Taking Its Knocks, But Still Standing
In early 2016, Convenience Store News began an online feature called Tackling Tobacco. This monthly compilation takes a look at tobacco regulation — both proposed and approved — across the thousands of municipalities in the United States.
The birth of Tackling Tobacco came at the same time as the National Association of Tobacco Outlets (NATO) revealed that its 2016 NATO Show would be the last so the association could hone its focus on the growing patchwork of regulation targeting the tobacco industry.
Still, despite the increasing changes on the federal, state and local regulatory fronts, tobacco remains a strong category for the convenience channel. At a time when more municipalities are embracing Tobacco 21 efforts, and numerous local governing bodies are enacting flavor bans, cigarettes account for the largest merchandise category in convenience stores when it comes to in-store sales, according to the latest CSNews Industry Report. Specifically, cigarettes captured 30.11 percent of all industry in-store sales in 2016.
Over the past five years, in the face of heavy and yet-still-increasing pressure, cigarette sales have either stayed relatively flat or dipped just slightly. During the same 2012-2016 timeframe, the category saw its margin percentage increase from 14.21 percent in 2012 to 15.2 percent last year.
Other tobacco products (OTP) — likewise a target of regulation — occupies the No. 5 spot among the largest merchandise categories in c-stores when it comes to in-store sales. The category accounted for 5.16 percent of all industry in-store sales in 2016.
So, while some in the tobacco retailing world may think tobacco is entering a prohibition-by-legislation period, the numbers indicate we shouldn't count the business out just yet.