Accessories

Cigars Aim

for Stability in 2022

Now that cigar supply chain

issues have begun to find steadier ground since the early days of the pandemic, c-store tobacco category managers wonder if more inventory reliability will stoke sales.

IRI convenience store data shows cigar dollar sales grew moderately, at 3.3% for the 52 weeks ending Dec. 26, 2021. However, year-ago changes in unit sales dropped by more than 3%, which indicates price increases probably support the sales increase.

Nielsen reported similar dollar sales for cigars in all retail channels, including c-stores, at 2.1% for the 52 weeks ending Jan. 29. In terms of unit sales, Nielsen’s findings were a bit more encouraging, with a positive 0.7%. It also revealed a 1.3% price increase for that year-to-year comparison.

Of course, store-level experiences don’t always reflect national trends.

At The Cigarette Store (TCS), cigar sales have traveled an upward trajectory for a while. TCS is the largest licensee of Smoker Friendly International and operates more than 180 stores including Gasamat convenience stores as well as tobacco outlets and cigar lounges in eight states. “We are still experiencing supply issues; however, during the past few months, it has gotten much better. Over the past six months, we have experienced a 5.6% increase over the same time frame for the prior year,” said Jeremy Weiner, category director, cigars and premium products, Smoker Friendly.

He’s also optimistic about anticipated varieties set to come out.

“A few of the cigar manufacturers plan to market some limited-release items this year,” said Weiner.

REGULATORY CONCERNS

Tamping down that enthusiasm, however, is the news the Food and Drug Administration (FDA) plans to begin the process of a proposed rule on the tobacco product standard to remove authorization to sell and market flavored cigars. Action could get underway as soon as next month.

C-stores in certain states have been battling these types of prohibitions for years on vape and e-cigarettes, but more recently, the spotlight has shifted to flavored cigars and cigarillos, which continue to be targeted for tax increases, too.

For example, in New York state, cigars were levied with an excise tax of 75% of wholesale value, prepaid a couple of years ago. Last July, California bumped up its cigar tax by 11.5%, reaching nearly 64%, which is slated to run until the end of June.

“Who knows what else they’ll throw at us,” said Jim Calvin, president of the New York Association of Convenience Stores. “(I’m watching for) another attempt to ban all flavored tobacco statewide, another attempt to ban flavored alternative nicotine products statewide.”

Cigars hold steady

Cigar dollar sales in the convenience store channel climbed 3.3% for the 52 weeks ending Dec. 26, 2021, per IRI, while unit sales of cigars dipped 3.1%.

Dollar Sales Unit Sales

Price per Unit Product Current 1-Year % Change Current 1-Year % Change Current 1-Year Change

Cigars

$4.03 B 3.3% 2.39 B -3.1% $1.69 $0.10

Source: IRI Market Advantage - TSV Total U.S. Convenience data for the 52 weeks ending Dec. 26, 2021