Cigarettes are still the No. 1 in-store merchandise category, but for how long?
That was a question posed at the NACS Show in Chicago. With the percentage of inside sales mix for cigarettes declining, the other tobacco products (OTP) segment is increasing, said Emma Tainter, NACS research manager, analytics and programs, who presented Tuesday at the NACS Show.
Using NACS research data, Tainter told the audience OTP has “basically doubled” its percent of in-store sales from 4.2% in 2015 to 7.6% in 2024. OTP includes tobacco products that are not cigarettes, including cigars, smokeless tobacco, nicotine pouches and heated tobacco products.
“The profitability gap between cigarettes and OTP is closing,” said Tainter. “The magnitude of the change in the last 10 years is significant.”
While smoking rates are at historic lows, non-combustible product alternatives are on the rise. OTP sales averaged $19,663 per store, per month in 2024, up 7% from 2023, according to NACS State of the Industry data for 2024.
Tainter said that at “some point, perhaps in the near future, OTP will overtake cigarettes if things keep going the way we’ve been seeing them.”
Capturing growth in this segment is something retailers are eyeing strategically, including Weigel's Inc.
Jessica Starnes, CLMP, director of loyalty and tobacco category manager at the Powell, Tennessee-based retailer, who also presented in the education session said the company has “rightsized the backbar to position ourselves to become the nicotine pouch destination.”
Starnes explained that the retailer is fully focused on nicotine pouches because this segment bypasses the threat of illicit products in the vaping category.
“We looked to nicotine pouches because that is where we can get 100% of the sales opportunity,” she said.
To accomplish becoming a nicotine pouch destination, Starnes said Weigel's expanded its variety of products.
“We worked with manufacturers to secure offers, as well as our wholesalers for collaboration to make sure that we had stocked supplies,” she said.
- Weigel's is No. 84 on CSP’s 2025 Top 202 ranking of convenience store chains by store count. Campbell Oil Co./Minuteman Food Mart is No. 117.
When it comes to the cigarette category Kathy Williams, senior category leader at Minuteman Food Mart, Elizabethtown, North Carolina, owned by Campbell Oil Co., shared that despite its decline, it is still important in certain regions.
“I know cigarettes are already a declining category, but I will say this, it depends on where you are,” Williams said.
Williams also pointed out that smoke shops do capture some of the business, but they don’t have loyalty.
“This is where we can overtake our competition,” she said.
When it comes to offering the best price to your consumer, Williams said it is important to use “your joint business funds and your business enhancement funds with your manufacturers.”
As a big cigar retailer, Williams said this confirms a broader issue of knowing your customers.
“It's important to know your customers and continue to cater to them,” she said.
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