Tobacco’s 2020 Trajectory

June 9, 2020

Great article from CStore Decisions. A bit lengthy but there is some great information here. Nice @Nielson information also.


Rising sales are boosting retailer optimism across the category, but regulatory hurdles loom.

Tobacco sales have proved a bright spot for many convenience stores during the COVID-19 pandemic, but while c-stores anticipate robust tobacco sales for the remainder of 2020, retailers are bracing for the potential chill of regulatory headwinds.

As the pandemic first hit the U.S., many customers began hoarding tobacco products — particularly cartons of cigarettes — ahead of shelter-in-place rules, according to data from the InfoMetrics database managed by consulting services firm Management Science Associates (MSA).  

“As the stay-at-home situation has continued, there has been increased consumption of all types of tobacco items with the exception of vape, possibly because consumers are at home and not in locations where there are restrictions on its use,” said Don Burke, senior vice president of MSA.  

A poll by consumer intelligence research platform CivicScience found that from April 28 to May 11 — at a time when most areas of the country were still experiencing stay-at-home orders — 31% of cigarette users reported smoking more frequently, and 28% of e-cigarette/vape users reported vaping more frequently. Some 44% of cigarette smokers and 34% of smokeless, e-cig and cigar users reported buying their tobacco product at a c-store most often during the same period. 

Research firm IRI’s Convenience All Scan data found smokeless tobacco dollar sales grew 7.8%, with spitless up a whopping 80.6% for the four weeks ending April 19, 2020. Tobacco accessories dollar sales were up 33%, and cigars climbed 13.1%, while cigarettes dropped 2.4%, and e-cigs dipped 1.1% for the same period. Nielsen data showed e-cigs down 8.5% and cigarettes down 5% for the four weeks ending April 25, 2020, but similar upticks in other tobacco products, with cigars up 11.3%, pipe tobacco up 14.1% and “shag” or rolling tobacco up 28%. 

Depending on location, c-store retailers are seeing various realities and differing surge/decline timelines when it comes to tobacco sales. 

Store-Level View

Doug Galli, vice president and general manager for Reid Stores and Crosby’s, said sales of other tobacco products (OTP) including cigars, snuff and e-cigarettes climbed at the company’s 82 c-stores in New York and Pennsylvania, ahead of shelter-in-place rules. 

Year over year through April, “cigars are up 7%, e-vape is up 29% and the ZYN/Velo category that was non-existent last year has shown some legs. That category is 50% of the lift over last year,” Galli said. He added that moist snuff was down slightly for the same period.  

On Feb. 6, 2020, the Food and Drug Administration (FDA) ruled that c-stores and other retailers can no longer carry display cartridge-based e-cigs or vaping pods in flavors other than menthol and tobacco, but flavored disposable e-cigarettes are still legal. 

“The FDA attempted to strike a balance between protecting adult access to flavored vaping products and discouraging youth from vaping,” noted Gregory Conley, president of the American Vaping Association. “Unfortunately, this move has undoubtedly led some adult ex-smokers to relapse and less adult current smokers to attempt to switch over.” 

The growth seen at Crosby’s c-stores is “in spite of the (federal) flavor ban in (non-disposable) e-cigs and vape products, along with the addition of the ZYN/Velo products,” Galli added. 

The cigarette segment, meanwhile, has been down 10% at Crosby’s c-stores through April, a slump Galli attributed to the purchase age for cigarettes increasing from 18 to 21 on Nov. 1, 2019, in New York state. Shortly thereafter, on Dec. 27, 2019, the FDA officially changed the minimum tobacco purchase age at the federal level from 18 to 21. The new nationwide Tobacco-21 law was effective immediately and applies to all tobacco products, including e-cigarettes and vaping cartridges.

Across the country, Cenex Zip Trip saw a different trajectory at its 36 c-stores in Montana, Wyoming, North Dakota, South Dakota and Minnesota. 

“While early March and April saw a small decrease in tobacco sales during the heart of the stay-at-home orders in the states we serve, in the past three weeks, we’ve seen them rise back similar to what we sold during the same time span a year ago,” said Zip Trip Merchandising Manager Jon Fleck. 

