There’s a new type of tobacco customer shopping at convenience stores — one who is more willing to cross over between product families. For example, category managers report smokeless tobacco users now like to mix in oral nicotine products, especially pouches.
“The growth in oral tobacco-derived nicotine appears to be coming from multiple categories, which speaks to true consumer poly-usage,” said Kevin Harder, Yesway senior category manager, tobacco and car wash, for more than 400 Yesway and Allsup’s stores in nine states throughout the Midwest, West and South.
“The popularity of these products has created discussion among tobacco industry professionals, and the consensus is certainly that there is some measure of cross-category cannibalization. Like vapor for combustibles, nicotine pouches offer a form factor, which is familiar to the moist consumer but with a more favorable risk profile,” added Adam Long, senior category manager at The Rutter’s Cos. Headquartered in York, Pa., the family-managed group of companies operates 79 c-store locations in Pennsylvania, Maryland and West Virginia.
“We’ve proactively tailored our in-store assortments to leverage the potential of this new and growing category. We offer full assortments for ZYN, On! and Velo. We’ve also added Rogue SKUs to our assortment in the past six months,” he continued. “We’re very happy with what the segment has contributed to total
Ben Brooks, category manager for Nouria Energy, also started selling Rogue this year, as well as added more flavors at the Worcester, Mass.-based company’s 146 convenience stores across five states. However, it’s also his observation that chewing tobacco and snus have dipped a bit.
“Yes, traditional smokeless products have been impacted by modern oral pouches. They seem to not be growing at the same rate as before,” Brooks explained. “We have had to adjust planograms to fit a larger assortment of modern nicotine pouches. Depending on a location’s overall tobacco space, the adjustments come from a variety of different subcategories.”
Market analyses confirm the growing popularity of spitless tobacco products, such as pouches, and the slowdown for snuff.
According to the National Association of Convenience Stores (NACS), sales for chewing tobacco during the first half of 2020 posted gains — up 7.4% for Q1 and 8.7% in Q2. However, that paled considerably in comparison with pouches, which boasted an increase of 470% for the first six months of last year, per Nielsen data.
That trend has carried into this year. IRI reported spitless tobacco dollar sales in U.S. convenience stores climbed more than 40% for each four-, 12- and 52-week period ending July 11. Unit sales jumped more than 50% for each period, too. What’s more, price per unit fell for spitless tobacco, while costs inched upward for chewing tobacco/snuff.
Harder noted that price changes also influence consumers’ choices.
“Manufacturer price increases continue to drive customers to seek value options or to take advantage of multi-can/loyalty offerings to obtain savings,” he said.
Flavor Ban Proposals
Despite the strong sales performances, legislative restrictions block some convenience stores from fully taking advantage of this trending other tobacco products (OTP) segment.
“At our locations, we carry Velo and ZYN, and sales are doing good; however, most of our locations are situated in areas with tobacco ordinances. We have seven locations, and three of them have flavor bans, which makes the amount of SKUs we carry very minimal. By Jan. 1, five locations will have a flavor ban,” said Madalena Morgan, director of convenience store operations for Bobby and Steve’s Auto World, a chain headquartered in Minneapolis.
Pew Charitable Trusts reported this spring that at least eight states are considering bans on all flavored tobacco products, including smokeless tobacco.
“We’ve already seen how harmful flavor bans are for people who vape by pressuring them back to smoking or buying products from informal sources,” said Alex Clark, CEO for Consumer Advocates for Smoke-Free Alternatives Association (CASAA), a nonprofit advocacy organization for consumers seeking reduced-harm tobacco products. “There’s no reason to expect a different result from banning other flavored smoke-free options like snus, nicotine pouches and moist snuff.”