Vape, Cigars Boost C-Store Tobacco Sales

By 
Angel Abcede, Senior Editor/Tobacco, CSP

alan beach

CHICAGO -- With the tobacco category being one of four key sales drivers for the convenience-retailing industry, two of its shining subcategories were cigars and vaping in 2017, according to numbers released during the recent NACS State of the Industry (SOI) Summit.

Here's a look at how the cateogry performed in 2017, as well as the opportunities and challenges ahead ...

Vaping

vaping e-cig

As a subset within other tobacco products (OTP), vaping saw a strong 51.1% increase in dollar sales and a 21.7% increase in unit throughput, according to presenter Alan Beach, senior vice president of merchandising for 7-Eleven Inc., Irving, Texas. “E-cigarettes are off the charts,” Beach said. “We’re seeing huge growth.”

Comparatively, cigarettes, which account for 85% of total tobacco-category sales, were down 3.5% in unit throughput and up only 2.4% in dollar sales. Beach said unit numbers will “continue to fall as consumption falls, but it’s propped up by inflation.”

Threats and opportunities

e-cig

Beach made three points that will affect vaping sales in the future:

  • Vaping numbers benefit from an evolving tobacco consumer, who appears willing to trade up to higher price points.
  • In c-stores, vaping growth is coming from pod-based devices what are called “closed systems.” These are vaping devices that don’t involve e-liquids, which let users physically manipulate the nicotine-infused oils. Instead, they use pods, which are prefilled containers that insert into the device.
  • The U.S. Food and Drug Administration (FDA), Silver Spring, Md., appears to be reconsidering its stance on vaping devices but currently has stringent new-product application rules and deadlines in place. As a result, Beach said retailers are focusing on growth in the short term.

Cigars and cigarettes

cigars

Like vaping, cigars turned in compelling numbers, with 14.1% in sales growth and 15.2% in unit growth. “It shows people are shifting from cigarettes,” Beach said. “It’s not all incremental, but it’s really strong growth.”

The tobacco category overall made up 34.1% of inside sales in 2017, according to SOI numbers, but only 17.1% of gross-profit dollars. Cigarettes alone, as a share of inside sales, continued a declining trend to 28.6% in 2017. In 2016 it was 31.0% of inside sales, and in 2015, it was 31.5%.

Click here to read more category results reported during the SOI Summit.