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Tobacco

Natural, Rolled-Leaf Cigars Leading Category Growth

Subsegments garner new attention from consumers

CHICAGO -- For c-store retailers fine-tuning their cigar set, natural and rolled-leaf cigars appear to be breaking from the pack—literally—in terms of growth trends, said a speaker during a recent CSP webinar.

While growth in cigar-stick volumes has slowed, natural-leaf cigars grew by 14.4% and rolled-leaf cigars grew by 66.9% at convenience stores during the 26-week period ending April 15, said Joe Teller, director of category management for Swedish Match, Richmond, Va.

Citing Swedish Match’s own shipment data for the convenience class of trade, Teller said 68% of growth in the cigar segment is coming from natural and rolled-leaf cigars, while homogenized tobacco leaf (HTL) cigars showed only a 14% increase in the same 26-week period.

In the May 10 CSP webinar, which was sponsored by Swedish Match, Teller said an HTL cigar, which makes up the highest percentage of cigar-stick volume, is a machine-manufactured product, inside and out. In an HTL cigar, the tobacco is pulverized (or homogenized) and rolled into big sheets of tobacco paper (not unlike writing paper). At that point, a machine cuts and rolls the cigars. In other words, all HTL cigars consist of tobacco manipulated by machines, he said.

Natural-leaf cigars typically always use a hand-rolled tobacco leaf to encase a more mass-produced, machine-made tobacco stick. They are identical to HTL cigars except for the veiny, outer leaf wrapper, Teller said.

A rolled-leaf cigar is where both the internal and external components are rolled together by hand, Teller said. It consists of whole tobacco leaf and needs to be handled by people in addition to parts of the manufacturing process using production lines.

Despite the volume-growth rates of natural and rolled-leaf cigars, retailers on average carry more HTL cigars on a per-item basis, Teller said. Citing the Swedish Match shipping data, he said c-stores carry on average 13.9 items in the HTL-cigar category vs. 7.4 natural-leaf cigar items and 4.1 rolled leaf.

“Find out where the shopper is going,” Teller said, “and create a plan.”

Teller said stick growth percentages have been trending downward, with a high in October 2017 of 16.7% growth (over October 2016) to a low in March 2018 of 5.2%, but he emphasized that the metric compares growth percentages and is not reflective of the continued, overall success of the category.

Citing statistics from New York-based Nielsen covering large-chain convenience stores, Teller said cigars account for 58% of all other tobacco product (OTP) unit sales and grew 17% over a year ago during a 24-week period ending April 7.

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