Tobacco

Large Cigars, Oral Nicotine Products Shine on Tobacco Shelves

Management Science Associates offer latest retail insights in NATO webinar
Cigars
Photograph: Shutterstock

MINNEAPOLIS — Convenience-stores play an important role in tobacco and nicotine sales as 71% of all nicotine sales in the United States are sold through convenience-store outlets, according to Don Burke, senior vice president of Management Science Associates (MSA).

Nicotine sales were up about 3% for all outlets as well as in c-stores for the 52 weeks ending in second quarter 2021 vs. the previous year, Burke said. “That’s really encouraging results for the category,” he said.

Burke presented during a National Association of Tobacco Outlets (NATO), Minneapolis, webinar on Oct. 13, sharing data on distributor shipments to retailer locations at 300,000 U.S. outlets. This webinar and others can be viewed at natocentral.org/webinars.

Large cigars and vapor cartridges and disposables showed growth when looking at wholesale shipment to retail data for all outlets for the 52 weeks ending in second quarter 2021 compared to the 52 weeks ending in second quarter 2020. Modern oral nicotine (MON) also showed strength in the c-store channel.

Large cigars were up about 13% in c-stores, as well as all outlets, while little/filtered cigars were down 12.7% in all outlets and 15% in c-stores, Burke said. Little cigars were affected my local tax levels catching up, he said. Many are now taxed the same as cigarettes, so consumers have turned to deep discount cigarettes instead.

Some attribute the growth of large cigars to consumers using them for alternative purposes, like as a blunt, but that’s not a universal truth, Burke said.

States including Georgia, Florida, New York, Texas, Michigan, North Carolina, South Carolina, Ohio, Indiana, Tennessee, Virginia and California have some of the strongest large cigar shipment volumes. However, when looking at states that have legalized marijuana for recreational use, these are not necessarily the states with the highest large cigar shipments, Burke said. Some states where recreational marijuana is legal, such as Montana, Maine and Oregon, have low shipments of large cigars.

“We often hear the large cigar growth is due to alternative uses for the large cigar or cigarillo wrapper,” Burke said. “And what we’re seeing here is that may be true, and that may be contributing somewhat to the use in large cigars, but that’s not consistent.”

Oral products, which include moist, snus and modern oral, are estimated to be up 5.5% to 6% in 2021 for total U.S. units, down from the 6.5% growth seen in 2020. C-stores own the modern oral nicotine segment now, Burke said.

“Right now, modern oral is a convenience/gas item and has far greater business than tobacco outlets, drug or all other trade,” he said.

When it came to vapor shipments, cartridges and disposables were up in all outlets, but kits and e-liquid saw declines. The total vapor category saw a decline for the first time in years in 2020, mainly due to Tobacco 21 and the U.S. Food and Drug Administration’s (FDA) flavored cartridge ban, Burke said. Total vapor is expected to be up 10% to 20% for 2021, though, he said.

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