OAKBROOK TERRACE, Ill. -- Although the stampede into electronic cigarettes and even vapor products has slowed to a steady march, positive economic trends and the untapped potential of selling larger packs of moist smokeless tobacco (MST) offer hope for the struggling tobacco category, according to speakers at a recent CSP-hosted webinar.
Among retailers responding to an ongoing CSP survey about the tobacco category, the percentage saying they are expanding their e-cigarette category has fallen steadily, said Nik Modi, senior tobacco analyst for RBC Capital Markets LLC, New York, and one of the two speakers at CSP’s quarterly tobacco webinar on May 14.
Back in December of 2013, 80% of retailers responding said they were expanding their e-cigarette category. But by March of 2015, that number had dropped to 29%.
Nor has vaping fulfilled the promise it once had, with over a quarter of retailers surveyed saying the segment has slowed and almost a third saying it never got off the ground.
For e-cigarettes, Modi said retailers are finding that “adding SKUs doesn’t mean success [but] we see some clear winners emerging.”
Also, despite the rising popularity of vaping shops, a year ago, 70% of retailers surveyed felt the vaping scene was booming, said Modi. That number in the most recent survey fell to 40%.
“The category came out of nowhere with a lot of force, but now [retailers] are seeing the repeat purchase [patterns] and that there are too many SKUs,” he said. “With vaping, the real opportunity is to switch the pack-a-day smoker, but right now it’s not [luring] the core cigarette consumer. It’s still a niche base. There are those who don’t want to take time to learn or it’s the technology. It’s uninviting to non-techies. Then add how the regulatory [situation] is uncertain.”
The categories of e-cigarettes and vaping are going to take time to develop, with much research and development to take place, Modi said.
Still, Modi noted that lower gas prices have benefitted impulse and convenience-store products in the store, including the tobacco category. Energy drinks, soft drinks and cigarettes have all seen positive upticks in sales in recent months.
Speaking about the MST category, Joe Teller, category management director, Swedish Match, Stockholm, Sweden, told webinar attendees that opportunities existed in selling cans in packs or “rolls,” as well as in packaged bags or “tubs.”
In a survey of retail chains, Teller said the top eight chains that were selling a strong percentage of rolls and tubs grew the MST category by 5.2% over a six-month period ending last March. But the stores that sold about 1% of rolls and tubs saw the MST category decline 1.7%
“Consumers want rolls of MST and pouches,” Teller said. “It should represent a growth opportunity [for retailers].”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.