The effect of tobacco taxation and smoking restrictions has made it much more difficult to rely on cigarette sales as the primary category for driving in-store profitability. But don’t read that to mean tobacco is suffering. Retailers are reporting strong sales gains in moist smokeless tobacco (MST), driven primarily by innovative new products and flavors and mega manufacturers, such as Philip Morris and RJ Reynolds, jumping into the segment.
According to retailers participating in CSD’s 2010 Brand Preference Study, top performers in the smokeless tobacco category were Copenhagen (Altria Sales & Distribution/US Smokeless), Grizzley (Conwood/Reynolds America) and Skoal (Altria Sales & Distribution/ U.S. Smokeless). The honorable mentions include Longhorn, Red Man and Timber Wolf (Swedish Match) and Kodiak (Conwood/Reynolds America).
Retailers also reported that the category remains one of the most competitive in the store as numerous suppliers vie for shelf space. Of the 68 buyers of smokeless tobacco, just four reported no sales presentations from MST suppliers in the previous two months. In fact, 56% of buyers reported more than five presentations from the 13 companies in the market.
FKG Oil Co. in Belleville, Ill., which operates 74 MotoMart convenience stores in the Midwest, has seen smokeless dollar sales rise by 19% over the past 12 months, according to Vice President of Sales and Marketing Todd Badgley. Unit volume is up 17%.
Bolstering sales, Badgley said, has been FKG’s competitive pricing and strong value perception, as well as multi-can—specifically, two- and five-can—promotions.