Editor's Note: Not Saying Goodbye to Cigarettes
At last month’s NATO Show for tobacco retailers, the exhibition floor was lined with hookas, vaping products, e-liquids and rows of electronic cigarettes. The world of e-vaping, more than $2 billion strong, continues to inspire interest and bold forecasts.
Within a decade, some predict, vaping—or e-puffs, as I like to call it—will outpace cigarettes in total U.S. sales. That may be true.
But I must confess that though I am no smoker, at least of the combustible variety, my heartstrings were tugged on by a frustrated cigarette maker. The supplier, an industry player for more than two decades, readily acknowledges that cigarette consumption is declining and that today’s cigarette battle is one for greater market share in a diminishing pie. That said, the person shared some exasperation about his experience at the NACS State of the Industry Summit and The NATO Show.
“You look around here and you get the impression that no one smokes anymore, that cigarettes are dead and that you should pull out your cigarettes and replace them with electronic cigarettes and foodservice,” the person said. “I’m not fighting facts, but there are other facts. And the No. 1 is that cigarettes are still the largest seller in c-stores today.”
Point well taken. Based on the latest SOI data, cigarettes once again contributed in excess of 30% of total in-store convenience revenue, more than double that of the No. 2 category, packaged beverages.
And there is a very important nuance. We speak in generalities, in national numbers. But as NACS showed, it’s even more important to look at regional numbers, and of course those of your own company. So while cigarette sales fell 5% in the Northeast, the West, South Central and Southeast saw a dip of roughly 1%.
I bring this up because there is a critical balance you must maintain. True, the 25% cigarette margins and sweet marketing allowances may be presents of the past, but it is equally true that cigarettes remain your singularly largest category, both as a destination and as a driver of market basket. Rarely do I see customers purchase a single pack of smokes without adding a lottery ticket, gum, mints, beverage or bite of some sort.