Cigar Sales Surge

Source: Datassential, “Pizza: A SNAP! Keynote,” 2021 of pizza this year as the previous year, and 95% of operators believe their pizza sales will increase or stay the same next year. Grocery and convenience stores specifi cally were positioned relatively well during the pandemic, and many people traded what would have been visits to restaurants for trips to these locations. Datassential data shows that the percentages of consumers reporting to visit a grocery or convenience store at least once per month to purchase pizza both increased by doubledigit percentages since 2018. “It has not slowed down,” confi rmed Turner. “Our sales this year are up over last year, and we’re up tremendously over prepandemic sales. We sell it at more locations now, and our locations that have always sold it are seeing a lot of growth.” CSD

Providing tomorrow's technology solutions for the Convenience Store Industry today!

Point of Sale Security Surveillance

Cabling & Infrastructure Access Control

www.asccinc.com 724•772•2722

CIGAR SALES SURGE

The traditional tobacco product keeps pushing profits despite market and supply shakeups.

Anne Baye Ericksen • Contributing Editor Longtime residents on the tobacco back bar, premium and domestic cigars, along with flavored cigarillos, have always fared well for convenience stores. But no one could have predicted just how much this other tobacco product (OTP) segment would prosper under COVID-19 restrictions. For nearly two years, cigars have produced notable profits, and it’s a trend c-store owners and operators hope has no end in sight.

Year-over-year comparisons from market research company NielsenIQ show cigars gained 5.1% in dollar sales for the 52 weeks ending Aug. 28, 2021. Albeit a slower pace than the same period in 2020, this posting indicates an ongoing resiliency. Indeed, for some businesses, this past quarter offered even more promising results.

“Domestic cigars climbed 11% in Q3 this year compared with the same period last year. Premium cigars were trending about a 9% increase over prior years, which is really good because … now that more people are back to work, there isn’t as much flexibility,” said Jeremy Weiner, category director for cigars and premium products at Smoker Friendly. Headquartered in Boulder, Colo., the company operates more than 181 retail sites in eight states.

Even though cigarillos garner greater sales in the c-store channel, premium and domestic cigars are generating enough consumer interest for some businesses to warrant greater promotional investment. Hy-Vee, a West Des Moines, Iowa-based grocery and convenience store chain, is so keen on the future of cigars that its recent grocery store redesign highlights a walk-in humidor. The new layout is featured at four locations, including Grimes, Iowa, where a Hy-Vee Fast & Fresh c-store sits in the parking lot.

“We see the cigar category sales as complementary to the spirits category, especially with growing segments like whiskey and cognac. Having a wide variety of cigars and accessories makes our Wine & Spirits departments a destination for cigar connoisseurs, as well as those new to the experience,” said Chris Carrow, vice president of Hy-Vee Wine & Spirits.

OUTSIDE INFLUENCERS

Quarter-after-quarter gains are even more impressive when compensating for the prolonged supply chain disruptions that began with the COVID-19 lockdowns and remain a problem today. Hy-Vee’s recent grocery store redesign, featured at four locations to date, includes a walk-in humidor.

Tobacco Turnout

In year-over-year comparisons, cigars kept pace with smokeless tobacco products.

Description

Cigarette Tobacco Cigarettes Cigars Smokeless Tobacco Dollar Sales

Latest 52 Wks - Ending 08/28/21 $27.9 M $53.6 B $3.64 B $7.51 B Latest 52 Wks YA - Ending 08/29/20 $33.5 M $52.5 B $3.46 B $7.12 B

Tobacco Alternatives, Non-Vapor $9.68 M Tobacco Alternatives, Vapor $4.60 B $12.0 M $3.93 B

Source: NielsenIQ Total U.S. Convenience data for the 52 weeks ending Aug. 29, 2020 and Aug. 28, 2021 1-Year % Change Latest 52 Wks – Ending 08/28/21 Latest 52 Wks YA - Ending 08/29/20

-16.8% -10.2%

2.0%

5.1% 2.2%

8.4%

5.5% 9.2%

-19.0%

17.1% 5.0%

12.7%

“We used to have eight-foot cigar sets, but they had to be condensed to six-foot sets because there’s less variety of products (even though) manufacturers are sending to stores what they have,” explained Weiner. “Without the supply there, we can’t grow the amount of space.” Instead, he’s chosen to fi ll the gaps with cannabidiol (CBD) and hemp products in the states where cannabis has been legalized.

“If anything, I think hemp has helped. I think there is dual use. Consumers mix cannabis with cigars.“mix cannabis with cigars.

— Jeremy Weiner, category director for cigars and premium products at Smoker Friendly

Interestingly, research suggests hemp smoking products interest cigar customers. A Nielsen Global Connect survey released earlier this year concluded one in four cigarette and/or cigar smokers admitted to consuming a hemp or CBD product.

What’s more, nearly 30% of cigarette and cigar users were open to trying a smokeable hemp product.

“If anything, I think hemp has helped,” said Weiner. “I think there is dual use. Consumers mix cannabis with cigars.”

While this and other current market forces bode well for future cigar sales, the Tobacco Tax Equity Act of 2021 could stymie momentum. The legislation seeks