CHICAGO -- Cigarettes still top the list of convenience-store merchandise categories in terms of sales, even though it falls behind in gross profit dollars and margin percentages, according to numbers released at the NACS State of the Industry (SOI) Summit, which was held April 4-6 in Rosemont, Ill.
On the list of top 10 categories, cigarettes ranked No. 1 at $50,740 in average sales per store per month. Packaged beverages were second at $24,784, followed by beer at $15,021. In terms of gross profit, cigarettes fell to No. 2 at $7,703 compared to packaged beverages at $10,272. Margins were thinner for cigarettes at 15.18% vs. packaged beverages at 41.45%.
Though clearly a core category at 36% of sales, cigarettes numbers in terms of both sales and volumes continue a declining trend. “It does not look good for the [cigarette] category,” said Andy Jones, president and CEO of Sprint Food Stores, Augusta, Ga., who moderated a general session on the SOI category numbers.
While these numbers were not unusual compared to data from recent years, other tobacco-related figures revealed newer trends—both upbeat and ominous …
Both share-of-sales and volume numbers show cigarettes on the decline, with share of sales dropping 0.5% in 2016 vs. 2015 and volumes falling 1.3%. Jones said the effect of drug-store giant CVS, Woonsocket, R.I., dropping tobacco sales in 2014 appears to be wearing off.
In terms of cigarette subcategories, the SOI numbers showed sales and unit growth in only one: subgeneric/private brands, with an increase in sales of 5.8% and unit growth of 2.1%.
In what appears to be a return to past behavior, tobacco customers are reverting to the basics. In 2015, when low gas prices were a relatively new phenomenon, soda and cold dispensed beverages were the most bought items along with tobacco products. In 2016, gasoline became the No. 1 ring along with tobacco.
Other tobacco products (OTP) performed well for the industry in 2016, ranking among packaged beverages and salty snacks as highest in sales and gross-profit-dollar growth since 2014.
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