Moist Segment Drives Strong C-store Gains for Smokeless Tobacco

BARRINGTON, Ill. — Smokeless tobacco posted positive gains across all key performance metrics for the four weeks ended March 29, according to the Balvor LLC Retailer Composite (BRC).

Dollar sales increased 8 percent vs. the previous year, aided by moist smokeless growing at nearly similar rates, snus increasing more than 12 percent and loose leaf remaining essentially flat.

Given the contribution that these segments make to the smokeless category, moist smokeless contributed more than 90 percent of the growth, with the balance coming from snus.

Meanwhile, retail units sold advanced nearly 2 percent with moist reporting slightly lower unit growth for the period. Snus grew just over 5 percent, while loose leaf declined by 5 percent. 

Penny profits grew between 4 percent and 5 percent, adding nearly a nickel of additional profit to each retail unit sold during the month of March. Higher weighted average retail prices of 6 percent more than offset the 1.1-percentage-point-decline in gross margins, the BRC found.

Digging into moist smokeless by price segments, the composite showed:

• Premium brands, the largest of the segments on both a dollar and unit basis, saw dollars grow around 2.6 percent. Retail units declined approximately 1 percent. This occurred in light of the fact that premium’s weighted average price gap narrowed by over five percentage points and now stands at 20 percent vs. mid-priced brands.
• Mid-priced brands, those retailing between 40 percent and 60 percent above the lowest-priced brand in the mix, experienced the strongest gains in both dollar sales and units sold — increasing 22 percent and 13 percent, respectively. Balvor’s mid-priced segment includes sub-brands (like Skoal Xtra) as they retail at a discount to their premium-brand counterparts.
• Discount brands were up nearly 10 percent on a dollar basis due to mid-single-digit increases in retail prices. Retail units were essentially flat, attributed partly to narrowing price gaps with premium, and more likely to improving economic conditions that motivated demand shifting to the mid-priced segment.

Another potential sign of improving conditions for the tobacco consumer is evident in the strong retail unit sales growth of moist rolls vs. moist can. Moist rolls are up more than 5 percent as moist can is up less than 2 percent compared to last year. 

“When a greater number of consumers are able and willing to spend more to save more, that’s generally a good thing for everyone,” said David Bishop, managing partner of Balvor.

The Balvor Retail Composite is based on item-level data from 14 convenience retailers, representing retailers of different sizes and from various regions across the United States. Balvor utilizes custom segmentation and equalizes chain-wide data to an “average per store week” (APSW) basis. This approach removes much of “noise” associated with changes in store count between periods; minimizes sample bias that would skew toward larger-store operators; and provides more actionable insights.

Companies interested in learning more about this report or about participating in the quarterly tracking service should contact David Bishop at [email protected].