Though lighters and other tobacco accessories remain fortified by cigarettes, other tobacco products and related offerings promise to generate robust sales.
By Howard Riell, Associate Editor
Business remains steady in the tobacco accessories category, with much of the industry buzz focusing on accessories for a pair of unrelated product lines—electronic cigarettes and legalized marijuana.
In states where medical or recreational marijuana is legal—it remains illegal according to federal law—convenience stores have the opportunity to add items like pipes, lighters and rolling papers.
Meanwhile, electronic cigarettes have helped increase marketable accessory lines with cartridges, chargers, brushes and more. However the category itself has become more challenging amid slowing sales, shelf space issues, competition from vape shops and most notably, ongoing legislation.
According to IRI, convenience store sales of tobacco accessories for the 52-week period ending Aug. 21, 2016 were $251.8 million, a 0.96% drop compared to 2015. Business in cigarette lighters continues to hinge on price, design and impulse buys aided by suggestive selling, and operators are only too glad to add even slightly to their average ring.
ONLY LIGHTERS
“We’re real limited as far as our accessories offering,” said Bailey Lyden, vice president of retail for Truenorth Energy, a Brecksville, Ohio company that operates 111 truenorth convenience stores in Ohio and Illinois. “We only do lighters.”
The convenience retailer has had an exclusive relationship with Bic for nearly seven years—the manufacturer also provides the chain with a private-label lighter. “We brand one truenorth and sell it a little cheaper than the normal ones. That’s been a nice deal for us.”
Lighters bearing the logos of national and local sports teams usually do well, Lyden said.
“But our private-label lighter is our No. 1 seller just because we price it 10 cents to 20 cents cheaper to try and get our brand out there,” Lyden said. “We were trying to keep the bigger Bic lighter under 99 cents, but I think recently we just broke that dollar threshold.”
The branded lighter sells for about $1.19.
The c-store chain, also currently working with Bic, developed a couple of different types of wraps adorned with the chain’s logo.
“That is another benefit of teaming up with Bic,” Lyden said. “You have that option to work with their marketing team and create something kind of cool and unique for you. We see benefits in getting a branded lighter out there.”
Counter-top displays for impulse sales is, of course, a given, Lyden said.
“The only other thing I could think of is maybe running a contest with your (customer service representatives) to see who could sell the most lighters in a given time frame,” Lyden said. “That way we’re making sure the employees are asking every time someone picks up a tobacco product. It’s such a necessary type item that it’s tough to sell outside of the need itself.”
When it comes to conventional cigarette lighters, Kumar Assandas, a 7-Eleven franchisee based in Henderson, Nev., follows pricing trends to maintain sales.
“I stock more of the cheaper-end stuff, the 99-cent models, because the cigarette prices are so high,” Assandas said. “We don’t sell too many of the refills.”
His store carries both Bic and 7-Eleven-branded models. Suggestive selling by cashiers helps drive impulse sales.
“Most stores used to carry matches, but we’ve gone away from that just to promote buying the cigarette lighters.”
Meanwhile, two other tobacco-related categories that boast their own families of accessories appear to see their fortunes moving in nearly opposite directions.
ALTERNATE MARKETS
Last year, Pennsylvania passed legislation to legalize medical marijuana, bringing the total number of states (plus Washington, D.C.) with some form of legal marijuana to 24.
Assandas said that while medical marijuana is legal in his state he doesn’t stock any accessories to accommodate users except for two popular brands of rolling paper, Urban Wraps and Zig Zag.
“In 2017, marijuana is supposed to be approved for recreational use in Nevada,” Assandas said. “At that point, we’ll add new products for those customers. I have no idea which ones yet; there is nothing on the horizon that I’ve heard of.”
At Grasslands Market, based in Douglas, Wyo., legalized marijuana is becoming a viable driver in the tobacco accessories segment.
“Tobacco is really dropping off in our area. I don’t see us taking space for accessories any time in the foreseeable future,” said Ed Pollock, a principal of Grasslands Market. “That area will eventually be a growth industry, and already is in Colorado. Legalization seems inevitable, and while the ‘shops’ will be the primary source, I believe convenience stores will be just that—convenient and available. Vaping and e-cigs just aren’t much of a seller for us, and I don’t see that changing here in Wyoming.”
E-CIG POTENTIAL
IRI reported that c-store sales of electronic smoking devices tipped $690 million for the 52-weeks ending Aug. 21, 2016, a dip of 3.24% compared to the same period in 2015.
According to Greg Conley, president of the American Vaping Association (AVA) based in Hoboken, N.J., vaping accessories range from atomizer coils to bands, tanks and even the e-liquid cartridges themselves. “But I don’t know of anyone who is trying to sell those in convenience stores. They are mostly a vape shop products. Accessories aren’t a very hot area in my mind for c-stores, and even in vape shops, there aren’t that many accessories.”
Conley referred to recent analyst research that found most convenience stores were not planning on expanding their e-cigarettes’ availability.
“They had gotten the number of brands they were satisfied with, and that was that,” Conley said. “But I think the businesses that have e-liquid among convenience stores are doing well with the category. It’s not a very large display to have 60 or 70 bottles available to consumers. And it’s fairly profitable, usually with fairly low wholesale costs. We always encourage convenience stores and traditional outlets to get into the e-liquid game, especially since that is the one that is the type of product that is actually helping smokers quit.”
Mahendra Atodaria, general manager of Smiley’s Express in Huntsville, Texas, said while sales of electronic cigarettes aren’t growing, sales of the accessories with them remain dependable. He stocks a variety of cartridges, brushes, tips, pens and pipes.
While his stores carry the top e-cigarette brands, Blu, VUSE and MarkTen, Lyden said his management team has remained conservative with the category.
“Sales are not really guaranteed quite yet, so we stick with the basics there as well,” Lyden said. “I think they have battery packs and items like that. But again, we are very conservative on our approach to the e-cigarettes category.”
Assandas said business is brisk in e-cigarettes, which is why he stocks accessories like refillable cartridges, batteries and chargers. Both products and accessories are merchandised on the cigarette back bar.
“On occasion we have e-cig advertisements out in front on our windjammer sign,” Assandas said. “We do have promotions for products like those. But other than that we rely on the manufacturer’s own advertising.”
