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Every so often, a statement is heard or read that can make you look at a topic in a completely new light. This exact thing happened to me while at Convenience Store News' Tobacco Roundtable — held in conjunction with the Tobacco Plus Expo in Las Vegas in March.
During a discussion on the roll-your-own (RYO) tobacco category — which in the past year saw its federal excise tax jump from $1.0969 to $24.78 per pound as a result of the expansion of the State Children's Health Insurance Program (SCHIP) — one attendee said the category took a beating as a result of the astronomical tax increase. And the situation got muddier, he explained, when RYO customers discovered cheaper loose pipe tobacco could be used as an alternative to the pricier loose cigarette tobacco.
My "Ah-ha!" moment was when the attendee said the following: "Consumers will enter the [RYO] category [in the future] and not know anything about last year or its previous prices."
Now roll this thought around for a moment in your mind. Think of the opportunity these future RYO customers — potentially your current customers — present to your business, and ask yourself how you can target them, attract them as RYO shoppers and keep them coming back.
Who are these customers entering the RYO category? With smokers facing ever-increasing prices thanks to state tax increases, many surely are looking for less expensive, alternative methods to obtain cigarettes — and RYO could be a solution.
And the same theory could be applied to the entire other tobacco products (OTP) set. Retailers have said smokers are increasingly becoming "dual users" — smoking cigarettes and using a form of OTP, such as cigars, pouches, moist snuff, etc. In this case, you may already have a loyal cigarette shopper who just needs a little encouragement or education at the time of purchase to try something new.
Retailers should apply the strategies they develop to promote RYO to new customers across the entire tobacco set. For example, consider promoting pouches as a cigarette alternative. Some retailers report the products can be an entry-level OTP item for smokers and other consumers due to their cleanliness compared to moist snuff and their portion-control size.
Potential adult tobacco customers are not the only future-focused opportunity in the tobacco category. For some time, cigarette manufacturers have diversified product lines into OTP to appeal to smokers looking for ways to get nicotine fixes in places they can't smoke. From lozenges and sticks to Swedish-style snus, these products are vastly different from the OTP with which many consumers are familiar. As a result, these products need store-level support to increase awareness of these items to adult tobacco customers and educate them on their use.
And while the products being developed and tested today may be years away from mass market appeal, they are evidence of the future of the tobacco category in the U.S.
Often while discussing the category, tobacco retailers dwell on the negatives — legislation, contracts and taxation, among others. Not enough time is spent addressing the positive aspects of this category and supporting the opportunities within the section. If the tobacco category is to remain at the top of convenience stores' in-store sales now and into the future, it is imperative retailers focus on the positives.