{"id":259,"date":"2019-04-30T12:03:32","date_gmt":"2019-04-30T16:03:32","guid":{"rendered":"http:\/\/www.tobaccofixtures-cigarettedisplays.com\/blog\/?p=259"},"modified":"2019-04-30T12:03:34","modified_gmt":"2019-04-30T16:03:34","slug":"the-state-of-the-tobacco-industry-2-2","status":"publish","type":"post","link":"http:\/\/www.tobaccofixtures-cigarettedisplays.com\/blog\/the-state-of-the-tobacco-industry-2-2\/","title":{"rendered":"DON’T SNUFF SMOKLESS"},"content":{"rendered":"
New products, growing dollar sales and limited regulatory activity give the smokeless tobacco category a boost.<\/strong><\/span><\/h6>\n

Historically, the smokeless tobacco category in convenience stores hasn\u2019t benefited from a frequent influx of new products, packaging redesigns or special-edition flavors, unlike candy and snack categories that regularly welcome innovations. Over the past several months, however, this other tobacco product (OTP) segment has expanded, which could inject new energy into an otherwise quiet category.<\/p>\n

In October, Swedish Match released the Thunder Xtreme<\/a> line of snus with packaging prominently branded by a large \u201cX.\u201d Then in February, the company confirmed that its ZYN nicotine pouch \u2014 test marketed exclusively in the West \u2014 is set to roll out nationwide later this year.<\/p>\n

Last month, the American Snuff Co., a subsidiary of Reynolds American Inc., announced a national relaunch of Grizzly Dark<\/a>, its premium brand. In addition to redesigned packaging, the manufacturer updated point-of-sale (POS) materials and initiated an online sweepstakes to reinvigorate consumer interest.<\/p>\n

These announcements have captured the attention of c-store owners and operators.<\/p>\n

Even before this recent series of product introductions and updates, smokeless has been making incremental gains while cigarette volumes continue to weaken. In fact, smokeless banked more in total dollar sales for most of 2018 than the trending electronic nicotine delivery systems (ENDS) sector. According to IRI, a Chicago-based market research firm, smokeless tobacco products cashed in more than $6.8 billion in sales at U.S. c-stores for the 52 weeks, ending Jan. 27, compared with $3 billion for electronic smoking devices.\u00a0<\/span><\/p>\n

However, ENDs experienced a 169% increase over the previous year\u2019s performance, compared with a 5.6% gain for smokeless tobacco, while cigarettes eked out a mere 0.1% gain for the same period.\u00a0<\/span><\/p>\n

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Within the category, there\u2019s a significant split between chewing tobacco\u00a0\u00a0<\/span>\u2014 or moist \u2014 and spitless tobacco \u2014 or snus. The moist segment accounted for more than 94% of dollar sales.<\/p>\n

Still, snus are gaining ground by posting the larger change in dollar sales at 25.8%, opposed to 4.6% for moist. The difference in unit sales is even more jarring. Moist outsold snus in volume by more than a 15:1 ratio; but snus registered a 17.5% increase for the 52 weeks versus a loss of 1.1% in unit sales for chewing tobacco, according to IRI.<\/p>\n

