Industry Report 2024 Deep Dive:
TOBACCO
A March 2024 deadline for the Biden Administration to take action on proposed standards that would ban menthol in cigarettes and characterizing flavors in cigars came and went, with any decision delayed indefinitely. While the convenience store industry dodged this bullet for the time being, the tobacco business at c-stores is facing other challenges. In this special "Deep Dive" report, a bonus supplement to the Convenience Store News 2024 Industry Report, we present exclusive data and insights into the cigarettes and other tobacco products (OTP) categories at convenience stores.
sponsored by
“
“
Regulation to Prohibit the
Use of Menthol in Cigarettes
and RYO Tobacco:
In April 2022, the FDA published a proposed product standard regulation prohibiting the use of menthol as a characterizing flavor in cigarettes, roll-your-own (RYO) tobacco, and heat-not-burn products. The public comment period ended on Aug. 2. A final rule/regulation is expected to be adopted by the FDA sometime in August 2023.
Bonus data and insights into the cigarettes and other tobacco products categories at convenience stores.
Regulation to Prohibit the Use of Characterizing Flavors in Cigars:
Also in April 2022, the FDA published a proposed product standard regulation prohibiting the use of characterizing flavors in cigars, except for tobacco flavor. The public comment period ended on Aug. 2. A final rule/regulation is expected to be adopted by the FDA sometime in August 2023. When the FDA issued the proposal, the agency stated that the effective date would be one year after the final rule is published.
Potential Regulation for Maximum Nicotine Level in Cigarettes
and Other Tobacco Products:
In June 2022, the FDA announced that the agency would propose a new regulation setting a maximum level of nicotine in cigarettes and certain other tobacco products. The other products that could be subject to this regulation were not specified. A proposed rule/regulation is expected to be published sometime by October 2023 and will be followed by a public comment period. When the proposed rule is published, the FDA may identify a timeframe for the new rule to go into effect.
45%
cigarettes
sponsored by
PRODUCED by
For the second year in a row, cigarette sales shrank in the convenience channel.
OTP
The smokeless tobacco alternatives segment gained around 4 points in both dollar share and unit share last year.
2023
36.30%
29.40%
19.50%
11.70%
2.00%
1.00%
0.10%
Smokeless
Vaping products
Cigars
Smokeless tobacco alternatives
Papers
Pipe/cigarette tobacco
Other tobacco nicotine products
1. Polyusage on the Rise
Today's price-conscious consumers are not staying as brand loyal as they have been historically. They are increasingly making purchase decisions based on what is on promotion. This can even mean poly product use by smokers. "We remain cautious on the U.S. tobacco/nicotine industry in the near term as the tobacco consumer remains under substantial financial pressure with many being more selective in their purchases and turning to more affordable alternatives, such as fourth tier/deep discount cigarettes, modern oral tobacco and, increasingly, illicit or gray market disposable vapor products," noted Bonnie Herzog, managing director and senior consumer analyst at Goldman Sachs.
2. A New Battle to Fight
A new tobacco fight is brewing in Massachusetts. The New England Convenience Store and Energy Marketers Association launched Citizens for Adult Choice, a grassroots campaign to oppose “generational bans” on tobacco and nicotine products. The move follows a Massachusetts Supreme Court ruling to uphold a Brookline, Mass., ordinance the prevents the sale of tobacco products to anyone born after Jan. 1, 2000. Newton, Mass., officials are considering a similar ordinance that would prohibit cigarette and tobacco sales to anyone born after Jan. 1, 2004.
FIVE-YEAR TREND: CIGARETTES
Cigarettes’ share of in-store sales fell to a new five-year low of 21.51%.
-4.3%
-3.3%
8.1%
-1.4%
31.10%
8.14%
8.3%
5.3%
30.75%
8.12%
7.74%
29.15%
0.8%
13.7%
23.5%
5.5%
27.65%
6.84%
What's Trending
1
2
3
9% cigarettes
7% cigarettes
6% cigarettes
4% cigarettes
39% OTP
9% OTP
8% OTP
6% OTP
4% OTP
SHARE OF IN-STORE SALES
2023
2022
3.48%
3.00%
1.19%
0.30%
3.65%
3.16%
1.17%
0.31%
Candy
Salty snacks
Alternative snacks
Packaged sweet snacks
Alternative snacks was the only snacking category to see its share of in-store sales drop year over year.
2023
% change
2023
% change
-1.6%
-2.9%
-4.3%
61.1%
8.8%
5.4%
0.9%
2.4%
$54,868
$44,506
$29,494
$17,781
$2,968
$1,464
$124
$151,205
$8,282
$6,718
$4,452
$2,684
$448
$221
$19
$22,824
-0.2%
-1.5%
-2.8%
63.5%
10.4%
7.0%
4.0%
3.9%
AVERAGE SALES PER STORE
Smokeless
Vaping products
Cigars
Smokeless tobacco alternatives
Papers
Pipe/cigarette tobacco
Other tobacco nicotine products
TOTAL
CATEGORY ANALYSIS: OTHER TOBACCO PRODUCTS
OTP had a better year than cigarettes, although the category still experienced a slowdown.
Source: Convenience Store News 2024 Realities of the Aisle Study
The percentage of nonbuyers who said cigarette prices at c-stores are too high jumped 14 points year over year.
