tobacco
Backbar Battle Even though it’s a small percentage of OTP, don’t count e-cigarettes out
T
he future of electronic cigarettes depends on who you listen to and on what day. Numbers point to a flattening-out of the segment. And while some see this as an indication e-cigarettes may not be the disruptive product it was once thought to be, others still believe the segment will bypass traditional cigarettes but it may just take a little longer. E-cigarettes still command attention behind the backbar. True, the segment has seen its tripledigit growth slow to double-digit growth, but it is the only segment to even post double-digit gains. But traditional cigarettes are not going away anytime soon. The tobacco category leader accounted for 31.13 percent of in-store sales and 15.78 percent of in-store gross margin dollar contribution at convenience stores in 2014. By comparison, other tobacco products (OTP) — which includes
Fig. 26
Cigarettes Unit
smokeless, cigars, e-cigarettes, papers, pipe and cigarette tobacco, and pipes — accounted for 4.89 percent of in-store sales and 4.41
Fig. 24
Category Analysis: Cigarettes
(31.13 percent of in-store sales; 15.78 percent of in-store gross margin dollar contribution)
Fourth-tier cigarettes took the biggest hit in 2014, posting a 6-percent decrease in average sales per store. However, it’s the smallest of the segments. Premium still dominated cigarettes with $339,306 in average sales per store. AverAge SAleS per Store 2014
Premium Branded discount Subgeneric/private label Fourth tier Imports TOTAL
Convenience Tobacco Supermarket Drug All other
2014 69% 9 5 5 12
2013 69% 9 5 6 11
Source: MI Connect STARS, week ending 12/27/14
42 Convenience Store News | JUNE 2015 | WWW.CSNEWS.COM
$339,306 61,044 20,068 1,830 13 $422,261
InduStry totAl (In mIllIonS)
% chAnge
2014
% chAnge
-1.2% -1.7 -4.0 -6.0 -1.6 -1.5%
$50,809 9,141 3,005 274 2 $63,231
0.3% -0.2 -2.5 -4.5 0.0 0.1%
Source: Convenience Store News Market Research, 2015
Percent of Cigarettes Dollar Sales & Unit Volume
Fig. 25
Dollar sales and unit volume highlight premium’s leader-of-the-pack status. Its share of both remained stable among all the cigarette segments in 2014 compared to the previous year. premium
Branded discount
Volume Market Share The convenience channel’s dominance as the go-to place to buy cigarettes continued in 2014. Drugstores saw a slightly lower share, perhaps driven by CVS’ decision to exit the category.
percent of in-store gross margin dollar contribution. Last year saw the typical players rule the roost in all
Subgeneric/private label
dollAr SAleS
4.8%
Fourth tier
unIt volume
0.4%
0.5% 5.5%
14.5%
16.5%
80.3% Source: Convenience Store News Market Research, 2015
77.5% 77
Imports