Montana — where the majority of Zip Trip’s stores are located — is now transitioning into the next phases of loosening stay-at-home restrictions, but during the lockdown, despite decreased customer traffic, the tobacco category held its own, Fleck said. 

Fleck noted tobacco companies are offering bigger buydowns and providing them earlier than planned. “With advertising these deals with outdoor signs and matrix reader boards, we have seen some (sales) come back,” Fleck said. 

At the end of 2019, a temporary ban on flavored vape products — including menthol — went into effect in the state of Montana. “We did a tremendous business in Montana with flavors prior to the ban,” Fleck said. 

The ban on menthol, however, expired in mid-April, and the chain is now bringing in some flavored disposable e-cigs. 

Given the Montana flavor ban, Zip Trip has seen a 20% drop in e-cig sales. Although the e-cigs/vaping segment is down significantly because of flavor bans, Fleck noted, “the category is doing well as a ‘comfort product’ along with beer during this pandemic.”   

Meanwhile, chew, snuff and cigars are down slightly — “which isn’t bad considering the drop in customer counts (due to the pandemic),” said Fleck. “We categorize tobacco alternatives with these products as well. ZYN, Dryft, etc., have been a pleasant surprise that has picked the overall category up.”

At Zip Trip, tobacco customers are asking for specials, and seeking “the bigger, better deal.” “Similar to beer, cigarettes are comfort products, so while we did a small decrease in business during this time versus the prior year, we attribute most of that to the smoking age increasing to 21 as opposed to COVID-19,” Fleck said. 

Meanwhile, in Texas, Irfan Tejani, CEO and president of Tejani Holdings, the parent company of Charge Up c-stores, said COVID-19 had a big impact on tobacco sales. 

“Sales were down all across the board by double digits as customers did not know how to react to the entire situation, and then we started to get momentum back,” he said. 

Headquartered in Sugar Land, Texas, Charge Up operates 40 c-stores in Texas and Louisiana. 

“Louisiana stores specifically had to adapt to operating during a strict lockdown,” Tejani said. Overall, he noted that “despite the ongoing restrictions, the cigarette category remains the highest grosser all across (our stores).” 

Smokeless tobacco has been stagnant to growing at Charge Up, depending on the location, while cigarillos are “very strong,” particularly the single sticks, which Tejani noted offer good profit margins. What’s more, he sees cigarillo sales growing — “especially the singles and promo packs like 3-for-1 and 4-for-1 packs,” Tejani said. 

Charge Up is also testing the oral nicotine category. Nicotine toothpicks are sold at select stores. 

“It’s a special category that doesn’t sell across the board,” he said. “Nicotine gums seem to be doing good where this category is sold.”

Tejani, Fleck and Galli all anticipate strong sales for tobacco for the rest of 2020. 

“Tobacco in our New York stores is about to grow. Effective May 18, if your retail location has a pharmacy, you will not be allowed to sell tobacco products,” Galli said. Crosby’s stores in Erie County, N.Y., experienced a lift in their tobacco sales when an identical rule went into effect there around a year ago.

Tejani said he believes the tobacco category will continue to stay strong and consistent over the coming years — unless regulations become even stricter — with e-cigs slowly taking over a bigger portion of the category. Despite ongoing regulations, customer needs drive the market, and customers continue to demand tobacco sales, he pointed out. 

“We see tobacco numbers increasing the rest of the year, as many uncertainties lie ahead with COVID-19,” Fleck said. “Once again, for tobacco users, it is a comfort that they rely on during these times.”  

What’s Ahead? 

One headwind for retailers to watch is potential for tax increases on tobacco products due to the pandemic.  

“COVID-19 is creating serious budget issues that we’re only just now starting to calculate. States that had started to grow accustomed to having large surpluses now have huge deficits that may surpass what states dealt with during the 2009 recession,” Conley pointed out. “As a result, tax increases on all tobacco and nicotine products are absolutely going to be considered in dozens of states over the next year. On the plus side for retailers, budget deficits will make it more difficult for state legislators to justify banning flavored vaping or tobacco products due to the tax revenue and jobs they provide.”

Another is how the premarket tobacco authorization (PMTA) will impact the category. 

At press time, the new date when (PMTA) applications are due to the FDA is set for Sept. 9, 2020. 

