Retailers, economists and parents worried the clogged supply chain would depress the holiday spirit by limiting inventories last year, but other tobacco products (OTP) category sales remained strong through the end of 2021. And as convenience store tobacco/nicotine category managers will attest, supply issues have existed since the early days of the COVID-19 pandemic. Cigar distribution, for example, has been strapped for two years. Despite these challenges, cigar sales held steady, or at least benefited from price increases.
According to Nielsen data from all retail channels, reported by Goldman Sachs, dollar sales for two-year stack trends were up for each period of two, four, 12 and 52 weeks ending Jan. 1, 2022. As noted, though, prices have risen by at least 12% over each time frame. By brand, price jumps varied greatly, from less than 2% for Swisher and to nearly 63% for Acid, also produced by Swisher International Inc.
Supply issues, however, could finally be settling.
“Cigars fared well this year, even with all the supply chain issues impacting the major cigar suppliers produced in the Dominican. Cigar business grew at +30% improvement to (last year),” said Jon Manuyag, director of marketing for Plaid Pantry. The Beaverton, Ore.-based retailer owns and operates 107 stores in the Pacific Northwest.
“We are excited to see the continuous supply chain increase as manufacturers improve production, namely in the cigar categories. Cigar production and product availability continues to improve,” said Tim Greene, category director, GM and Tobacco for Smoker Friendly. Its parent company, The Cigarette Store Corp., based in Boulder, Colo., operates more than 160 retail stores across seven states, including Gasamat convenience stores in addition to tobacco outlets and cigar lounges.
Vape Rises
“The biggest surprise (was) the vapor category as we navigated the unknown following Pre-Market Tobacco Applications,” Greene added.
On the whole, Nielsen data reveals vape finished out 2021 with jumps in dollar sales, unit volume and price across two, four, 12 and 52 weeks. As has been the case for much of last year, Vuse keeps grabbing market and dollar share, with more than 36%, 39%, 47% and 57% growth, respectively, for each time period. Leading disposable e-cigarette brands Puff Bar, Bidi Stick and Blu saw declines in both dollar and unit sales across the time periods.
“Our vape sales took a little bit of a punch in the mouth in 2021 due to the added Oregon vape tax in the beginning of the year, impacting unit volume in our market,” said Manuyag. “Customers that are overwhelmed with the sticker shock of the new 2021 vape tax imposed in Oregon have started to migrate back to smoking combustible and trying modern nicotine.”
Pouch Power
Indeed, the oral nicotine section, often classified as reduced risk, remains the unabated category growth leader. Nielsen reports ZYN and Velo increased dollar sales by double digits for each period. On! outpaced the others by more than double, with an impressive 103% increase for two and four weeks, almost 114% for 12 weeks, and more than 195% for 52 weeks.
“We continue to see dual use increase from our smokers and smokeless users as they turn to nicotine pouches when they can’t smoke or use traditional smokeless products,” said Greene.
“We’re seeing improved take rates on customers purchasing bundle deals and even full roll sales in this segment. Also, we are heavily looking into CBD hemp sticks and CBD-infused pouches,” said Manuyag. “This could be an emerging segment for us in the future, especially with all the discussion around regulation with flavored vape and menthol-flavored cigarettes.”
Of course, the new year started with new regulations for tobacco/nicotine products. Oregon joined other states in prohibiting shipments of inhalant delivery systems directly to consumers. More cities, such as Bloomington, Minn., implemented bans on flavored tobacco/nicotine products. Moving forward this year, Colorado legislators have promised to reintroduce bills for statewide bans.
“As it seems with every year,” said Greene, “2022’s biggest concern continues to be regulation at the local and state levels. In addition, we continue to wait for post-PMTA regulations and what effect that has on product offerings.”