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MARKET MANAGEMENT<\/strong><\/span><\/h6>\n
Merchandising strategies for categories with frequent product introductions are more fluid and receptive to changes. Planograms for tobacco products rarely change, due in part to regulations that dictate where cans and pouches can be displayed. Plus, c-stores are limited under law as to how to promote this category, and as such, OTPs do not lend themselves to innovative marketing and merchandising options.<\/p>\n
But, smokeless does demonstrate extreme strength in brand loyalty. Data from Nielsen and Wells Fargo Securities suggests unit share among the most popular product lines has not significantly changed. Copenhagen, manufactured by U.S. Smokeless Tobacco Co., a subsidiary of Altria Group, led with approximately 34% of unit share for the four weeks ending Feb. 23. It\u2019s held steady at this percentage for the 12-week period, and was only slightly less \u2014 33.2% \u2014 for the 52-week gauge.<\/p>\n
Other brands performed similarly: Grizzly maintained an estimated 28% for each period; Skoal registered 13.6% at four weeks, 13.5% at 12 weeks and a slight bump to 14.4% for 52 weeks. Each of the remaining brands claimed less than 5% each, none of which posted any notable movement up or down from one period to the next.<\/p>\n
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CONTROL FACTORS<\/strong><\/span><\/h6>\n
Of course, no discussion of tobacco products would be complete without reviewing the latest on the regulatory front.\u00a0<\/span><\/p>\n
Twenty-eight states are considering bills to raise the legal age to purchase tobacco products. If a state adopts and enacts this kind of legislation, retail sales would decline due to the loss of consumers in the 18-, 19- and 20-year-old age range.<\/p>\n
Plus, some states are contemplating tax hikes: Tennessee is weighing a 17% tax on wholesale of OTPs; Mississippi has proposed a 22.5% tax on the manufacturer\u2019s list price for all tobacco products other than cigarettes; and Nebraska may raise the state excise tax on OTPs to 65% of the purchase price, a 45% jump from the current level.\u00a0<\/span><\/p>\n
Twenty-eight states are considering bills to raise the legal age to purchase tobacco products. If a state adopts and enacts this kind of legislation, retail sales would decline due to the loss of consumers in the 18-, 19- and 20-year-old age range.<\/strong><\/span><\/h6>\n
Nationally, the U.S. Food and Drug Administration (FDA) has gone public regarding its intent to heavily oversee sales of tobacco. In November, then-Commissioner Scott Gottlieb announced two major proposals \u2014 to ban menthol in combustible cigarettes and prohibit flavors other than mint, menthol and tobacco in e-cigarettes. Last month, the FDA delivered its plan for the e-cigarette flavor ban to the White House. Also last month, Gottlieb announced his resignation, prompting some analysts to forecast a reprieve from the tighter oversight. Others suggest his replacement may further the FDA\u2019s focus on menthol regulation. For now, the federal agency\u2019s newest proposed rule changes do not specifically call out smokeless tobacco.\u00a0<\/span><\/p>\n
What\u2019s saving smokeless tobacco from the flavor ban is the fact that it\u2019s not very popular with young people. But if we start to see teenagers in more affluent neighborhoods start picking up smokeless products, you can bet there will be action.<\/p>\n
The FDA\u2019s decisions on multiple applications for modified risk tobacco products (MRTP) could directly affect the category\u2019s future potential. Eight Swedish Match General snus are under consideration, there\u2019s an MRTP application pending for Copenhagen fine-cut moist snuff, and Reynolds American has submitted documentation for its Camel snus.<\/p>\n
Approval of a modified-risk order by the FDA might help correct people\u2019s misconceptions about the risks of smokeless tobacco. The ability to make modified-risk claims about any of these products could lead to a measurable consumer shift from combustible products to smokeless tobacco.<\/p>\n
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We, at TheCstoreEstore.com<\/a><\/strong>, are here to assist retailers by providing the largest selection<\/strong><\/span><\/em> of tobacco fixtures and cigarette displays, and offering retailers the fixtures and point of sale products that they need to keep cigarette, tobacco and smokeless sales a viable and profitable category.<\/p>\n
Visit our website to view a full range of tobacco fixtures and cigarette displays. With the exception of custom units, all pricing is disclosed on our website and online ordering is very simple. Call us and we’ll provide you with immediate pricing for all custom units.<\/p>\n
TheCstoreEstore.com<\/a><\/strong><\/p>\n
(866) 630-2100<\/strong><\/h6>\n
sales@cademanenterprises.com<\/strong><\/h6>\n
Reprinted from Smokeless Far From Snuffed (March 18, 2019, by Anne Baye Ericksen)<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"
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