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Tobacco

Natural-Leaf, Rolled Cigars Continue Growth Path

Retailers need to rethink plan-o-grams, says webinar panelist
Photograph: Shutterstock

CHICAGO With numbers for natural-leaf and rolled cigars continuing on a growth trend, a panelist in a CSP-hosted tobacco-category webinar advised retailers to consider redesigning current plan-o-grams to take advantage of the emerging opportunity.

Citing data from New York-based Nielsen, Joe Teller, director of category management for Swedish Match, Richmond, Va., said cigars accounted for more than half (57%) of other tobacco products (OTP) unit volume and 86% of unit growth for the 24-week period ending Sept. 22, 2018.

“If you’re growing [stick volume] more than 60%, you’re getting good share,” Teller told the audience during the Nov. 6 webinar. “I’ve seen numbers at 25% to 35% growth, where [retailers] are not getting their fair share of growth.”

Core drivers of growth are regular, natural-leaf cigars and rolled-leaf cigars, he said.

Unfortunately, retailers often go with manufacturer contracts that keep shelf space for these growth products to a minimum, Teller said. In a slide showing what he said was a “typical cigar plan-o-gram,” homogenized tobacco leaf or manufactured cigars accounted for 71% of shelf space when the grouping accounted for only 15% of category growth.

Meanwhile, retailers in his scenario allotted natural-leaf and rolled cigars only 29% of shelf space even though they accounted for 85% of category growth.

“There’s a disconnect … with what the consumer is going for,” Teller said.

Another speaker on the webinar, Nik Modi, tobacco analyst for RBC Capital Markets, New York, described cigarettes as on the higher end of the typical 3% to 4% decline over the past few weeks due largely to rising gasoline prices and recent product price increases.

CSP and Swedish Match sponsored the biannual tobacco-update webinar.

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