OTP Trends Drive Product Innovation

CHICAGO – As the second quarter brings a mounting number of new-product announcements, recent trends in other tobacco products (OTP) have manifested themselves in items breaking onto retailer shelves.

Limited-time offers and ancillary tobacco products emerged as talking points at the NACS Show last fall, as well as the Tobacco Plus Expo (TPE) earlier this year in Las Vegas.

Similarly, during the SOI Summit this month in Rosemont, Ill., retailer Alan Beach of 7-Eleven addressed one such trend from the main stage: closed-system, pod-based vaping devices. Beach, senior vice president of merchandising for 7-Eleven, Irving, Texas, said e-cigarettes as a general subcategory rose 51.1% in sales and 21.7% in unit throughput, far surpassing competing subcategories within OTP.

“E-cigarettes are off the charts,” Beach said. “Huge growth.”

Here are some new products reflecting these larger tobacco trends ...

Limited-time offers (LTOs) often act as pilot tests for new products, with successful items returning to retailer shelves in longer-term incarnations.

Along those lines, Swedish Match North America, Richmond, Va., is expanding its White Owl line of FoilFresh cigars to include White Owl Spiked Lemonade. The company describes the flavor as a little sweet, and a little tart. The LTO began shipping in March and is available in two-for-99-cents, two-for-$1.49 and save-on-two formats.

At the TPE Show, Don Burke, senior vice president of Management Science Associates, Pittsburgh, said convenience stores are surprisingly dominant in papers, tubes and wraps, holding 69% of distribution compared to other channels. He suggested c-store retailers take another look at that category and consider the channel's advantage.

One new product in the category comes from Inter-Continental Trading USA, Mount Prospect, Ill., which recently launched Kashmir Rolling Papers. The unbleached papers are 100% organic, made in the United States and priced at 99 cents per pack.

Regarding e-cigarettes, retailers are “bullish” on the category, with expectations that sales will increase by 40%, according to New York-based Wells Fargo Securities LLC and its first-quarter 2018 Tobacco Talk survey of retailers.

Two e-cigarette products showcased at last fall’s NACS Show:

• San Francisco-based Juul Labs launches its Juul closed vaping system.
• Charlotte, N.C.-based Fontem Ventures unveiled its myblu starter kits.