What's Happening?
At the NACS Show in Chicago, industry experts discussed the shifting dynamics in tobacco sales within convenience stores. Cigarettes, traditionally the leading in-store merchandise category, are seeing
a decline in their percentage of inside sales mix. Meanwhile, other tobacco products (OTP), including cigars, smokeless tobacco, nicotine pouches, and heated tobacco products, are gaining ground. Emma Tainter, NACS research manager, presented data showing that OTP's share of in-store sales has nearly doubled from 4.2% in 2015 to 7.6% in 2024. This growth is attributed to the increasing popularity of non-combustible alternatives as smoking rates hit historic lows. Retailers like Weigel's Inc. are strategically positioning themselves to capitalize on this trend by expanding their nicotine pouch offerings.
Why It's Important?
The shift from cigarettes to OTP represents a significant change in consumer preferences and retail strategies. As OTP sales continue to rise, convenience stores are adapting by diversifying their product offerings to meet demand. This trend could lead to increased profitability for retailers who successfully navigate the transition. The decline in cigarette sales also reflects broader public health trends, as more consumers opt for less harmful alternatives. Retailers that embrace OTP could gain a competitive edge, particularly in regions where cigarette sales remain strong but are declining.
What's Next?
Retailers are expected to continue expanding their OTP offerings, with a focus on nicotine pouches due to their potential for higher sales and lower regulatory risks compared to vaping products. Collaboration with manufacturers and wholesalers will be crucial to ensure a steady supply and variety of products. As the profitability gap between cigarettes and OTP closes, more convenience stores may shift their focus to OTP, potentially leading to a reshaping of the tobacco retail landscape.
Beyond the Headlines
The rise of OTP could have broader implications for public health, as these products are generally considered less harmful than traditional cigarettes. This shift may also influence regulatory policies, as governments seek to balance public health concerns with consumer demand for alternative tobacco products. Additionally, the growing popularity of OTP could spur innovation in the tobacco industry, leading to new product developments and marketing strategies.
