New tobacco opportunities unveiled at US event

Convenience Store News discovers the opportunities in the tobacco category in the US during the Tobacco Plus Expo event in Las Vegas last month, 3-4 March.

Convenience Store News held its annual Tobacco Roundtable ahead of the Expo event, where a panel of retailers and manufacturers including 7-Eleven, Smoker Friendly and TravelCenters of America, met to discuss best practices in the category and hear the latest tobacco retailing data presented by CSNews.

One retailer at the event noted the past year was spent “adapting to trends”. This included bringing loose pipe tobacco into stores as a lower-cost alternative to roll-your-own (RYO) cigarette tobacco, which was subject of a 1,200% tax hike under the federal excise tax (FET) increase almost a year ago.

Retailers agreed last year’s predictions that RYO tobacco would die as a result of the FET increase were not realised.

One attendee said the segment “suffered the worst” due to the combined effects of the FET and lower-priced pipe tobacco entering the arena, but the “value of RYO is sill there. … [New] consumers will enter this category and not know anything about last year and the increases in price.”

The success of two- and three-count foil packs of cigars was also noted at the roundtable. Another winning product in the other tobacco products (OTP) category is moist snuff, which is seeing high single-digit growth, according to one attendee.

Another opportunity for retailers is the increasing incidence of tobacco users overlapping segments, such as cigarette smokers using moist snuff or cigars.

On the legislative front, one large c-store chain noted its positive efforts fighting state taxation issues. The retailer said being active in legislative matters “never has been a focus” for the company, but recent success with in-store petitions is making a case for more involvement.

Discussions also focused on the challenges in the tobacco category. Most attendees voiced concerns over restrictive contracts by the major cigarette companies that make it harder for retailers to take advantage of all the promotional incentives available.

The Tobacco Plus Expo focused on targeting untapped opportunities in a session called El Elefante in Your Isles, which was presented by Juan Tornoe, consultant at Hispanic Trending.

“Everyone is aware of the growth of the Latino market. But oftentimes, businesses think they are doing ok, so they don’t go after Latinos,” he said.

Tornoe said retailers should create marketing messages that cater to the Hispanic customers’ demographics in their region. Factors that influence messages include:

• Country of origin/heritage
• Language of preference
• Place of residence
• Generation
• Socio-cultural level
• Assimilation/acculturation level

“By combining these factors, you will be able to tell how to talk to a group of people and how to reach out to them,” he said.