Cigars are feeling the lingering heat of inflation. According to Circana, the price of large mass cigars in U.S. convenience stores last year rose by 5.5%, and the price tag of little cigars, such as cigarillos, also climbed by 5%. The cost of premium cigars was on par with a jump of 4.3%.
Prices, however, were basically the only statistics for cigars to go up in the 52 weeks ending Dec. 31, 2023. Circana reported unit sales in c-stores dropped for each subcategory, but little cigars fell by more than 18%. Dollar sales for little cigars also declined by 14.3%.
“The typical tobacco consumer is still being impacted by a reduction in disposable income and has become ever more attuned to obtaining their nicotine at the lowest possible price,” said Don Burke, senior vice president for Management Science Associates (MSA). “The growth in the disposable vape product category, particularly those offering value benefits, such as imported items offering thousands of puffs, are likely very enticing to the cash-strapped tobacco user that used to purchase from other tobacco categories.”
In addition to economic impact, Burke said weaker marketing support from manufacturers has had an effect.
“For the cigarillo category, this is a change from a few years ago when it was growing quite considerably. MSA has attributed this decline to a reduction in the amount of promotion (typically pre-priced packages) in the cigarillo category,” he explained.
Regulation Watch
Of course, cigars also have the impending flavor ban hanging over them. The Food and Drug Administration (FDA) is set to announce its decision on new rules this month. Many in the c-store industry already expect a ban to have a substantial impact on the category’s profitability.
“If this plan would go into effect, it would drastically reduce the number of products we would be able to sell. The domestic cigar sets in our stores would probably need to be reduced by at least 50%, if not more,” said Jeremy Weiner, category director of cigars and premium products for Smoker Friendly. The Boulder, Colo.-based company also operates Payless Cigars & Pipes and Rocky Mountain Cigar Festival.
“Currently, I see most manufacturers focusing on cigars that do not contain flavors. In-store sales promotions and releases revolve around these types of products and have the names of Silver, Gold, Platinum, Diamond and Blue. I believe this is a plan to get consumers introduced early to the products in case flavored products are removed from the shelves in the future,” he added.