C-stores can do more to help modern oral products reach their full backbar potential.
Renee Covino, Convenience Store News
NATIONAL REPORT — The alternative smokeless tobacco segment, otherwise known as modern oral products, is rising in sales and category importance within convenience stores.
Modern oral nicotine, which consists primarily of pouches, tablets, gum and lozenges, currently has 91 percent distribution in the convenience channel, according to Swisher, which distributes oral nicotine products in partnership with Rogue Holdings.
More than 70 percent of adult tobacco consumers in the United States have expressed interest in modern oral products, notes Brittany Lockard, senior manager, brand and innovation communications for Reynolds American Inc. (RAI), which last year bought pouch manufacturer Dryft and incorporated it into its VELO oral pouch line.
While the convenience channel has embraced modern oral products, there is more that c-store operators can do to elevate this new segment to its full backbar potential.
Constant evaluation and evolution of the backbar real estate is essential to meet the demands of today’s adult tobacco consumer, according to Matt Domingo, senior director of external relations at Reynolds Marketing Services Co.
Be it via product assortment, the impact of merchandising space, or both, choice must be offered to today’s adult tobacco consumer, who is willing to try different options such as oral nicotine to meet today’s societal demands, he explained.
Put the Emphasis on Pouches
Industry insiders agree that the modern oral nicotine category is being driven by pouches. According to recent data from Management Science Associates Inc. (MSA), volume in the category has almost doubled from last year and now accounts for 14 percent of the smokeless volume in c-stores. For the 26 weeks ended Aug. 1, 2021, nicotine pouches made up 98 percent of modern oral dollar sales.
ZYN nicotine pouches are driving Swedish Match North America’s business forward, notes Jason Walker, associate brand manager for ZYN Marketing. Since launching in 2014, ZYN has grown to be the top smokeless brand in several states.
“[It’s] currently outselling juggernaut moist snuff brands in states like Utah and Oregon,” Walker relayed. “Most exciting, we have yet to find the ceiling; ZYN continues to grow in the face of significant price competition and brand proliferation.”
Highlight It Separately
Through both dedicated space and prominent permanent shelving, c-store retailers are growing the modern oral nicotine category and helping consumers identify and differentiate it from other traditional tobacco products.
“We recommend merchandising nicotine pouches in their own section in a permanent display,” Walker advised. “Visibility to consumers is extremely important and, given the rapid growth of the category, they are actively looking for it at the store.”
Now that the category is more established, consumers are also looking for variety in their favorite pouch brands. “We see that the retailers who carry more than 16 SKUs of ZYN outsell retailers who do not — by nearly double,” Walker told Convenience Store News.
Chris Dillard, category manager for tobacco at The Spinx Co., a convenience store chain based in Greenville. S.C., shared that the retailer is pleased with its decision to highlight modern oral nicotine and create a designated space that makes it easier for adult tobacco customers to see the different modern oral options within its innovative tobacco products selection. As a result, he believes customers “are starting to be more aware of the nicotine alternatives.”
Understand How Consumers Have Changed
“As times change, adult nicotine preferences also shift,” according to RAI’s Lockard.
In light of restrictions regarding where certain tobacco products can be consumed, she explained that some adult smokers are looking for smoke-free alternatives, and some adult dippers are looking for spit-free alternatives.
“When we talk to nicotine pouch consumers, the thing that they find most appealing is the convenience. They gravitate toward the smoke-free, spit-free and hands-free benefits as key reasons for adoption,” Walker echoed.
At the same time, he added that the entire U.S. population has been reevaluating priorities amidst the COVID-19 pandemic and based on this reevaluation, “we have seen seismic changes in consumer behavior. Nicotine consumers are no different, and consumers’ perceived benefits of modern oral nicotine mirror some of the behavioral changes that we are seeing on a macro level.”
C-store operators would be wise to recognize this and educate their staff on these changes and how modern oral products can fit in to the post-pandemic tobacco consumer’s world.
Keep Taking Chances
C-store operators that are willing to differentiate and take on new and emerging categories and forms of tobacco are the ones that are leading in oral nicotine to begin with. But that doesn’t mean they should stop now, according to Domingo.
C-stores that take chances in the category “are typically the ones who end up capturing the bigger slices of the volume that becomes available from market to market,” he said.