“In theory, this would mean that after the September deadline, only products with pending or approved PMTAs before the FDA can continue to be sold by retailers across the U.S. Those selling JUUL, NJOY, Vuse, blu, etc. have little or nothing to worry about in terms of potential dead stock, but some of the more fly-by-night companies that make disposable vaping products seem likely to exit the market in September,” Conley warned. 

For a while, the shelf space for vaping products in c-stores seemed to be increasing by the month, he said. But now that some products are likely exiting the market ahead of the PMTA deadline, “the opposite appears to be occurring.” 

Conley believes states will begin to police the market more aggressively than the FDA. “We are going to see attempts at the state level to make selling products without a pending or approved PMTA a crime. Of course, this will not stop the black and gray markets, but will just drive them further underground,” he said.

read entire article here: https://cstoredecisions.com/2020/06/08/tobaccos-2020-trajectorby clicking herey/


Convenience Store Retailers Cite Top Trends for 2018

January 10, 2018

NACS gives us their predictions for 2018. The great news is that backOffice Software™ from Insight Retail Software can handle everything that comes your way in 2018.  INCLUDING YOUR SCAN DATA SERVICE!


From Nacs:  ​ALEXANDRIA, Va. – Growth in healthy food and beverages sales led to positive overall sales at convenience stores in 2017, and retailers expect the momentum to continue in 2018, according to a survey of retailers released today by the National Association of Convenience Stores (NACS).

More than two in three convenience retailers (69%) said that foodservice sales increased last year, and 61% said that sales of better-for-you items (i.e., fruits/vegetables, yogurt, nuts, health bars) experienced sales gains. By comparison, only 7% said that foodservice sales were down and only 3% said that sales of better-for-you items decreased.

“Customers are demanding higher quality foods and snacks” at Chestnut Petroleum stores (New Paltz, NY), according to Mickey Jamal. Sales of healthy food and drinks were strong in 2017 at Arroyo Grande Valero (Atascadero, CA). Protein bars and fruit and protein smoothies propelled sales at A-Square Enterprises Inc. (Conyers, GA), and water—whether plain, flavored or coconut water—grew sales at Select Fuel & Convenience (Red Bud, IL).

Convenience stores sell an estimated 80% of the fuel purchased in the United States and retailers also said sales were strong at the pump: Most retailers (52%) said that fuel sales increased in 2017, compared to 20% who reported a decline in gallons sold.

Trends for 2018
Retailers also predicted emerging trends for 2018. Kombucha drinks will continue to grow, as will new programs for home delivery, according to Lisa Dell’Alba at Square One Markets (Bethlehem, PA). New payment methods also will be a top trend, said Kent Frieling at Stop ’n Save (Grand Junction, CO). And healthier meal replacements won’t just be a big trend in 2018—they will also be on his menu, complimenting a robust growler fill program, said Kent Couch at Stop & Go Mini Mart (Bend, OR).

Also, retailers said that the lunch daypart has the most potential to grow sales at their stores, with 67% identifying lunchtime traffic as their biggest opportunity. But other dayparts also hold promise, including the opportunity to grow sales of mid-day snacks, noted Stephen Lair with Petromark Inc. (Harrison, AR).

“People love food inside a convenience store. It’s a one-stop shop for them,”

said Parvez Himani at Priya Impex Inc. (Alpharetta, GA).

Strong Optimism for 2018
Beyond products, retailers say that strong consumer optimism over economic prospects, identified in the monthly NACS Consumer Surveys, also helped grow sales in 2017.

“There seems to be a direct correlation between our customers’ view of the economy and their use of disposable income in our marketplace,” said Dennis McCartney of Landhope Farms (Kennett Square, PA).

Strong consumer optimism also translated into strong retailer optimism. More than three in four (77%) retailers are optimistic about their business prospects for the first three months of 2018, with the same percentage of retailers optimistic about the overall U.S. economy for the first quarter.

Some Concerns Loom in 2018
Competition for the convenience store customer is the top concern of retailers heading into 2018, with nearly half (46%) saying that they expect to continue competing with other channels and other convenience and fuel retailers (45%).

Labor is another major concern, cited by 45% of retailers, such as finding and recruiting top talent in the market. To address the issue, retailers say that are recruiting employees from non-traditional labor pools including retirees, disabled workers and military veterans.

