CHICAGO — How things can change in just a year’s time. As I sat down to compose last year’s Behind the Counter issue, it was nothing but blue skies: tobacco sales had soared, regulations had stalled out and the industry was ripe with promising new technologies in the form of modern oral and heat-not-burn products. Sure, there was that pesky little pandemic … but overall, life behind the counter was good.
2022 looks a little different.
On the one hand, many things have returned to business as normal (full disclosure: the concept of “normal” will come up a lot in this issue!). “Normal” in tobacco means cigarette sales are back to historic declines—alongside the disposable incomes of our core tobacco consumers; regulatory headaches are back in the news cycle; and the U.S. Food and Drug Administration continues to do … well not much, while at the same time creating a huge amount of chaos for manufacturers and retailers.
On the other hand, all that promise of the future is looking less and less like a sure thing. Products that were supposed to offer adult smokers an alternative to cigarettes are being held up at every level.
Take electronic cigarettes: despite a self-imposed deadline of Sept. 9, 2021, the FDA has failed to issue premarket tobacco product application (PMTA) decisions on many of the largest players. The agency recently predicted it won’t issue decisions on all current PMTAs until June 30, 2023. This has left the once-innovative category in complete regulatory limbo, with no flavors approved for rechargeable products and the largest manufacturer (Juul) without a single PMTA decision.
It’s not just vape. Analysts have long-clamored for the broad U.S. rollout of Philip Morris International’s heat-not-burn product IQOS, believing the technology represents the next step in replicating the smoking experience at a potentially lower risk. However, IQOS was pulled from shelves in November due to a U.S. International Trade Commission ruling that IQOS infringes on two patents held by British American Tobacco Group.
And while modern oral nicotine products are not currently subject to flavor bans (at least at a national level), retailers are all too aware that this latest hot segment could one day be plagued by the regulatory headaches seen elsewhere in the category.
Where Does That Leave Us?
There’s a temptation to only see the doom and gloom. After all, how can we provide consumers the innovation they demand when the regulatory “normal” means it can take three to five years to get a new product approved? As Mike Sullivan of E-Alternative Solutions put it “what if it took Apple five years and millions of dollars in regulatory paperwork every time they wanted to update the original iPhone?”
Yet we are an industry of survivors. To summarize a concept retailer Ray Johnson brought up multiple times in our conversation for this issue, “If regulations keep me from doing XYZ with tobacco, I’ll do it with something else.”
Ray is clearly not the only one expanding his definition of what goes behind the counter, just look at the titles of this year’s Category Manager of the Year nominees. Those titles don’t just reference cigarettes and OTP, but also include words like “CBD” and “kratom.” From “tobacco” to “nicotine” to “behind the counter,” the very name of this category designation showcases a willingness to evolve.
If two-plus years of pandemic upheavals has taught me anything, it’s that predicting the future is a fool’s errand. That is especially true for the behind the counter category. But one thing I’m certain of is that if there’s any group of people well-equipped to succeed in this new world of regulatory, social and financial unknowns, it’s behind the counter retailers. One way or another, this motley crew finds a way.
Melissa Vonder Haar is a freelance journalist and speaker. She also is marketing director for iSee Store Innovations. Contact her at melissa@iseeinnovation.com.
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