As the convenience store industry continues to weather the unceasing assault by legislators determined to make it harder to sell tobacco products, accessories are picking up speed based on what is still easy to sell. As a result, tobacco accessories is an emerging category that should continue to grow throughout 2011.
According to SymphonyIRI Group, sales of smoking accessories in convenience stores topped $271 million for the 52-week period ended Dec. 26, 2010, up an impressive 19.86%.
Tobacco accessories includes everything from lighters, cigarette-rolling machines, humidors, pipes and pipe cleaning supplies to tobacco pouches, cigar cutters, hookahs and rolling papers.
Gary Tabor, director of marketing for Jay Petroleum Inc., which operates 35 Pak-A-Sak locations in Indiana and Ohio, believes focusing some attention on accessories has been worthwhile for his chain.
“It’s become a profit center. We’re still having some problems getting products—the tubes for roll your own cigarettes—and things like that. They seem to be in short supply, but I think once they get the distribution on track, the situation will improve,” Tabor said.
Among Jay Petroleum’s best sellers are lighters, RYO tubes and even pipes. “Since pipe tobacco is less taxed here in our markets, pipe tobacco has really taken off for us,” Tabor said.
Given the limited number of companies supplying products, lighters produce an excellent margin—between 40-60%. More importantly, sales have been steady for the past decade, despite the decline of cigarette smoking. With an effective price point and proper marketing, lighters can be extremely profitable.
“The category will never be a top seller,” said Keith Broviak, director of marketing for 50-store Ricker Oil, of Anderson, Ind. “But all the little pieces matter when it comes to maximizing store profitability.”
Mike Turco, category manager for 189-store Tedeschi Food Shops of Rockland, Mass., also reported strong lighter sales—as of September 2010 the company was 40,000 units and $65,000 ahead of 2009 figures. So, lighters may not be sexy, but at 48% margin, said Turco, “that’s $31,000 profit. If you want to throw that into the wind, go ahead. I’m not.”
BIC is Turco’s No. 1 seller—165,000 units sold at $1.39 in 2009—and his No. 2 is the Tedeschi branded wheel lighter (125,000 units sold at 99 cents). Private label has done so well that Tedeschi will soon put its logo on an electric lighter, Turco said