lighting your way to profitablilty

Marketers tend to give a lot of counter space to novelty lighters, but BIC warns that long-term profitability comes from repeat sales of traditional products.

That novelty lighter that emits a powerful flame might make for an interesting conversation starter, but it’s not the best way to grow long-term profitability in the lighter category, warns Sheila Fox, the lighter marketing brand manager Milford, Conn.-based BIC Consumer Products USA.

Nor should all other lighters be considered safe products if they haven’t been tested to meet the safety requirements for pocket lighters outlined by the U.S. Consumer Product Safety Commission (CPSC). “Retailers are responsible for unsafe products sold at their stores and they need to be aware that these lighters may end up in the hands of children with disastrous results,” Fox said.

When sold responsibly, lighters are a dependable source of revenue, even as the number of smokers declines. According to its most recent report on the number of smokers in the U.S., the Centers for Disease Control and Prevention (CDC) found that 20.9% (44.5 million) of adults were current smokers in 2004, down from 22.5% in 2002, and 24.1% in 1998. CDC trends show long-term cigarette consumption is expected to decline another 3% per year through 2010. The report also indicates that the prevalence of heavy smoking (25 or more cigarettes per day) has declined over the past decade, from 19.1% of smokers in 1993, to 12.1% of smokers in 2004.

Yet, sales of disposable lighters increase and the total lighter market volume is expected to grow through 2008. BIC estimates that more than 60% of all lighters are sold in c-stores with its products representing seven of the top 10 lighter SKUs.

Based on the U.S. Import Report for both disposable and refillable lighter shipments through December 2005, BIC estimates that manufacturers and distributors will ship 1.02 billion lighters to stores in 2006, up 2% from a year ago. The reason for the increase in sales, Fox said, is twofold: consumer convenience and a decrease in the overall number of matchstick sales. According to Information Resources Inc. (IRI), FDM retail sales of matches dropped 400 million from 3 billion in 2003, to 2.6 billion in 2005. In addition, sales of promotional matchbooks have been significantly affected by anti-smoking campaigns and the MSA advertising provisions.

“Customers continue to lead an on-thego-lifestyle and one lighter is not enough. They have one at home, in the car, anywhere that makes it more convenient for them,” Fox said. “As a result, the sales are incremental and growing steadily.”

Another trend helping push lighter sales is flavored cigars. As reported in the National Association of Convenience Stores 2006 State of the Industry report, the “other tobacco” category is growing aided by a 5.2% increase in cigar sales. The boost is also helping energize lighter sales primarily because the cigars are difficult to light with matches and they are consumed by customers outside the core cigarette smoker demographic, thereby cultivating a new lighter customer.

This fact is crucial, Fox said, because lighter profitability has proved to be a marathon, not a sprint. Repeat sales of novelty lighters are sporadic at best.

Indeed, disposable spark wheel lighters are the primary product of choice, accounting for 94% of total market volume.

Safety First
Currently, the CPSC has mandatory childresistant standards and voluntary safety standards for pocket lighters that apply to imported and domestically manufactured disposable and novelty lighters, and any refillable lighters with a landed cost of $2.25 or less.

While everyone in the supply chain can be liable, retailers can be found solely responsible for all claims and are particularly at risk for monetary damages when selling products from obscure foreign manufactuers. Attorneys can seek damage awards greater than $100 million in cases involving injuries to minors.

C-store retailers should know who manufactures the products they sell in their stores and if these manufacturers have adequate insurance coverage.

With the ready availability of inexpensive cigarette lighters from importers, Steve Burkhart, vice president and assistant general counsel for BIC, notes BIC’s best business practices for managing and avoiding liability:

  • Buy lighters and other products from reputable companies that stand behind their products.
  • Make sure vendors have substantial insurance coverage.
  • Ask vendors to provide coverage under their insurance policy.
  • Expect vendors to show documentation that their products are compliant with state and federal laws.

BIC® Lighter 5 Points of Difference™
With low quality lighters prevalent in the marketplace, BIC launched the BIC Lighter 5 Points of Difference campaign to ensure that customers know that all lighters are not created equal™.

BIC also remains an innovator in the category. In July 2006, BIC introduced the next phase of metal cases—BIC C2 Select— available in chrome plated finishes. This will be followed by the September 2006 launch of the BIC® M Series™ lighter and case. These lighter cases are “refillable” with BIC Mini Lighters and will garner higher rings and superior product movement at registers, while supporting BIC 50-ct. mini sales.

BIC extends its total quality commitment to all aspects of the c-store business sector including promotional support, category management, packaging, logistics and sales. In 2006 and beyond, BIC is committed to delivering the highest quality product to consumers while maximizing profits for the convenience retailer.

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