California has seen its share of tobacco regulation. But even after the state enacted a flavored tobacco sales ban, cigarette sales for major brands at Loop Neighborhood Marketplace convenience stores are up in both dollars and units, said Beth Reina (pictured below), director of marketing for the chain owned by Fremont, California-based Vintners Distributors.
“We think it’s because most of our stores were already affected by some sort of menthol ban,” Reina said. “So, when it took effect (statewide), people just switched to the non-menthol.”
- Vintners Distributors/Loop Neighborhood is No. 59 on CSP’s 2023 Top 202 list of top U.S. c-store chains by store count.
That being said, total cigarette sales are still down in her stores, she said.
Seeing that customers can adapt may give hope to c-store retailers in other states—and nationwide—who are facing similar flavored tobacco bans.
Reina, who has been with the company for 14 years and manages behind the counter as well as marketing, shares how she has managed change in the category.
Backbar Design
Loop Neighborhood’s backbars have one key differentiator from many other c-stores: Its cigarettes are not customer-facing. The company made the decision about 10 years ago when it decided it wanted to shift the focus from cigarettes to healthier items, Reina said.
Customers who want cigarettes know Loop Neighborhood stores have them, though, she said, “So we haven’t really seen a decline or anything.”
A typical set includes about 4 feet of cigarettes, 2 feet of moist smokeless tobacco (MST) and 2 feet for vapor products. The company has 132 stores total, as of Jan. 1. More than 50 are Loop Neighborhood Marketplace convenience-stores, and the rest are Shell- or Chevron-branded gas stations, along with its newly launched brand Poppy Market.
It’s only the Loop Neighborhood stores where cigarettes face only the employees, Reina said. And when stores are remodeled, she tries to reduce the cigarette space further. Just a few years back, it was about 6 to 8 feet long, she said.
Loop Neighborhood also sells a lot of cigarettes through its loyalty platform, Reina said.
“I partner with both Altria and RJR for their loyalty programs. And I think about 50% of our transactions are with loyalty,” she said.
To develop good vendor relationships, Reina said to make sure it’s a win-win for everyone.
Vapor Update
While cigarettes and modern oral nicotine (MON) are doing well, vapor is on the decline, Reina said. The Food and Drug Administration has repeatedly denied premarket tobacco product applications (PMTAs) for flavored e-cigarette products, and it is still completing its review of applications turned in by September 2020.
The agency has also been cracking down more on illegal vape products. In May, it issued warning letters to 29 retailers and one distributor for illegally selling unauthorized tobacco products.
The unauthorized products were various types of Puff and Hyde brand disposable e-cigarettes, which were two of the most commonly reported brands used by youth e-cigarette users in 2022, according to the agency. The Puff products include Puff Bar.
“I’ve had a lot of people that approached me, and I think [they have] a really good product, but I’m a little hesitant to pull the trigger on it because they don’t have PMTA,” Reina said.
For now, she is making these decisions on a case-by-case basis, and at least making sure the companies have submitted a PMTA before stocking their product.
Flavor Bans
Selling cigarettes, and all other tobacco products, was further challenged when California’s flavored tobacco sales ban took effect in December. On top of that, the FDA is also proposing to ban menthol cigarettes and all flavors in cigars.
To adapt to local and state flavor bans and the FDA’s PMTA regulations, Reina said she spaced products out further on the shelves and added additional MST products that aren’t flavored.
Even before the statewide flavored tobacco sales ban took place, about 55 stores were affected already by local flavor bans, she said.
“So we were kind of prepared for it when it came about,” she said. “We weren’t surprised by it because we have been starting to adjust the sets in accordance with that.”
Every Loop Neighborhood store has its own planogram. And while they share the same core set of tobacco items, Reina will also adjust based on what customers in a particular region or store request. To help manage changes to the back bar, stores can download their planograms from a shared drive. The chain also holds biweekly meetings with the operations team to make sure any changes are communicated to stores, she said.
While nothing can really prepare a category manager for a flavor ban, offering more non-flavored items to begin with is Reina’s advice for others facing similar challenges. There are many flavors in modern oral nicotine (MON), for example, she said.
“Use non-flavored SKUs in your point-of-sale materials. So at least the consumer is trained to actually just see the non-flavored, non-menthol products by the sale materials,” she said.
Another challenge on the horizon might be the FDA lowering the nicotine level allowed in cigarettes. Reina is getting out in front of that challenge by finding other options now.
“I’m actually looking at a lesser-nicotine product that was presented to me, and that we might be launching it into our stores, too,” Reina said of VLN, or very low nicotine, cigarettes. “But I think it’s just the trend, especially here, right? I mean, people are just looking to be healthier.”
Similarly, 7-Eleven, Irving, Texas, is picking up 22nd Century Group Inc.’s VLN products in more than 1,450 corporate locations in Texas, California and Florida. Circle K, owned by Laval, Quebec-based Alimentation Couche-Tard, and Boulder, Colorado-based Smoker Friendly have already started to sell the cigarettes as well.
VLN cigarettes smoke, taste and smell like a conventional cigarette, but with 95% less nicotine than conventional cigarettes, according to Buffalo, New York-based 22nd Century.
Reina has tried other alternative tobacco products, too, like Smokey Mountain Herbal Pouches.
“So at least they have flavors, right? Because it’s non-tobacco. And I’m hoping that the consumer that’s really craving that flavor will migrate to it. We just launched. I can’t really say [yet] if it’s going to rock my world,” Reina said.
She had tried some CBD gummies and vapes, but “it hasn’t really been doing what we thought it would be, so we will not be expanding that.”