TOBACCO
coming from out of the country and partially driven by curfews that affected how many hours a plant could operate, according to Dillard. “Even though cigars continue to grow, I wonder how much more could we grow if we had better in-stock conditions,” he said. Although there are still some issues, Harder reported that most of the manufacturing appears to be back on track. Most of the challenges presented themselves in the early days.
“If you are not sure if you are going to have a job anymore, or not sure when you are going to be able to get out of the house again, picking up a carton is definitely something you are going to need to do.” — Kevin Harder, Yesway
Regulatory Stumbling Blocks Hitting in mid-March, the coronavirus pandemic struck on the heels of two major regulatory changes aimed at the tobacco industry: the federal Tobacco 21 legislation in late December, and the Food and Drug Administration’s (FDA) removal of unauthorized flavored vapor products, excluding disposables, from the backbar in early February. MSA’s analysis of the 52 weeks ending in mid-June found that the vapor segment — which includes everything but electronic cigarettes — was still growing. However, Burke said the segment started to show a slight decline beyond the mid-June numbers. Tobacco 21 hit vaping harder than any other segment, he said, adding, “I think that was the intent of that regulation.” And the impact of the FDA’s flavor ban may be driving vapor users back to the disposable cigalike products, as those items are showing some growth. “The category was definitely in flux between November 2019 through February, all pre-COVID,” Sheetz’s Crozier said. “It was more than just age 21 and the flavor pull. They were certainly factors, but Juul pulled their mint flavor in late 2019 and that had an impact.” At the Yesway and Allsup’s chains, the increase in the legal minimum age to buy tobacco products at the federal level did not have much of an impact on cigarettes. “Looking at December 2019 to the end of January 2020, our sales on cigarettes were down about 3.4 percent compared to about 3.7 percent the same time the prior year,” Harder cited. The stores saw more of a decrease in sales of e-cigarettes and vapor products, though Harder said that followed on the heels of several events making it hard to pin down the driving force. “Vapor was already down by about 30 percent due to the preemptive removal of certain flavors by some of the manufacturers,” he explained. “It’s hard to say if that was part of the natural decline, [or] how much more did it decrease just because of the flavor restrictions of the FDA. It was already trending down.” Vapor sales have rebounded slightly since the height of the pandemic, according to Harder. Pinpointing the reasons behind the backbar’s numbers also comes down to timing. “Q1 is a tough time in the c-store business regardless of regulatory environment changes. Customers are typically in the savings/change mentality gearing up to pay Christmas debt and stick to New Year’s resolutions, which negatively impacts tobacco use,” Spinx’s Dillard said.
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