Why Shoppers Don't Buy Tobacco Items at C-stores
Source: Convenience Store News 2024 Realities of the Aisle Study
0.3%
2023
% change
2023
% change
-7.1%
-7.6%
19.7%
-5.7%
$327,279
$55,497
$27,209
$409,985
$49,401
$8,377
$4,107
$61,885
-5.6%
-6.2%
21.5%
-4.3%
AVERAGE SALES PER STORE
INDUSTRY TOTAL (IN MILLIONS)
Premium/super premium
Mid-level
Economy/value
TOTAL
Dollar Sales
Unit Volume
2022
23.20%
8.00%
52.00%
11.10%
5.30%
0.40%
0.00%
2023
37.80%
31.00%
20.90%
7.50%
1.80%
0.90%
0.10%
2022
24.10%
8.80%
54.70%
7.40%
4.40%
0.60%
0.00%
3.5%
2023
79.80%
13.60%
6.60%
2022
81.00%
13.80%
5.20%
2023
76.30%
15.50%
8.20%
2022
77.00%
15.70%
7.30%
Premium/super premium
Mid-level
Economy/value
Dollar Sales
Unit Volume
Drug
Online
-1.5%
-1.2%
2.8%
4.1%
-10.5%
-1.1%
3.16%
3.00%
2.82%
-1.1%
2.67%
-5.2%
-3.7%
8.7%
-4.8%
-1.2%
1.17%
1.19%
1.22%
1.10%
1.11%
Percent change in total sales
Percent change in total unit volume
Share of in-store sales
3. Some Much-Needed Clarity
The U.S. Food and Drug Administration is finally trying to bring some clarity to which tobacco products retailers can and cannot sell. This spring, the agency launched the Searchable Tobacco Products Database, a new user-friendly list of the tobacco products — including e-cigarettes — that may be legally marketed in the United States. Updated monthly, the online database features easy-to-use search capabilities especially tailored toward retailers.
INDUSTRY TOTAL (IN MILLIONS)
The smokeless tobacco alternatives segment saw
the most growth with a 61.1% increase in average
sales per store, up from 46.2% growth in 2022.
Cigarettes rank among the top three nonedible items purchased at convenience stores, trailing only fuel and lottery.
While still the go-to place for tobacco purchases, the percentage of shoppers who said they buy cigarettes at a c-store in a typical month was down 12 points vs. last year and for OTP, 13 points.
Retail Channels Where C-store Shoppers Purchase Tobacco in a Typical Month
33% Cigarettes
26% Other tobacco products
Source: Convenience Store News 2024 Realities of the Aisle Study
Convenience
Grocery
Mass
Dollar
Tobacco Items Purchased at a Convenience Store in Past Month
The Consumer View
2022
2023
2021
2020
2019
Cigarettes
E-cigarettes/vapor products
Cigars
Oral nicotine/snuff/chewing tobacco
30%
8%
7%
5%
Cigarettes
39%
22%
19%
17%
19%
The price at c-stores is too high
C-stores don’t offer a good selection
I've never thought of looking for these products at c-stores
Don't trust the quality at c-stores
C-stores don't offer sales/promotions
33%
29%
20%
20%
11%
Other Tobacco Products
CATEGORY ANALYSIS: CIGARETTES
Diving into the Data
Bonus data and insights into the cigarettes and other tobacco products categories at convenience stores.
Economy/value cigarettes were the bright spot, posting nearly 20% growth in average sales per store.
FIVE-YEAR TREND: OTHER TOBACCO PRODUCTS
While OTP sales remained on the plus side last year, the category's unit volume declined for the third consecutive year.
Percent change in total sales
Percent change in total unit volume
Share of in-store sales
3.9%
4.6%
8.1%
8.3%
13.7%
2022
2023
2021
2020
2019
CIGARETTE SHARE BY SEGMENT
Despite declining dollar and unit share, premium/super premium cigarettes remain the overwhelming category leader.
Buoyed by the growth of new alternative products, the OTP category continues
to top cigarettes in percentage sales gains.
Cigarettes
-4.3%
-3.3%
0.3%
3.5%
-1.5%
2022
2023
2021
2020
2019
CIGARETTES VS. OTHER TOBACCO PRODUCTS
Both cigarettes and other tobacco products have been experiencing
dips in in-store sales share over the past two years.
21.51%
23.49%
25.90%
27.43%
27.38%
2022
2023
2021
2020
2019
Male c-store shoppers are more likely than females to purchase cigars (9%), while female shoppers are more likely than males to purchase cigarettes (33%).
Compared to baby boomers and Generation X,
Gen Z and millennial c-store shoppers are more likely to buy e-cigarettes (21% and 13%, respectively) and cigars (15% and 11%, respectively).
6% Cigarettes
5% Other tobacco products
6% Cigarettes
7% Other tobacco products
7% Cigarettes
7% Other tobacco products
6% Cigarettes
6% Other tobacco products
3% Cigarettes
5% Other tobacco products
3
-7.4%
-7.6%
-6.0%
-2.8%
-5.5%
21.51%
23.49%
25.90%
27.43%
27.38%
-3.3%
-0.5%
-1.4%
5.3%
0.8%
7.93%
7.98%
8.14%
8.12%
7.74%
Other Tobacco Products
3.9%
4.6%
8.1%
8.3%
13.7%
Cigarettes
Other Tobacco Products
7.93%
7.98%
8.14%
8.12%
7.74%
SHARE BY SEGMENT
CIGARETTES VS. OTHER TOBACCO PRODUCTS
FIVE-YEAR TREND: PERCENT CHANGE IN TOTAL SALES
FIVE-YEAR TREND: SHARE OF IN-STORE SALES
