Cigars are the new black … when it comes to convenience-store sales, anyways. The typical corner store, one category of tobacco seller that isn’t necessarily top of mind for many who buy cigars, is now seeing double digit increases in stogie sales.
The Convenience Store News 2010 Industry Report shows cigar sales at convenience stores were up 25% in 2009, compared 2008. The report cites innovations in the cigar-manufacturing industry, along with cigarette smokers seeking to pay lower taxes for their smokes, are a large part of the revenue increase.
According to Convenience Store News:
[Convenience stores] showed a significant leap in cigar sales last year, from $14,897 per store in 2008 to $18,567 per store, as retail prices rose with the increase in the federal excise tax, which pushed wholesale prices more than 32 percent. This year, retailers and wholesalers are again reporting strong sales and continued consumer interest in the segment.
Still, there have been significant in-store changes—many pushed by cigarette retail hikes—in consumer habits and product offer. “We see consumers looking for options other than cigarettes to satisfy their smoking needs,” said Frank Davoli, director of sales and marketing for South Bend, Ind.-based Richmond-Master Distributors Inc. … The operator’s retail cigar sales saw double-digit increases last year and are on mark to do the same in 2010. “Consumers are purchasing both cigarettes and little cigars in the same transaction and switching between the products,” Davoli said. “It seems they are taking a ‘smoke a cigarette, smoke a cigar’ approach as a way to decrease the total cost of tobacco enjoyment.”
According to the article, some of the other changes prompting the increase include:
- Growing Cigars: The redesign and reclassification of what used to be called “little cigars” to “filtered large cigars,” which evades new federal excise taxes (previous Stogie’d coverage). Brands taking advantage include Cheyenne, Smokers Choice and Santa Fe.
- Getting Tipsy: Also expanding the segment are the increase in wood-tip cigar offerings, especially when combined with “proven flavored cigar winners, such as wine-flavor wood tip cigars.”
Also aiding in the expansion of sales: New players who are introducing products priced 20 percent to 30 percent below the traditional manufacturers’ comparable items.
Premium-cigar sales are also on the rise at convenience stores, as consumers look to “reward or treat themselves” to a higher-quality smoke, according to the article.
Source: Convenience Store News