“For the right kind of person, it is a fun job. Interacting with customers is enjoyable as our business attracts a lot of repeat customers whom they see every day,”

said John Clark with Alpine Mart (Stowe, VT).

Regulation and legislation that could potentially harm their operations is also a concern, cited by 42% of retailers, especially those doing business in California.

The quarterly NACS Retailer Sentiment Survey tracks retailer sentiment related to their businesses, the industry and the economy. A total of 103 member companies participated in the December 2017 survey.

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 Call: 518 633 4111 x 108 for more details
Insight Retail Software Website – we have lots of info here!

Doing that one thing that makes your store better than the rest and lets your customers know that you care.

November 14, 2017

I was speaking to Imad Khalil from Kelly’s Fuel Mart in Melvindale, Michigan about the Scan Data Service that we provide for Altria and RJ Reynolds Tobacco Incentive Programs.  Imad was wondering if the service was right for his business but after speaking with our team of experts he knew this program was key to staying competitive in his area and that is something that he takes very seriously.

I enjoyed visiting with Mr. Khalil where I learned more about his business and what he does to provide a great service to his customers.  He explained that his latest customer service feature was the addition of U-Glove’s at each pump station.  “U-Glove?” I asked.  I was so interested to hear more because I can’t stand to have the smell of gas on my hands.  He explained that each pump is equipped with a dispenser of plastic gloves that are provided at no cost to the consumer.  These disposable gloves offer a clean and germ free experience for the customer.  “I LOVE IT!” I said, “Can I share this on my blog?  Tell me more!!”  He said there is a cost to the merchant for providing this service but he believes that these little things make a big difference to his customers.  [I know I would drive out of my way and pay a few pennies more per gallon to have a nice clean environment.  Not to mention saving a manicure.]  Even if the gloves aren’t used, I believe that just offering this service shows that Imad cares about his customers.  I am certain that Moms with a carload of kids would greatly appreciate having gloves since they aren’t always able to go inside and wash their hands.

So – Good job Kelly’s Fuel Mart and thanks for being an Insight Retail Software Scan Data Customer!  We appreciate your business.

U-Glove


Imad is also participating in InsightRS Scan Data Program that keeps him competitive in his tobacco market.

Tobacco Scan Data Program For

Altria and RJ Reynolds

Your Key To Higher Tobacco Profits

Altria’s PM USA 2017 Retail Leaders Program and RJ Reynolds Scan Data Reporting Program offer incentive money to retailers who submit transaction-level scan data (“Scan Data”) from their Point of Sale on a daily basis. Inclusion in the program also entitles you to offer multi-pack and loyalty discounts.

If you sell cigarettes you need to be on this program!

We help you compete with the big guys.

http://www.insightrs.com/scandataservices

Call Chris Floyd for more information:  518.633.4111 x 108

 


And just like that, summer is over.

September 1, 2017

Scan Data for Altria September

Back to school, football season and the wonderful beauty of fall.

So now that vacations and summer travel is over it’s time to sign up for our Scan Data Service.  Give us a call today! Don’t miss out on this amazing opportunity for tobacco incentive money.

Call Chris at:  518-633-4111 x 108

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Scan Data Services: Your Key To Higher Tobacco Profits

July 19, 2017

Altria’s PM USA 2017 Retail Leaders Program and RJ Reynolds Scan Data Reporting Program offer quarterly rebates to retailers who submit transaction-level scan data (“Scan Data”) from their Point of Sale on a daily basis. Enrollment in these programs also entitle you to take advantage of other programs such as multi-pack discounts and loyalty incentives.

InsightRS is offering the Scan Data Service that will allow you to take advantage of this great opportunity for more profit from your tobacco sales. Using our automated daily process, we submit the necessary data for you to comply with the program requirements. We collect either 25% of your quarterly rebate or $25/month per store for providing this service.

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Compete In Your Market

Gain Access To Multi-Pack Discounts And Loyalty Funds

  • Inclusion in Scan Data Program enables you to offer Multi-Pack Discounts
  • Optional Loyalty Program entitles you to offer addition discounts to your customers

We Do All Of The Work

Our Fully-Automated Service Does All Of The Work

 

Call Chris today – 518 633 4111 x 108

Visit our website for more information:  Click here!

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