While the COVID-19 health crisis has hindered the nation’s economy, it seems to have lit a fire in the cigar market, at least in the short term.
“Within the cigar category, I am seeing about a 10% increase in volume year-to-date versus the same period last year,” said Mark McCarty, director of category management with Clark’s Pump-N-Shop, which operates 67 stores in Kentucky, Ohio, West Virginia and Florida. “Much of this increase occurred within the last six to eight weeks during the COVID-19 outbreak.”
National numbers bear that out. Data from Chicago-based market research firm IRI showed dollar sales of cigars in U.S. convenience stores for the 12-week period ending April 19, 2020, were up 7.2% compared with the same time last year. And the previous four weeks were nearly double that, at 13.1%. That increase dwarfs the 52-week dollar growth of just 1.3%.
Besides the presumption of smokers stocking up, small cigars are driving those big sales.
“It’s mostly cigarillos that is the bulk of the business right now — the pre-price products of two for 99 cents, two for a $1.49, depending on what the taxes are in specific states,” said Jeremy Weiner, cigar category manager for Smoker Friendly, which operates 105 stores across Colorado, Wyoming, Montana, Nebraska and Florida. “But, yeah, it hasn’t changed much over the past few years, that’s for sure.”
The classic cigar is still a reliable seller, as well, with some customers purchasing by the box.
“We sell the 60-count Perfectos and things like that, but that’s more of the traditional cigar smoker,” Weiner said. “And I think the flavors and things like that are more for the crowd that’s anywhere from about 21 to 35.”
Weiner noted that the COVID-19 pandemic put the damper on some promotional efforts and delayed others. Nevertheless, cigar makers are still busy putting ideas together.
“Some of the limited-time offers, I think, will be affected, but Swisher’s coming out with a summer celebration — a foil pouch for the red (classic Swisher Sweet) that’s going to be like a collector series,” Weiner said. “I think it’s going to have four different packages for that same product.”
As for display, Weiner explained that all of Smoker Friendly’s sets are planogrammed and uniform, with either a four-foot or eight-foot domestic cigar set. His stores try and keep most of the product out on the floor so the consumer can interact with the merchandise.
That’s a luxury most c-stores don’t enjoy. Smoker Friendly outlets are 21-and-over establishments. Other retailers, like McCarty, have to approach display strategy differently.
Clark’s displays its tobacco products on top of the backbar counters with all of the categories of other tobacco products (OTP) at eye level to make it easier for customers to view the product in the short amount of time they’re at the checkout. But McCarty praises suppliers for their merchandising help, too.
“In regards to manufacturers, I have some great partnerships with Swisher and R.J. Reynolds, who go above and beyond to help me in resets and planograms for the categories,” he added.
Regulation Woes
All retailers and suppliers, though, must continually adjust to new local regulation. Weiner cited a Smoker Friendly outlet in a small Colorado mountain town that last summer handed down a flavor ban.
“A lot of these different counties are taking it upon themselves to put bans in place as they see fit,” he said. “And it makes it difficult for us as a retailer just because we get products from a distributor and now they have to lock those products down, so they’re not shipped to that location.”
But McCarty added the COVID-19 pandemic may play an unexpected role in easing those tobacco flavor restrictions.
“It will be interesting to see over the next six to 12 months if the talks of additional legislation in regards to flavors, etc., will be put on the back burner,” he said, citing the large losses of state and local tax revenue due to the pandemic’s economic downturn. “Hopefully the states and federal government will be focused on things to help the economy and small business, and not adding additional ways to hurt us.”
