C-store retailers continue to wait in suspense for Food and Drug Administration (FDA) decisions on pre-market tobacco applications (PMTAs) to trickle in, revealing the future direction of the category and which products can legally be sold under FDA’s ongoing regulations.
Despite the uncertainty, vape sales maintained steady growth.
Dollar sales for electronic smoking devices increased by 13.1% to $6.20 billion for the 52 weeks ending April 17, 2022, according to U.S. convenience data from IRI. Unit sales at c-stores increased by 3.9% for the same period.
“Vape continues to stay strong,” said Nathan Arnold, director of marketing at Englefield Oil, which operates 120 Duchess locations in Ohio and West Virginia. “While other tobacco categories continue to fall, we do see some of our consumers switching from traditional cigarettes to vape. This trend has been occurring for many years and continues.”
Watching FDA Regulation
“The FDA continues to be paralyzed by fear that someone somewhere could be angry with their decisions on a flavored product,” said Greg Conley, president of the American Vaping Association, a pro-vaping advocacy organization. “They continue to only authorize the most inoffensive products.”
One of the most significant events to affect c-store operators recently, according to Conley, is the removal of blu’s nicotine salt system from the market.
“That’s something that we’ve been warning about for years that the natural end or the natural conclusion of the PMTA process was 99%-plus of existing products being banned,” he continued.
For the rest of 2022, Conley predicts the end of the disposable synthetic nicotine category or the disposable vaping products within the synthetic nicotine category due to Congress giving the FDA regulatory authority over synthetic nicotine.
Lance Klatt, executive director of the Minnesota Service Station & Convenience Store Association, sees more traditional tobacco being left alone from regulators as vaping continues to be a larger trend with young adults.
He also predicted the availability of safer options.
“(I) can see higher pricing affecting the overall category through theft and gray markets,” he added.
Disposables dominate the vape category at Boulder, Colo.-based The Cigarette Store Corp., dba Smoker Friendly, which has 180-plus locations in eight states. Tim Greene, director of tobacco and general merchandise at Smoker Friendly, believes this will change somewhat in the second half of 2022.
“The second half of 2022 will see the disposable market slow down with the regulation, although I expect many brands to remain on the market as they await FDA ruling or challenge expected marketing denial orders (MDOs),” Greene said.
The biggest change in 2022 for Smoker Friendly is eliminating the brands it knows will not submit PMTAs.
The chain’s 2022 first quarter sales were up 53% from 2021’s first quarter sales and up 12% from 2021’s fourth quarter sales.
Meanwhile in Minnesota, c-stores’ vape sales have been flat, according to Klatt, but they have been adding “mostly closed systems due to valid and safer systems offered through respectable manufacturers.”
At Rotten Robbie Gas Stations, which operates 36 locations in California, six of which are in towns with full e-cigarette bans, sales are also basically flat (up 1.5%).
In cities with e-cigarette bans, customers cross over into nearby towns to purchase their vape products.
“Stores that are next to cities with e-cigarette bans sell more product,” said Reilly Robinson Musser, vice president of marketing and merchandising at Rotten Robbie.
Juul remains the most popular brand at Rotten Robbie, which also sells Vuse and blu products.
At Duchess convenience stores, however, Vuse is outpacing other vape options.
The industry has been especially awaiting FDA decisions on market share leaders Vuse and Juul, particularly when it comes to their menthol varieties, Conley pointed out.
On May 12, FDA issued marketing granted orders (MGOs) to R.J. Reynolds Vapor Co. for its Vuse Vibe e-cigarette device and accompanying tobacco-flavored closed e-liquid pod, as well as for its Vuse Ciro e-cigarette device and accompanying tobacco-flavored closed e-liquid pod.
The FDA also issued MDOs to R.J. Reynolds Vapor Co. for multiple other Vuse Vibe and Vuse Ciro e-cigarette products. Any of those products currently on the market must be removed or the FDA may take enforcement action.
“Little can be read from this decision,” said Conley of the Vuse MDOs and MGOs.
The FDA has not yet issued a decision on Vuse menthol products, which are still under review, Conley noted.
“The authorization of a tobacco flavor, delays on a menthol flavor (decision) and bans on other flavored products have become a pattern for FDA,” Conley said.
Arnold admitted consumers and retailers are wary considering the FDA discussions on the category.
“However, it seems that our consumers are knowledgeable about the press around vape,” he said.
Recently, Duchess has increased signage and promotional offers for its vape products to promote awareness of its brands and offerings, despite the historical absence of tobacco marketing on its forecourts or in store.
Rotten Robbie offers two three-foot sections for the category, Musser noted. Smoker Friendly is continuing to feature brands and offerings its customers are searching for by highlighting the category on the backbar.