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Tobacco

Other Tobacco Products Offset Cigarette Losses in 2018

E-cigarettes helped retailers recover from losses in traditional combustibles, webinar speaker says
Photograph: Shutterstock

CHICAGO — Other tobacco products (OTP) helped retailers fend off losses from traditional, combustible tobacco last year, according to a speaker at a recent CSP tobacco webinar.

Reviewing NACS numbers from the association’s recent State of the Industry (SOI) Summit this past spring, Joe Teller, category management director for Swedish Match, Richmond, Va., said OTP, led by e-cigarettes, have become the fastest-growing segment of the category—and a strong growth driver for c-store merchandise overall.

OTP grew both in dollar sales (20.5%) and gross profits (26.4%) in 2018 vs. a year ago, according to NACS, while cigarettes fell in both areas, down 3.1% in dollar sales and 4.4% in gross profits. Teller also pointed out that cigarette dollar sales per store per month fell $1,700 and $357 in gross profits, where OTP rose $1,979 in dollar sales and $697 in gross profits.

For the first time that Teller can recall, OTP had offset cigarette losses. “Not just partially offset [cigarette losses] like in the past, but more than offset those losses,” he said during the May 14 webinar co-sponsored by CSP and Swedish Match. “That’s really an amazing story.”

Unfortunately, the picture for cigar sticks was less upbeat. Citing Swedish Match data, Teller said volume was down 5.3% as of April 2019 vs. a year ago. In a chart going back to January 2018, he showed a somewhat erratic decline from growth percentages as high as 11.8% to the current low.

“Cigars declined and never came back,” he said.

Breaking down the cigar data, he said a large percentage (42%) of the subcategory is made up of homogenized tobacco leaf or manufactured cigars, which saw the greatest decline, down 40% in terms of stick volume from a year ago. Natural leaf and rolled leaf cigars, however, both saw volume increases at 117% and 38% respectively.

“The overall trend may be negative, but there’s always components of cigars that are growing,” Teller said.

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