OAKBROOK TERRACE, Ill. -- The image of the frugal roll-your-own (RYO) customer is transforming as premium tobacco products lead the pack in sales growth. While the reasons for the surge are based on theory rather than hard data, the segment’s 12.4% annual growth rate indicates this category is on a roll. Many experts will agree on one point though: Consumers are showing more discerning taste preferences when it comes to RYO.
“The excessive taxation and over-regulation that led to higher prices, declining quality in loose-tobacco segments and less money in consumers’ pockets also left many smokers with fewer smoking occasions,” Mark Tucci, co-founder of Custom Blends Farm Fresh Tobacco, who operates four Planet RYO smoke shops and five franchises on the East Coast, told CSP Daily News. “They are realizing that a higher-quality smoke experience less often can be more satisfying.”
The gains for premium tobacco have been steadfast for the past five years. In fact, it is the only RYO segment seeing consistent growth, said LaRese Armstrong, brand manager for RYO & accessories, Scandinavian Tobacco Group (STG). “The segment is twice the size it was in 2009,” she said. “The top four brands have shown consistent sales gains each quarter of this year (American Spirit, Drum, Samson and Peter Stokkebye).”
Steve Sandman, president of Republic Tobacco L.P., said consumers are willing to pay a premium price when they know they will receive a premium product consistently. “Drum premium hand-rolling tobacco continues to enjoy an extraordinarily loyal following because of the high-quality tobacco used, along with its unique hlafzware shag cut,” he said.
“There are definitely folks out there who really want a high-end tobacco,” agreed tobacco industry consultant Lou Maiellano. “There really is a difference between the products; a higher blend equals a better experience. The consumer in the market for these products looks for that fine edge.”
Passionate about providing high-quality tobacco to his customers, Tucci said his Custom Blends products are as “close to the source as you can get. The only processing is the natural curing process, the separation of leaf from the stem and shredding.” To ease the transition for consumers new to roll-your-own or Custom Blends, Planet RYO provides a guide that suggests which Custom Blends product will substitute a customer’s favorite tobacco brand.
CONTINUED: Rolling Papers on a Roll, Too
Papers on a Roll
RYO accessories such as machines, filter tips and rolling papers offer retailers additional opportunities to capitalize on premium tobacco growth. Premium rolling papers, which rose 3.1% in sales this year, can complement sales of premium RYO tobacco products.
“Premium tobacco offers discerning consumers the taste and quality they desire, and accessories are following a similar trend,” Armstrong told CSP Daily News.
STG recently became the exclusive U.S. distributor of Smoking Brand rolling papers, which offer many options for consumers including regular and king size, ultra-thin Deluxe and a pre-priced fishbowl for easy counter display.
“Rolling-paper consumers like a variety of options for many applications,” Armstrong said. “Offering an assortment of sizes, thicknesses and paper materials can greatly improve sales without taking up valuable space.”
For c-stores that don’t carry rolling papers, the legalization of marijuana in some states opens the door for reconsideration.
“Whether they decide to carry them or not is their choice,” says Maiellano. “Legalization of marijuana aside, the reality is today’s tobacco consumer is seeking new and unique ways to enjoy tobacco, whether it’s RYO, snus or other alternatives. Retailers will continue to face a slew of opportunities and challenges as this pattern ensues.”
His advice? “Stay alert to new products and trends so you don’t miss the right opportunity when it comes along,” Maiellano says.
This post is sponsored by Scandinavian Tobacco