The tobacco customer is changing, along with consumers’ product options, which is driving optimism for a strong 2011.
By Pat Pape, Contributing Editor.
Eric Choncko is a 31-year-old locomotive engineer living in North Texas. He also is a regular snuff user and a core convenience store customer. He chose that tobacco product over cigarettes several years ago because “the smell of smoke always makes me sick,” he said.
Chonko represents what was once the typical smokeless tobacco user—a young male living in the southern part of the U.S., working at a blue-collar occupation. But the profile of that customer is changing for two main reasons. Smoking bans continue to spread to more public places, such as bars, office parking lots and even some apartment complexes, and consumers now have more than the traditional choices—chewing tobacco or snuff—that once made up the entire smokeless tobacco category. Today’s new product options include:
• Snus, a moist tobacco powder similar to snuff. Although available as a loose product, it typically comes in small, tea-bag-like pouches that users place under the upper lip, as opposed to snuff which goes under the lower lip. The pouches are not easily detected, which makes them ideal in situations where discretion is important, such as in an office or on an airplane.
• Sticks, toothpick-thin tobacco products that dissolve in about 10 minutes when placed between the upper lip and gum.
• Orbs, small pellets made of finely ground tobacco, enhanced with flavorings such as mint or cinnamon. The pellets dissolve in the mouth within 15 minutes.
• Strips, which are about the same size as a postage-stamp and dissolve after three minutes.
According to the U.S. Centers for Disease Control and Prevention, the rate of smoking has remained constant since 2008, but the number of smokeless tobacco consumers is rising. Unlike nicotine chewing gum, which slowly releases nicotine into the system in an effort to aid smokers who want to give up the habit, smokeless products give consumers a fast, nicotine sensation. They are convenient and practical for those times and locations where cigarettes are desired, but prohibited. A major plus is that unlike snuff and chewing tobacco, no spitting is required.
“A lot of women are trying snus because you don’t have to spit,” said Andrea Myers, executive vice president of marketing for Kocolene Marketing, which operates a dozen Fast Max convenience stores in Indiana and Kentucky and 19 Smokers Host tobacco stores in Indiana.
Bob Roberts, president of Smoke Em, a nine-store chain based in Scottsdale, Ariz., is convinced that today’s female smoker presents the greatest opportunity for smokeless tobacco retailers. “Our biggest challenge is to educate women that it’s not like moist tobacco. It’s completely different,” he said. “It’s a tobacco product you put in your mouth, but that’s the only similarity.”
Roberts believes that if women would simply try the products, they would be won over by the convenience factor. “Women feel most uncomfortable going outside a building and smoking by the door,” he said.
In the past, cigarette smokers and smokeless tobacco users were two separate customer groups. But with smoking bans spreading to so many public places, including bars, offices and even apartment buildings, industry insiders see more smokers purchasing and using both cigarettes and smokeless products.
“Cigarettes continue to go up in price, and there are lots of places where people can’t smoke,” said Phil Metzinger, vice president of tobacco for B, a Lufkin, Texas-based company that operates grocery and convenience stores, plus 41 tobacco outlets. “People who enjoy tobacco are looking for an alternative that can be used in a restaurant, at work or at a Cowboys game. Smokeless tobacco is gaining in popularity, especially in urban environments.”
Myers agreed smoking bans are the chief reason customers are turning to the new products. “In Kentucky, there are fewer smoking bans, so people don’t have the need to go for smokeless products,” she said. “Indiana has created an environment where we have to sell something else. And it’s only going to get worse.”
In Arizona, major antismoking legislation was passed in 2006. “Basically it took smoking out of the bowling alleys, bars, restaurants and pool halls,” said Roberts, adding that there was a limited number of smokeless products on the market at the time. “At this point, I think snus is a supplement, not a substitute (for cigarettes). But it’s still early in the game.”
Currently, smokeless tobacco is a small portion of a c-store’s business compared to cigarettes, but it is growing and will continue to do so, Myers predicted. “If you look at the number of units (being sold), it’s a low number,” she said. “But two years ago we didn’t sell any of this. You have to look at your tobacco category as a whole. You have to look at your smokeless products and your cigarettes.”
One thing boosting sales is the promotional efforts of tobacco companies. Manufacturers frequently offer special pricing on two- and three-packs. “Snuff comes in five-packs, and we sell a lot of five-packs,” said Metzinger. Some promotions include free trial pack of snus with a purchased package of cigarettes.
“Any type of promotional pricing tends to have a positive effect on moving product,” said John Mayer, product director of cigarettes and tobacco for McLane Co., the Temple, Texas-based supply chain services provider.
Another way to introduce these products to the tobacco-consuming public is to mention them to customers when they purchase a traditional tobacco product. “As retailers, we train our staff to upsell,” said Myers. “If someone buys a pack of cigarettes, we ask them to say ‘Would like some snus with that?’ and people will ask ‘What’s that?’”
Roberts believes getting customers to sample the products is important for generating future sales, but that is difficult now that free samples are prohibited by law. “It’s harder but not impossible,” he said. “It requires more dialog between the cashier and the customer. At a lot of convenience stores, you just don’t have that time.”
Smokeless tobacco has its critics. Based on warnings from health agencies and increased regulation from the Federal Drug Administration, tobacco retailers could easily become despondent about the industry’s future. “But after you spend a day in the store, you feel a lot better. They’re not stopping,” Myers said of tobacco consumers.
“Tobacco is ingrained in our culture,” said Metzinger, noting Pilgrims learned to grow tobacco from Native Americans back in 1612. “I don’t see cigarettes going away. But I do think things are moving toward smokeless.”