The current Trump Administration continues delivering rapid changes to the Food & Drug Administration’s (FDA) Center for Tobacco Products (CTP). First, the proposal to ban menthol for cigarettes and characterizing flavors in cigars was withdrawn. Then the call to lower maximum nicotine levels was deprioritized, although the agency continues to accept public comments on the proposed rule change. And by late February, approximately 100 CTP staffers received layoff notifications.
“As the new administration looks for federal government efficiencies, the hope is that Premarket Tobacco Product Application (PMTA) review delays are addressed, as the FDA has consistently failed to comply with the Congressionally imposed six-month deadline to review a PMTA and issue a final order either authorizing or denying the marketing of a tobacco product,” said David Spross, executive director for the National Association of Tobacco Outlets (NATO).
However, some news outlets reported that the layoffs included individuals tasked to review PMTAs. Of course, state and local regulations impact c-stores, too, and Spross said many lawmakers have tobacco on their agendas again this year.
“So far there are approximately 15 states that are considering increased tobacco taxes, including large-market states such as Ohio, Michigan and Indiana. In addition, Northeast governors from Maine, Rhode Island and Massachusetts included nicotine taxes in their state budget proposals,” he said.
The adoption of state-level registries identifying FDA market approvals or products qualified to remain on sale while PMTAs are under review continues — Kentucky, Virginia and Wisconsin initiated registries this year. Plus, the perennial topic of flavor bans is back on the legislative table.
“State flavor bans on all tobacco products continue to be considered, particularly since the new White House administration withdrew the ban on menthol cigarettes and flavored cigars. States actively considering legislation include New York, Washington, Oregon and Hawaii,” said Spross.
Real-time Reactions
Outside of political wrangling, the tobacco/nicotine category keeps trending toward modern oral nicotine and away from cigarettes. Data from Chicago-based market research firm Circana shows cigarettes still pulled in the largest dollar amounts in the U.S. c-store channel for the 52 weeks ending Jan. 26, more than $51 billion, but sales fell by nearly 4%. Unit sales dropped even more by 8.4%. During the same period, spitless tobacco products grew by almost 57% in sales and slightly more than 41% in units. The chewing tobacco alternative segment also gained 42% in dollar sales and 31% in units. Electronic smoking devices, including vaping products and vaping accessories, slipped by double digits for both measurements.
“Other tobacco products (OTP) and modern oral products are still going strong. We’ve seen a lot of growth in that category while combustible cigarettes have had double-digit declines,” said Bailey Lydon, VP of retail for True North Energy. Based in Brecksville, Ohio, the company owns and operates 193 retail and fuel sites in Ohio, Michigan, Illinois and Wisconsin.
The shift, however, isn’t as clear cut as smokers switching to OTP. Rather, Lydon said there’s more interplay within the category, an observation frequently echoed by category managers across the country.
“We’re seeing a lot of dual use and crossover between moist snuff, e-cigarettes and combustible cigarettes,” Lydon explained.
“We also notice customers who purchase modern oral are more willing to try other products, especially if they’re on sale,” he continued.
Lydon tries to capture that curiosity through the company’s truerewards loyalty program.
“It’s a way to promote new product entries and drive trials,” he said, adding that the strategy was particularly effective when experiencing pouch stock shortages last year. “We also are dedicating more backbar space to modern oral nicotine products and alternatives and less to combustible cigarettes.”
Indeed, despite regulatory ups and downs, a diverse offering of OTP engages customers who appreciate options.
