Sponsored by Cheyenne International
As name-brand tobacco and nicotine products see persistent price increases, c-store operators are increasingly turning to high-quality 4th-tier options as a profitable strategy. This shift allows operators to cater to the growing consumer demand for affordability without sacrificing quality.
To save money, consumers are showing a growing interest in discount tobacco products that prioritize quality and consistency. “We’ve seen deep discount brands account for as much as 44 percent of total cigarette sales in certain states which reflects a significant shift toward more affordable options,” says Ernie Teague, vice president of sales and marketing at Cheyenne International.
For c-store operators looking to offer a wider range of nicotine products to consumers, it is necessary to now look towards 4th-tier or deep-discount products. “Tobacco and nicotine typically account for 20–30 percent of a store’s revenue so it’s important not to overlook it,” Teague says. “When it comes to the bottom line, tobacco is an important piece, but retailers need to have the right mix to meet the needs of consumers in their area. With the right products, priced correctly, and well merchandised, tobacco is a vital and viable category for c-stores.”
Steve Barbour, owner of Cigarettes 4 Less, found customers were interested in deep discount products as long as the quality was maintained. As much as two-thirds of his sales are from deep discount products. “Premium brand’s prices were going up and the value brands were following them,” Barbour says. “So, after a certain point in the late nineties, I felt like there was another level that could be targeted, which was the price level the value brands used to be at. Deep discount brands were being made by smaller manufacturers, like Cheyenne. They were startups, but I liked the idea of having another level customers could choose if the value brands got too expensive.”
This trend underscores the growing importance of price-sensitive strategies in the tobacco market as economic pressures mount. “I liked that Cheyenne products were made in the United States. I chose them because they had a great-looking package that I thought would help me push the product,” Barbour says.
As the price for premium and value tobacco increases, high-quality 4th-tier products have proven to be lucrative for c-store owners. Price hikes in premium and value tobacco products continue to be an issue for consumers. Partnering with a reliable company, like Cheyenne, gives consumers and c-store operators another tobacco option that won’t break the bank.
For c-store operators who may be on the fence about offering 4th-tier products, Barbour has some simple advice. “I would tell anyone who is starting a business or has been in the business a while that offering deep-discount products is not an option. Operators have to offer more price options that are good quality. This trend is getting more obvious as the industry moves forward because large companies increasingly have more expenses, translating to multiple price hikes a year.” For more information on Cheyenne’s 4th-tier tobacco products visit theyearfor4thtier.com
