CSNews Retailer Study Shows Good & Bad of C-store Tobacco

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CSNews Retailer Study Shows Good & Bad of C-store Tobacco

By Melissa Kress, Convenience Store News - 04/06/2015

NATIONAL REPORT — An exclusive tobacco retailer study conducted by Convenience Store News asked c-store operators what is having the biggest positive and negative impact on their tobacco business these days. Pricing, innovation and regulation were among the items cited.

In one form or another, price is playing a positive role in convenience store retailers' tobacco category performance. Of the retailers surveyed by CSNews, many cited coupons, promotions and pricing as having the biggest positive impact on the business.

"Competitiveness between brands is leading to a lot of discounting," one retailer pointed out.

Others credited innovation in the tobacco space, such as electronic cigarettes and foil packaging for cigarillos. "The past year has seen three to four good innovations," one retailer stated.

Innovation in established brands was cited by another retailer as key. "Every time they bring out a different type of Marlboro, it lifts our sales," this respondent said.

Other positive factors on their tobacco business, according to the retailers, include falling gas prices, low state excise taxes, and the rise in e-cigarettes and vapor products.

But it's not all moonlight and roses. Prices were also cited as having the biggest negative impact on the tobacco category's performance. Higher taxes, price hikes and a depressed general economy were called out by some retailers in the negative column.

Regulation, or the lack thereof, is also figuring into the tobacco category's health. Several retailers pointed to the Food and Drug Administration's proposed deeming regulations of electronic cigarettes and cigars as a major driver of uncertainty in the category. Others cited increased regulations at the state and local levels as detriments.

"Cities limiting where people can smoke and all the bloody laws in California," one retailer remarked when asked about current tobacco category challenges.

CSNews conducted the survey among convenience store retailers on the current status of their tobacco programs. Responses from a total of 90 retailers are included in the results. A total of 59 percent of respondents represent chains (two or more units), while 41 percent are single-store operators. Respondents operate an average of 121 units. All respondents carry cigarettes and other tobacco products at their stores, while 91 percent have electronic cigarettes and 69 percent carry vapor products.

For full results of the study, look in the April issue of Convenience Store News