Deep discount cigarettes and modern oral categories are gaining share Bonnie Herzog, managing director and senior consumer analyst at Goldman Sachs, New York, told a room full of convenience-store retailers and others who sell tobacco products at CSP’s Convenience Retailing University (CRU) in Nashville, Tennessee.
In her presentation, Herzog offered a detailed outline of the latest results from the Nicotine Nuggets survey. The survey represents about 60,000 retail locations across the United States, including convenience stores.
One finding she shared with the group was how cost continues to weigh on the consumer. As wallet spend continues to be a factor for consumers, deep discount cigarettes and modern oral categories are gaining share, she said.
In her presentation, Herzog shared that retailers are allocating the most incremental space at the back of the bar this year to oral nicotine pouch brands (+2.9%), according to January’s Nicotine Nuggets suvery.
Small in relation to cigarettes, the oral nicotine category, “does look very promising. It's growing quite fast,” she said, adding: “I think this category is going to get increasingly exciting.”
When it comes to shelf space, retailers are also allocating the most space to discount cigarettes as well.
Retailers are also allocating more space to deep discount cigarette brands (+1.1%) as they expect trade down activity to accelerate with some retailers adding space to this category for the first time, according to January’s Nicotine Nuggets findings.
Another topic Herzog discussed during the session was the growing concern of illicit disposable e-cigarettes.
Retailers are also more divided in their views on space allocation changes for e-cigarettes with many taking a “wait-and-see” approach as the Food and Drug Administration (FDA) works to tighten enforcement of illegal or noncompliant products, the latest Nicotine Nuggets reveals. Herzog told those attending the session that retailers are broadly pessimistic that enforcement will improve in the near-term.
Last month the FDA filed civil money penalty (CMP) complaints against 20 brick-and-mortar retailers, which include convenience stores, for the illegal sale of unauthorized Elf Bar e-cigarette products.
Despite the FDA stepping up enforcement, Herzog said more action is needed.
“I'm not sure the fines are going to be enough to kind of stop individuals or businesses from selling these and it's just become sort of a mess and just in terms of how they manage this whole situation,” she said.
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