Proposed rules from the Food and Drug Administration (FDA) targeting flavored cigars have retailers considering what such a ban would mean for their business.
On April 28, 2022, the FDA announced proposed product standards “to prohibit menthol as a characterizing flavor in cigarettes and prohibit all characterizing flavors (other than tobacco) in cigars.”
The National Association of Tobacco Outlets (NATO) explained that, if the standards are finalized and implemented, artificial and natural characterizing flavors (other than tobacco flavor) in cigars, cigar components and parts — such as cigar tobacco, filters or wrappers — would be prohibited. Flavors including but not limited to an herb or spice, clove, vanilla, chocolate, cherry, menthol and mint would be included in the ban. The regulation would also apply to premium cigars, which would only be able to feature a characterizing flavor of tobacco.
“The proposed product standard provides no sound public health reason or scientific basis for eliminating the entire flavored cigar category,” said the Cigar Association of America Inc. (CAA) in a statement. “Based on data gathered by government-funded surveys, youth usage of flavored cigars has been steadily declining for years, and youth usage of cigars in general is at an all-time low. This is only the latest in a series of proposals by the FDA to attempt to deprive adult cigar consumers of the products of their choice.”
“We believe a ban on certain cigars will clearly have an impact on our retail partners,” added David Ozgo, president of CAA. “Due to the fact that there are many unanswered questions regarding even what would be considered a ‘characterizing flavor’ under the proposed product standard, it is difficult to say what impact the proposed ban would have on c-store cigar sales were it to be finalized.”
Cigar Sales Impact
Cigar dollar sales at c-stores held steady in 2021 up 3.3%, despite a unit sales decline of more than 3% for the 52 weeks ending Dec. 26, 2021, according to Chicago-based research firm IRI.
Cigar dollar sales rolled in flat, bringing in $4 billion in dollar sales — a dip of 0.9% — for the 52 weeks ending April 17, 2022, per IRI. Unit sales fell 4.7% for the same period. Dollar sales dropped 2.3% for the latest four-week period, ending April 17, 2022, with unit sales down 2.8%.
“It goes without question that the ban will have a detrimental impact on cigar sales in c-stores,” said Steven Montgomery, president of b2b Solutions LLC in Lake Forest, Ill. “The extent of the impact will depend on two factors. First, the percentage of a retailer’s total cigar sales that the flavored cigars represented, and the willingness of their purchasers to switch to non-flavored ones.”
C-store operators might be able to mitigate lost sales by expanding their selection of non-flavored cigars, he added.
While the threat to retailers is real, it is not imminent, suggested Thomas Briant, executive director of NATO. The regulatory process will take one to two years to be finalized and go into effect, he said, and many factors could change between now and then.
In the meantime, c-store operators continue to do all they can to follow consumer trends and promote this popular category of products.
“The trend in cigars continues to be in natural leaf cigars,” offered Adam Chonko, category manager — alcohol, tobacco, beverages and store-food for Westlake, Ohio-based TravelCenters of America, which operates more than 275 locations in 44 states and Canada, under the TA, Petro Stopping Centers and TA Express brands. “Premium cigars are viable in c-stores and continue to perform well in our stores.”
“Pre-priced cigarillos in two- and three-pack pouches at 99 cents and $1.49 still dominate the category,” said Jeremy Weiner, category director, cigars and premium products for The Cigarette Store Corp., dba Smoker Friendly, which operates 180 locations in eight states.
Natural leaf cigarillos are also popular at Smoker Friendly.
“The top-selling flavors in our Smoker Friendly stores are Grape, Strawberry, Cherry, Berry and Irish Cream,” Weiner said.
Weiner said his reaction to the proposed ban of flavored cigars is intense. “Total outrage, and I am tired of all government overreach. The FDA is taking away choices from adult, legal-age consumers, and this will hurt our industry,” he said. “Flavors are popular in so many other products that are not deemed healthy, such as alcohol and soft drinks, and tobacco products are the only ones being singled out.”
A flavor ban will definitely hurt c-store cigar sales, Weiner added, since a majority of the cigars sold are flavored. The result of such a ban going forward, he suggested, will be much smaller cigar sets with fewer choices for the consumer.
“Premium cigars are a viable option for c-stores,” Weiner said, “since many premium cigar manufacturers now offer single cigars packaged in humidified pouches.”
Many manufacturers also offer packs of cigars in humidified bags that carry four of the same style or a variety pack.
The battle is ongoing. CAA’s Ozgo said the group is “committed to defending the right of adult consumers to purchase a legal product, including in the important c-store channel. While there will continue to be challenges, we’re optimistic about the future.”