Tobacco Shines In Las Vegas' Lights

Tobacco Plus Expo International 2013 drew 80 first-time exhibitors

Tobacco retailing's best and brightest were on display under the glowing neon lights of Las Vegas as the industry gathered for Tobacco Plus Expo International 2013 (TPE).

Among the highlights of this year's show, held in late January, was the annual New Products Showcase. Featured in the display were companies and items ranging from cigarettes to loose tobacco to electronic cigarettes — all vying to be named among the best products debuting at this year's show. Taking the honors were Hunid Racks Tobacco for Best Tobacco Product, Xhale Distributors/PhD Marketing for Best Non-Tobacco Product and Starbuzz for Best Tobacco Accessory.

This year's TPE event drew attendees from all walks of the tobacco industry, including approximately 270 exhibitors — 80 of which were exhibiting at the show for the first time. The 2013 exhibitor roster outnumbered last year's lineup, which totaled roughly 225 exhibitors.

The number of exhibitors was not the only difference seen this year. The mixture of exhibitors changed as well. Last year's show featured many exhibits by roll-your-own (RYO) companies, with attendees crowding booths for RYO machine demos. This year's expo, however, drew considerably less RYO displays — perhaps a direct result of recent changes in the way retailers with RYO machines are taxed. Those changes were included in the mid-2012 Federal Transportation Bill.

During the TPE 2013 keynote session, entitled "How Has the Tobacco Retail Business Evolved: Where Was It 15 Years Ago, Where Is It Today and Where Is It Going," Tobacco Outlet Business International Publisher Ed O'Connor noted that a recent survey of 28 tobacco retailers encompassing 434 retail establishments showed RYO is gone and not coming back.

Instead, more real estate at this year's event was taken by electronic cigarette companies, including Logic Technologies' Logic Power Series, Encore Raw, CIGR8, ESmoke USA and XEO Magnetic e-Cigarettes. The overwhelming presence of e-cigarette companies is a testament to the products' growth in the tobacco industry. Once an almost exclusively online product, e-cigarettes are now demanding space in convenience stores — and getting it. In fact, industry insiders estimate that c-stores typically carry four or five e-cigarette brands. One leading tobacco analyst even predicts e-cigarette consumption will surpass that of traditional cigarettes in the next decade.

Dr. Brad Rodut, who also spoke at the TPE 2013 keynote session, sees opportunity in electronic cigarettes, adding that sales "are booming" and projected to reach $1 billion in the United States this year. "We believe electronic cigarettes are a game changer for the industry," said Rodut, a professor of medicine at the James Graham Brown Cancer Center at the University of Louisville. "The transformation is now. The winners are the consumers, and the industry can be winners as well. Tobacco retailers should embrace and participate in the transformation."

The evolution taking place in the tobacco category is not lost on retailers. The survey cited by O'Connor also found that e-cigarettes currently account for 2.8 percent of the tobacco product inventory, but the majority of respondents — 92 percent — forecast an increase in their e-cigarette inventory over the next 18 months. Some retailers said they are carrying up to four brands of e-cigarettes now and intend to add a fifth, according to O'Connor.

"If you are not dedicating the shelf space and do not have the commitment to grow [electronic cigarettes], you may want to take another look," he advised.