Growing Tobacco

First NATO-CSP Tobacco Survey looks ahead at tobacco retail growth.

Linda Abu-Shalback Zid, Senior Editor

LAS VEGAS, Nev. -- Despite economic turbulence and legislative challenges, tobacco retailers continue to be invested in their stores, according to results of the first NATO-CSP Tobacco Survey, which were revealed during the kickoff session of the NATO Show.

According to the survey, sponsored by Swedish Match, 43 percent of the 160 convenience stores and tobacco outlet respondents (representing nearly 11,000 stores) said they increased their store count over the past three years.

At a time when other industries have "melted down and gone," this shows particular resilience, according [image-nocss] to J. Michael Marks, managing partner of Melbourne, Fla.-based Indian River Consulting Group. "For all the shots that we take and all the turmoil that we go through You want to talk about a foundation industry, this speaks very loudly."

To further demonstrate the point, Mitch Morrison, vice president and group editor of CSP magazine, asked attendees to raise their hands if they were investing in their stores next year. To the sea of hands that responded, Morrison said, "You're not letting the great recession slow you down. You're saying to the great recession this is a great opportunity to make some hay."

In the survey results, 74 percent of tobacco shops said they would invest in their stores this year. In terms of the growth, 68 percent said they would expand their tobacco and accessory inventory, 46 percent said they would expand non-tobacco inventory and 44 percent planned to remodel.

On a smaller scale, 14 percent were adding coffee and non-alcoholic beverages, 13 percent were adding smoking lounges, 11 percent were adding more c-store fare and 21 percent were turning to other investment types.

As for the categories that tobacco shops were looking to grow, 22 percent were looking at cigarettes, 49 percent at premium cigars, 44 percent domestic cigars, 48 percent moist smokeless tobacco, 34 percent standard pipe tobacco, 31 percent hookah pipe tobacco, 68 percent roll your own/make your own and 49 percent said they would grow snus.

In convenience stores, 83 percent of respondents said they were increasing the square footage they dedicate to tobacco. As for the particular categories they were looking to grow, 85 percent said cigars, 69 percent said moist smokeless tobacco, 15 percent said cigarettes, 15 percent said roll your own/make your own and 15 percent said tobacco accessories.

Marks told attendees that the "foundation survey" will help formulate surveys to come, and expressed the importance of continued retailer participation in the survey. "Everybody's got to make the decision about what's best for their business, and having the forum where you can actually get some facts instead of somebody lobbying makes you a better business person," he said. "I really encourage you to continue this kind of dialogue."