Without a doubt, modern oral nicotine products, especially pouches, shone the brightest within the tobacco/nicotine category for convenience stores throughout 2022.
According to IRI, a Chicago-based market research firm, units of spitless tobacco grew by more than 31% for the 52 weeks ending Jan. 1, 2023. Consequently, dollar sales also jumped nearly 34%, while the price per unit barely inched upward, even with inflation. Market analysts point to three key factors buoying this other tobacco product (OTP) segment: curiosity, poly-usage and heavy promotional campaigns from manufacturers.
“In addition to being smoke free and more interesting than cigarettes is the range of nicotine concentrations, from three milligrams up to 15 milligrams,” said Alex Clark, CEO, Consumer Advocates for Smoke-free Alternatives Association. “While it appears that most consumers prefer something in the range of three milligrams to six milligrams, the fact that people who smoke can choose a retail nicotine product that’s more satisfying than replacement therapies could be a boon to more people quitting smoking.”
Demographic Shifts
Like snus, nicotine pouches offer a spitless option, which makes them more attractive to a broader customer base compared with traditional moist chew or snuff. On a National Association of Tobacco Outlets (NATO) webinar, Goldman Sachs’ Senior Financial Analyst Bonnie Herzog said nicotine pouches appeal to a younger, urban, educated demographic. Having different nicotine usage options, particularly with public use restrictions, contributes to the increases in unit sales.
“We have a growing demographic in females 18 to 45 and college students, primarily female. Our plans within this category will revolve heavily around those two demographics. Our business partners are lined up with our plan, and we look for nice improvement in both customer count and basket increase,” said Ryan Suttles, director of operations for Curby’s Market Express. The Lubbock, Texas-based business opened its first site last year and has plans to debut two more in the coming months.
However, in the Goldman Sachs “Nicotine Nuggets” Q4 survey, c-store respondents expressed concern that some pouch brands may lose a bit of luster this year if manufacturers pull back on promotions.
Clark also suggested new state and federal oversight could affect OTP.
“Policy and regulations around modern oral nicotine are moving in the same direction as rules about vaping,” he explained. “Concerns about youth use, including flavors and nicotine concentrations, are being used to justify severely limiting access to safer nicotine products. Retailers should be on the lookout for any legislation proposing to ban flavored vapor products and menthol cigarettes. It’s likely that these bills already contain language banning flavored nicotine/tobacco products. If not, there’s a good chance it will be added.”
