For most convenience stores, the cigar segment within the overall tobacco category can be split between three product families: traditional or premium cigars, petite cigars, which are smaller versions of the traditional version; and cigarillos. Of the three, the latter racks up more transactions. In addition to be sold in multipacks at affordable price tags, cigarillos feature multiple flavor options. A flavored tobacco ban on cigars would be hugely impactful on this other tobacco product (OTP) segment for c-stores.
In April, the Food and Drug Administration (FDA) announced it is officially pursuing a ban on flavored cigars along with a ban on menthol cigarettes. The agency insists flavored cigarillos entice and encourage underage users. “Characterizing flavors in cigars, such as strawberry, grape, cocoa and fruit punch, increase appeal and make cigars easier to use, particularly among youth and young adults,” the agency wrote in its announcement.
By removing these items, the agency theorizes, school-age individuals will be dissuaded from developing tobacco habits. However, the restriction certainly would cause c-stores to rethink their cigar strategy. Perhaps filling the vacated shelf space with more premium brands will keep cigar customers interested.
A flavor ban most certainly would push stores to pull cigarillos, but it also will eliminate current promotional opportunities. Throughout the year, manufacturers like Swedish Match and Swisher release limited-edition flavors, which offers category managers promotional opportunities. Without that built-in incentive, managers will have to find alternative marketing options, such as redirecting customer attention toward fellow OTPs. Note: The FDA has issued market denial orders (MDOs) for millions of flavored vape products. This spring, it also began the market authorization review process for synthetic nicotine devices, which could result in more MDOs on flavored products.
Fortunately, there’s time before any action has to take place. After the 60 days of public comments, the Office of Management and Budget will conduct a review for multiple factors, including any unintended consequences. The FDA then has a compulsory one- to two-year delay while concerns are addressed before issuing a final rule change.