-store) consumers are above legal age, making the prevention of underage (tobacco) sales a little easier to navigate,” Dell’Alba explained.
And while the inconsistency of local tobacco regulation has been a headache for many retailers, they learn to adapt and keep on top of them.
Segura said that he feels pretty safe in Texas as far as state and local regulation of smokeless products. But he’s keeping his ear to the ground because flavor restrictions are always possible. “There was a law in California that was recently passed about not being able to sell menthol cigarettes,” he said. “And that law, that legislation was kind of being talked about here in Texas.”
Tri Star’s stores are also in tobacco-friendly states, Staley said, so he’s not worried about state or local restrictions anytime soon.
At press time, there were nearly 50 measures to curtail, restrict, tax or ban tobacco, smoking and vape products in state legislatures across the nation, according to the National Association of Tobacco Outlets (NATO) online legislative monitor.
Most of those, though, have been focused on vape flavors, menthol cigarettes and age restrictions. For now, smokeless seems to be flying under the radar as it soars to new heights in form and flavor for consumers.