C-store Opportunities to Cater to the Tobacco Polyuser

As cigarette usage declines, alternative backbar products are experiencing growth.
A man holding a cigarette and a vapor product

NATIONAL REPORT — Have you done the math? As the consumption of cigarettes declines, the consumption of other nicotine products increases, but often the consumer is the same, a so-called polyuser that convenience stores are in good position to cater to.

The latest "Global Trends in Nicotine" report noted that cigarettes shrunk from 88.9 percent of the total nicotine ecosystem in 2017 to 84.1 percent in 2020. This shift has largely been driven by the increase in alternative nicotine products in the market, with one of the main results being an increase in consumers who use multiple products.

Earlier this year, Mike Wilson, vice president of trade strategy and operations for Winston Salem, N.C.-based Reynolds Marketing Services Co., told Convenience Store News that this phenomenon is one of the category's greatest untapped opportunities of 2023. "Many adult consumers are looking for potentially less risky products and as these consumers continue to navigate away from combustible cigarettes, polyusage continues to rise," he said.

[Read more: Backbar Shifts Reflect Continued Pressures on the Tobacco Consumer]

The decline in cigarette usage over the last decade has led to a proliferation of more novel and alternative nicotine products, driving growth of more dual and poly product use, agreed Don Stuart, managing partner at Cadent Consulting Group, based in Wilton, Conn. Because of this, the industry is experiencing a slightly different consumer shopping for tobacco these days than 20 years ago, he explained.

"This consumer is more willing to cross over between product groups and try alternative tobacco products than ever before," he said. "These aren't buyers of your father's pipe tobacco or cigars."

The Particulars of Polyusage

Don Burke, senior vice president of Management Science Associates Inc. (MSA), a Pittsburgh-based company focused on analytics and informatics, has also been watching the polyusage trend take shape, with what MSA defines as the two largest nontobacco nicotine product forms — vapor and modern oral — often winding up in the baskets of cigarette users.

"The trend is very much expected to continue as tobacco use restrictions have practically forced the cigarette consumer, who chooses to consume nicotine regardless of their location, to find an additional product form that is allowed/acceptable at that location," Burke explained.

"You will see that polyusers often switch between combustible cigarettes and either moist smokeless tobacco or modern oral nicotine based on whether they are at work or at play," offered Matthew Hanson, chief financial officer/chief growth officer of Chicago-based Black Buffalo.

Black Buffalo launched in convenience stores last year as a modern oral nicotine product designed to deliver the "ritual and experience" of moist smokeless tobacco in long-cut and pouches, but without the tobacco leaf.

"Adult nicotine consumers appreciate products that allow for frictionless experiences or moments of consideration," Hanson said. "Many products now offer discreet use, which allows adult consumers to enjoy them in more settings, such as professional, commuter and travel."

Nicotine pouches are one of the most popular products (behind e-cigarettes) to have inspired polyusage. "Smokeless tobacco users are more likely to mix in oral nicotine pouches," noted Alex Morrison, senior business analyst at Cadent Consulting Group. "Women also opt for pouches at significant rates — females comprise about 25 percent of pouch users."

Even more popular, e-cigarettes form the basis for most poly-purchasing, particularly by younger users, according to Morrison. He pointed to a recent study published in the National Library of Medicine that cited young adults are more likely to have lower risk perceptions for most alternative tobacco products. Furthermore, the study suggested that the uptake of e-cigarette usage may, in part, be explained by experimentation, which Morrison likens to polyusage.

Next-Generation Suggestions

So, how can convenience stores best market to dual or poly product users?

"The best advice is unexciting, but always be in stock with the right items," Cadent Consulting's Stuart said. "A lot of the polyusage today is being driven by new items that are viewed as risk-reducing relative to traditional tobacco products. The hottest trend we are seeing is in tobaccoless nicotine pouches, but this can change on a dime as we have seen in the last few years with JUUL and other e-cigarettes."

Morrison shared that he recently spoke with a large chain retailer based in the Midwest who told him that they have traded a lot of e-cigarette backbar space over the last two years in favor of modern nicotine pouches like Zyn, on! and Rogue products. "As it is these products that drive considerable polyuse occasions, it is important to stock the full array of pouch options," he advised.

Reynolds' Wilson echoes that to meet the demands of the polyuser, c-stores should strive for a more robust nicotine portfolio from reputable manufacturers.

But beyond being in-stock with the right items, driving awareness is crucial for any emerging category with relatively low awareness and share, as many alternative tobacco products are.

Stuart outlined three ways c-stores can drive awareness, starting with signage of noncombustible products, both at the storefront and the backbar. Promoting noncombustible products is a top suggestion, too. "I recall a c-store a few months back running a three-for-one on Zyns; this is a fantastic way to stimulate interest," he noted.

The third way retailers can drive awareness is to maximize their facings for products that are on-trend and tailor their assortment to fit the latest trends.

Employee education and interaction also come into play if retailers want to adequately satisfy the needs of polyusage customers. "The connection between store staff and guest is a bond born out of frequency," Hanson relayed. "Convenience stores can leverage the relationship between adult consumers and their staff by providing staff with education and offering consumers products at a value that encourages them to try a product that is different from their everyday form, flavor or brand."

Evolving Regulation

Perhaps the most important advice for a retailer seeking to satisfy polyusers is to only deal with alternative nicotine manufacturers that are playing for the long-term.

"I would make sure I was dealing only with reputable companies that have submitted PMTAs and credible ones backed with scientific data," advised Bryan Haynes, a partner specializing in tobacco at the national law firm of Troutman Pepper.

He acknowledges that the U.S. Food and Drug Administration (FDA) could be more helpful to the industry if the agency was more transparent around this topic. Nevertheless, it behooves retailers to question the companies they deal with regarding their PMTA status.

Despite continually evolving efforts to limit adult consumer choice and options through regulatory means, tobacco consumers still opt to enjoy nicotine. From a harm reduction perspective, polyusage can potentially be a good thing, but these products are still in the early stages and research on their health impact is lacking.

"From a retailer perspective, it is important to stay current on the regulatory environment surrounding the products on shelf. The last thing a retailer wants is to be blindsided should one of the lines fall victim to the latest regulation," Morrison cautioned. "Modern nicotine products are an exciting opportunity, but from both a harm reduction and a sales perspective, the market is still very young and retailers need to be careful as regulations evolve."