For generations, the roll-your-own (RYO) tobacco segment’s major competitor for consumers’ cash was mass-produced cigarettes, cigars and moist chew or snus.

In recent years, competition in the tobacco sector has increased, as the category today also includes vape and modern oral nicotine items. 

There’s also increased competition from the cannabis market. Some 18 states have legalized recreational cannabis use by adults, and voters in another 18 have approved medical marijuana use. As the number of cigarette smokers declines, the number of marijuana smokers is going up. Global analytics and advice firm Gallup reported nearly half of surveyed adults have tried cannabis, and 12% smoke it, up from 7% in 2013. 

Sales of RYO, which had already begun to slack, appear to feel the hit.   

RYO experienced losses of 15% in dollar sales and more than 22% in unit sales for U.S. convenience stores for the 52 weeks ending Dec. 26, 2021, according to IRI. This is a big dip compared with the 2019-2020 evaluation, which showed a one-year change of +0.5% in dollar sales and -8.2% in unit sales, per IRI.

Pipe tobacco sales have struggled as well. IRI registered even greater falls in both dollar and unit sales: -24.2% and -27.2%, respectively. The two-year difference is equally stark. There was a falloff of 8.3% in dollar sales between 2019 and 2020, and -15% in unit sales. 

These product subcategories face so much competition, some convenience store operators give them very little shelf space or pull RYO and pipe tobacco from shelves altogether. 

RYO Outlook

Despite declines, RYO tobacco still brought in $43.6 million in sales in c-stores for the period, and pipe tobacco brought in $74.5 million, per IRI. These products continue to enjoy a niche following of loyal customers and can be an opportunity for c-stores that position themselves as a destination for RYO. The Cigarette Store is seeing just that. 

“The RYO category continues a positive upward trend versus same store (sales) a year ago, 3.5% growth driven by Value Pipe,” said Tim Greene, category director, general merchandise and tobacco, for Boulder, Colo.-based The Cigarette Store, operating more than 180 locations including Gasamat convenience stores, Smoker Friendly and Tobacco Depot retail outlets and lounges in eight states. “We are excited with the growth of Value Pipe, as it remains a vital segment of the category.”

But even with the encouraging numbers, Greene understands RYO and pipe tobacco cater to a very select customer niche. “We are concerned with the continuous decline of cigarette RYO and will look at strategies to reverse the trend with these brands,” he noted.

And as with all other product families within the tobacco category, RYO and pipe tobacco suffer the effects of increasing regulation and tax bumps. 

“As always,” Greene said, “we monitor the legislative climate at a local, state and federal level and the effects tax increases will have on all tobacco segments, including the RYO category.”