C-store retailers can breathe a collective sigh of relief now that the proposed ban on menthol cigarettes and characterizing flavors in cigars has been further delayed — likely pushed to after election season.
The Food and Drug Administration (FDA) first proposed the ban on menthol cigarettes and characterizing flavors in cigars in April 2022, with final rules predicted for August 2023. But the anticipated announcement regarding the final rules didn’t come, with the FDA moving the announcement date further several times. The agency’s most recent estimate of a March 2024 announcement came and went without a peep from the agency. In response, anti-smoking groups sued the U.S. government over the delay in early April.
Then on April 26, the Biden administration announced it was delaying a decision on whether to issue a final rule at all. The move came as no surprise to many in the industry who had predicted the final rules would be delayed until after the November election. But does this mean the ban might not happen at all?
“Regarding the menthol delay, I do see it as just that — a delay,” clarified David Spross, executive director of the National Association of Tobacco Outlets (NATO). “While no time has been specified, I see the delay lasting at least through the November 2024 election since it has become such a political issue. Depending on the presidential election, results could have an impact on the potential timing of the bans or if they occur at all.”
NATO, as part of the comment process for the proposed ban, met with representatives from the Office of Management and Budget, the executive office of the president, the FDA and the Department of Health and Human Services and advocated that the rules not be finalized. NATO pointed out that the ban would have a substantial adverse economic impact on the retail businesses that are reputable, licensed and regulated. It would also hurt government revenues and public programs that are funded by those revenues. What’s more, the ban could shift these products to the black market. Meanwhile, licensed and regulated retailers are following the laws and regulations, which is already helping to reduce youth access to tobacco products.
Mike Jones, director of marketing, S&S Petroleum Inc., which has 90 stores in Washington, Idaho, Oregon and California, noted the delay is a positive for the tobacco category, but meanwhile legislatures are looking to pass similar bans at the state and local levels.
Spross pointed out that, at press time, pending state-level flavor ban legislation included a total flavor ban introduced in Michigan; a total flavor ban pending in committee in Minnesota that was scheduled for review on May 20; and a total flavor ban from a bill carried over from the 2023 session pending in committee in Pennsylvania. Rhode Island added a ban on flavored vapor products to its budget bill that is scheduled for review on June 30, which would codify the Rhode Island Health Department’s current ban on flavored products that is already in effect. And New York has added oral nicotine pouch products to its vapor flavored ban, scheduled for review on June 6.
Trend Watch
Meanwhile, cigarettes and cigars are facing inflationary heat. Prices were up 4.2% for the 52 weeks ending April 21 and 3.8% for the four weeks ending April 21 for cigarettes. Cigarette dollar sales fell 2.1% for the 52-week period, with unit sales dropping 6%. At the same time, cigar dollar sales grew 2.7%, with unit sales down 6% and prices up a whopping 9.3%.
“With increased price pressure we are seeing shifts to cheaper and alternative brands, or even options to traditional cigarettes,” Jones said. “Cigars are mixed as we see more value play from the consumer in this category.”
Jones said he sees customers taking a hybrid approach to cigarette shopping, where fourth-tier or value brands are gaining traction, but customers then go back to premium on more of a treat-based occasion. With cigars he sees customers moving toward single cigars and value options.
Looking ahead, Jones predicted a soft year for cigarette volumes.
“Sales may be slightly up due to retail increases, but (I) expect that units and cartons per week as a whole will be soft,” he said. “Cigars could see some lift as a result of consumers shifting from cigarettes to cigars as a possible replacement.”
