Still, the No. 1 tobacco segment is cigarettes, despite predictions of its downfall. Lilly noted it is "risky to take our eye off [it.]" Cigarette declines are coming not only from consumers turning to e-cigarettes and vaping as alternatives, but in part from the increase in e-commerce, resulting in fewer regular trips to convenience stores.
Tobacco loyalty programs, such as those offered by Altria Group Inc. and Reynolds American Inc., are helping drive volume growth, according to Lilly.
Along with the inherent complexity of the category, the roundtable participants pointed to legislation and regulation as one of the biggest challenges to success in tobacco. While some regions face more restrictions than others, bans on product types will spread beyond individual stores, even if they start locally.
The shift to 21 as the minimum age to purchase tobacco is also a challenge on an employee level. In Massachusetts, current 18-year-olds who are grandfathered in create inconsistency for cashiers.
Retailers must take initiative and bring their concerns and documented facts to legislators, particularly local government, which is likely to care about the jobs and services c-stores provide to the community.
"Get involved with the belief that you can have an impact," Teller said.
An on-demand replay of "Retailer Roundtable: Growing Your Tobacco Profits" is available here.