As on-again, off-again tariffs roil markets, retailers are watching for possible impacts on the tobacco category while customers are pulling back on spending and finding opportunities to trade down.
According to Observatory of Economic Complexity, the U.S. is the largest importer of lighters, a top-selling tobacco accessory for convenience stores nationwide. The international trade research organization also confirms China is the top exporter of lighters. That supply-and-demand relationship puts the c-store staple in jeopardy of facing tariffs.
As of April 8, President Donald Trump placed a 145% tariff on goods imported from China as well as smaller percentages against numerous other countries. Although some exemptions were named later on and the administration eventually agreed to a 30% tariff by mid-May, the fact remains that lighters and other tobacco-related products remained on the tariff target list.
The full fiscal effects resulting from the tariffs weren’t immediately evident this spring. Sales of lighters posted more than $41 million for the four weeks ending April 20, per Circana, and unit sales of matches jumped 6%. The market research firm also reported cigar accessories enjoyed an 8.3% increase in dollar sales for the 12 weeks ending April 20. However, as pre-tariff inventories are depleted, costs could increase as stores restock shelves.
“The industry does have resiliency, but I see pricing increases to continue to affect consumer use throughout the tobacco category,” said Lou Maiellano, president, TAZ Marketing & Consulting Group.
Jeremy Weiner, category director of cigars and premium products for Smoker Friendly, has been exploring alternative supply options to keep his stores fully stocked. The Boulder, Colo.-based company is owned by The Cigarette Store Group, which also runs Tobacco Depot, Smoke ‘N Go, Havana Manor and Gasamat retail sites.
“I will wait and see how the tariffs play out, but I will source the companies that have the best prices for cigar accessories and purchase from (them). Some companies I have spoken to mentioned they can source similar products from other countries that would have lower tariffs,” he said. “I want as little disruption as possible for our dedicated cigar consumers.”
Of course, accessories aren’t the only products within the tobacco category that could experience price hikes due to tariffs. The majority of premium, or hand-rolled, cigars are produced in Nicaragua, the Dominican Republic or Honduras, each of which has had a 10% tariff levied this year. The additional cost could hamper the segment further.
According to Circana, premium, large mass and little cigar segments are experiencing declines. Each dropped in dollar sales in a 52-week comparison while also incurring price hikes.
In the win column, the U.S. Court of Appeals delivered premium cigars a reprieve this spring when it denied the Food and Drug Administration’s (FDA) appeal to regulate this particular subcategory of tobacco products.
