Adjusting to Changing Tobacco Trends
The tobacco industry is changing at a rapid pace. Cigarette sales are declining year after year, while vape and smokeless products have been on the rise. Now, there are new products out there that fit into the growing "ANDS" (alternative nicotine delivery systems) category, such as nicotine toothpicks, pouches and dip (no tobacco leaf present in any of these).
Modernizing categories and planograms will be a necessity for convenience retail chains looking to hold onto revenue.
While consumers are quitting cigarettes in droves, most would agree they are not quitting nicotine. Many consumers switched from cigarettes to ENDS (electronic nicotine delivery systems) such as Logic, blu and Juul. Other consumers have moved into smokeless tobacco products such as dip and spitless snus.
The rise of smokeless tobacco options and ENDS products in the past 10 years is a clear indicator that consumers aren’t quitting their nicotine altogether, but instead they have become open to finding their nicotine in other products.
Some of these products I like to call “ANDS” products. These are non-combustible alternative nicotine delivery systems that would otherwise not be able to be categorized into current and obsolete product groupings. ANDS are a fairly new subcategory of other tobacco products (OTP) and are increasingly gaining customers. People are tending to move away from tobacco leaf products, both combustible and non-combustible, and move to products that deliver nicotine.
Nicotine toothpicks and pouches are very similar. Both are flavored oral nicotine products that did away with the tobacco leaf. The toothpicks are infused with nicotine and food-grade flavorings, while the pouches are tea bags that are filled with powdered nicotine and food-grade flavorings.
Another ANDS product is nicotine dip that is made using mint leaves instead of tobacco leaves. Nicotine dips are made with nicotine applied to chopped mint leaves. They can be used just like traditional tobacco dips like Skoal, Copenhagen or Grizzly.
Are 'ANDS' Right for Your Business?
So, should your business sell ANDS? It all comes down to whether your convenience store or chain is positioned to make the investment to secure customers for the present and future.
In discussions with CEOs of many of these ANDS manufacturers, they say consumers are constantly asking them where they can buy the product. Store owners should embrace this and use it to their advantage. A retailer can acquire new customers just by carrying a product that is newer to distribution. This is especially true when the products being considered have already started to take sales away from cigarettes, moist snuff and ENDS products.
By adding new SKUs to their tobacco categories, retailers will need to eliminate others or increase the real estate space for their tobacco products section as a whole.
When choosing new product lines in the ANDS category, a category manager should evaluate a manufacturer or a brand based on such factors as sell-through, branding, customer experience, customer adoption, marketing, and point-of-sale (POS) merchandising support.
Behind-the-scenes items that are also crucial toward the long-term success of the store(s) and the brands they carry include Food and Drug Administration (FDA) compliance, quality control, shelf life, liability insurance and vendor/retailer support.
We already know that Juul has emerged as the leader in the ENDS category. Which ANDS products are in line to solidify a spot on your shelf? Which ANDS manufacturers and brands meet the qualifications stated in the previous paragraph?
With sell-through and compliance being the most important direct and indirect items of importance, there are certain brands and products leading the pack on this newly paved road. Here are three types of ANDS that hold promise for the convenience channel:
Nicotine pouches have created a nice following throughout the country — both online and in stores. Nicotine pouches function just like spitless snus. Look for products that have sell-through and have been on the market prior to the FDA’s deeming rule date of Aug. 8, 2016. For tobacco products on the market by this date, the FDA allows them to legally sell while the manufacturers meet certain deadlines and guidelines that will eventually lead up to a Pre-Market Tobacco Application (PMTA) submission in August 2021/2022. Within a year of that PMTA submission, the FDA should complete its review and approve or deny the manufacturer to continue selling the product.
While nicotine toothpicks might seem like a new idea, they have been around since 2013. In the toothpick space, only a few known brands were on the market by the FDA deadline. When merchandised and branded properly, nicotine toothpicks see sell-through. They also function as an upsell that increases a store’s average order value. Avoid investing in a brand if it has not met the requirements in the deeming rule, such as submitting ingredient listings and labels to the FDA. The facilities and products should be FDA registered as well. Look for a brand that has compliance and quality control that are on point. Toothpicks are one of the few products being used by smokers, dippers and vapers alike.
Nicotine dip is another product making its way into stores. I like the idea. Why have tobacco leaves pressed up against your gums when you can have mint leaves and nicotine instead? I can see these products leading to the abolishment of traditional tobacco leaf dips.
In the end, consumers want to feel empowered to make a choice. Nobody goes to the ice cream parlor that only carries three flavors when the parlor across the street has 15 flavors plus 10 different topping options.
With the guidelines and requirements mentioned earlier, choose one to three items from each of the three ANDS subcategories (pouches, toothpicks and dip). Find products that aren’t selling well on your shelves and remove them.
The way I see it, ANDS are the future of the category. The status quo has changed. Non-combustible ANDS products should be part of your offering in order to solidify your store’s ability to sustain long-term growth and success.
Evan Grossman is an entrepreneur and industry advocate. In 2013, he founded Pixotine Products, launching Pixotine Nicotine Toothpicks. Before founding Pixotine Products, Grossman co-founded Trans World Jets in 2011, a jet charter consulting and contracting business.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.