Certain product categories rarely undergo major shifts, whether it’s a spike in popularity or a significant drop. You can count tobacco accessories among those in that classification.
Sales of lighters, matches, pipes and other accessories either register minimal gains, or at the very least don’t lose major ground in year-to-year comparisons. This is good news for convenience store owners and operators, especially considering that the smoking population is expected to fall to historic lows in the near future.
“Plus-selling is important. I have employees who always bring [accessories] up,” said John Archer, owner of Shell Food Mart in Hinsdale, Ill. “[Tobacco accessories] are definitely an additional sales opportunity.”
Information Resources Inc. (IRI), a Chicago-based market research firm, reported convenience stores sold more than 382 million lighters for the 52 weeks ending Dec. 25, 2016. At an average price of $1.60 per unit, lighters can’t compete on the same profit level as foodservice, carbonated beverages or snacks. However, the product segment did earn $614 million in dollar sales last year, a year over year gain of 4.08%, according to the IRI.
While lighters continue to flicker brightly, matches experienced the biggest gain among accessories—including rolling papers—last year. IRI reported that matches experienced an 8.22% increase in dollar sales in the 52 weeks ending Dec. 25, 2016. Unit sales also received a boost of more than 11%.
Pipes and other tobacco accessories stayed steady with less than 1% increase in dollar sales and slightly more than 1.5% gain in unit year-to-year sales.
SPARKING INTEREST
For the most part, the design and technology of tobacco accessories has remained unchanged outside of cosmetic updates. Throughout the past few years, however, this product segment has expanded its inventory to include items such as hookahs. In the seven states that have legalized the sale and use of recreational marijuana, the category has added various cannabis paraphernalia.
Last year, we reported stores in Colorado added items such as disposable pipes or hemp rolling papers to shelves to serve the cannabis customer base. This year in Washington State, a study was conducted by Headset Cannabis Intelligence, which indicated that consumers appreciate a greater variety of accessories. Some residents were interested in different formats of cannabis, and the associated devices.
For example, sales of vapor pens as a delivery system rose by more than 225% in Washington cannabis shops. Headset also reported that pens boast a profit margin of approximately 56%.
“As each market matures, our contacts say their customers become more educated and interested in vaping,” said Jessica Rabe, assistant vice president and research associate for brokerage and trading-related services firm Convergex. “Consequently, companies continue to innovate with new cartridge designs and have numerous products on offer for stores to provide their customers.”
As of mid-February, the new White House administration has not issued any policy statement regarding its stance on legalizing sales or use of recreational marijuana. In 2013, the federal government released a memorandum stating it would not challenge states on the issue.
During Senate confirmation hearings, the new attorney general, Jeff Sessions, remained noncommittal about any changes he may institute, which could impact an industry that’s projected to generate more than $21 billion by 2020.