CSP Tobacco: Organic on Fire

Natural trends move beyond farmer’s market and onto the backbar

Melissa Vonder Haar, Freelance Writer

Organic Convenience

This kind of high-end messaging, authentic as it may be, hasn’t always worked on the c-store backbar.

“I was all for them a long time ago, but they didn’t sell so well,” Myers says of natural brands. “Now they’re starting to sell.”

Along with 10 years of consecutive growth in the natural-cigarette subsegment, Santa Fe and Nat Sherman are looking to capitalize on the c-store opportunity by growing distribution. Nat Sherman alone has picked up 3,500 to 4,000 retail locations over the past year and continues to grow.

What’s more, these right-place-right-time natural brands are bringing an attractive consumer into the convenience channel. As Don Burke, senior vice president of Pittsburgh-based Management Science Associates (MSA), explains, natural and superpremium cigarette shoppers tend to be significantly less value-driven.

“In the superpremium category, you find far less promotions. … In fact, you find almost none,” he says. “Consumers are not used to seeing any kind of features or able to determine a pricing benchmark for those items.”

According to Spillane, this lack of concern over pricing often expands beyond the tobacco section. Consumers seeking natural products appreciate—and pay for—everything from coconut water to small-batch jerky. “People that are spending more on our products are going to spend more in the stores,” he says.

“It’s nice to be able to carry a product where you can advertise they’re organic or natural as opposed to just a low price,” Myers says. “I would love to have salads in all of our stores, but sometimes fresh just doesn’t sell. This is an opportunity that works.”

The better growth and profit margins of superpremium and natural cigarettes have another advantage: Spillane estimates natural brands boast a 30% greater profit margin compared to premium brands, and Nielsen shows more than 10 consecutive years of growth in the segment.

“The same qualities that have fueled [the natural segment’s] growth will continue to propel Natural American Spirit’s popularity and growth,” says Moskowitz.

“For retailers, this is certainly an opportunity to increase your tobacco sales,” says Burke. “If they are not in this category or not carrying enough of a selection in the superpremium area, they may want to consider it.”

As for those who think the organic appeal doesn’t extend to their consumer base, Myers says Kocolene’s largely rural stores are bucking that stereotype. “To me, the all-natural products used to be for college towns and big cities. That’s not our demographic,” she says. “The category is way up for us. I think the word is spreading.”