Three Tips to Capitalize on Cigars' Burning-Hot Growth
NATIONAL REPORT — Rev your engines, tobacco category decision makers. Cigars are not only growing in the convenience channel, but they’re accelerating at a faster and faster clip.
Convenience store industry dollar sales for cigars were up in the low- to mid-single digits in 2015, up in the mid- to high-single digits in 2016, and up nearly 15 percent in 2017.
Unit growth is even more impressive. Industry data shows that cigar units have been growing at double-digit monthly rates for several years and, according to market researcher Nielsen, cigar units grew 18 percent during the latest six months, while sales dollars grew 17 percent.
Is your cigar strategy set to the right speed?
With so much growth potential, this is no time to sit idly by. Convenience store operators can get the most out of the cigar segment by following these tips:
1. Rev up the natural & rolled leaf subsegments
By far, the fastest-growing cigar subsegments currently are Natural Leaf and Rolled Leaf, according to Joe Teller, director of category management at Swedish Match, manufacturer of the White Owl and Game cigar brands.
David "Woody" Woodley, executive vice president of sales and marketing for Sheetz Inc., confirms that natural leaf cigars are performing well for the Altoona, Pa.-based convenience store chain, and more space is being dedicated to this subsegment in its 540-plus stores.
For clarification, natural leaf cigars are mass-produced cigars with a tobacco leaf on the outside as a wrapper. The inside of the cigar is homogenized tobacco leaf (HTL), basically pulverized in a similar way to how paper is made. Rolled leaf cigars are made exclusively of tobacco leaf. They appeal to consumers because they have a more premium look than regular, mass-produced HTL cigars, yet are competitively priced.
According to Nielsen large c-store chain data, Natural Leaf grew 34 percent in dollars over the last six months, while Rolled Leaf grew 63 percent, far faster than other subsegments.
"Together, these two comprise half of all cigar category growth," stated Teller.
2. Go wide on variety
With so much activity in the cigar segment, c-stores are wisely ensuring there’s adequate space with a large variety to choose from, said Teller.
Woodley affirms that at Sheetz, the chain has upped the SKU count and "set space to sells."
"We believe cigars will continue to grow, so we are going to continue to dedicate the space to the segment," Woodley told Convenience Store News.
3. Update regularly
Retailers should be much more vigilant now about updating their cigar assortments than in years past, Teller advised.
Part of this strategy means keeping new products in stock, added Woodley.
Limited-time cigar products allow for continuous real-world testing of new and interesting flavors, the best of which end up becoming everyday cigars. This trend has become expected by c-store cigar smokers, who often come into the store more frequently expecting to find new and limited-time cigars.
Download our full report, "Putting Cigars in the Fast Lane," by clicking below.