Making money in tobacco accessories—lighters, cigar cutters, humidors, pipes, rolling machines, rolling papers and even hookahs—during the months ahead may not be easy, but it can be done.
Three ways to do it: offer novel items, stay on the cutting edge of trends and let customers roll their own. The payoff in 2010 could be huge as lighters alone accounted for more than $411 million in 2009, according Information Resources Inc. (IRI) for the 52 weeks ended Dec. 27, 2009.
St. George Oil in St. Louis carries all the usual tobacco accessories, including grinders, scales and flavored wraps for those people who like to roll their own.
“Right now, the main volume in our stores is the flavored wraps,” said Amer Hawatmeh, president of the three-store chain, which operates under the Phillips 66 brand. “We are in a lot of impoverished areas where we sell a lot of bald tobacco, so people roll their own. That’s one thing I’ve seen our volume move to: people rolling their own cigarettes, and of course we have brought in all the four- and fifth-tier tobaccos.”
St. George stores carry an average of 40 varieties of flavored wraps, with retail prices ranging from $2.50 to $1 per pack. The stores have also been making good money for 13 years selling three clear lighters for $1. “We do a case per week,” said Hawatmeh. “That’s a thousand units. I buy them at case quantities at $72 per case. Other people in town sell them for 99 apiece.”
The lighters are merchandised within four feet of the checkout counters since, according to Hawatmeh, they are his No. 1 impulse item. “That three for $1 program I do with the clear lighters has worked for me for years. That’s how I have always been able to build my tobacco volume.” All told, tobacco accessories account for about 5% of his total store sales.
“My main focus right now has become real simple. It is on novelties, which in my mind includes tobacco accessories. To be successful at anything in this category look for out-of-the-box items,” Hawatmeh said.
An increasingly popular product Hawatmeh is testing in his stores is naturally grown smokeable herbs that take the place of bulk tobacco. Shoppers like it because $5 gets them three ounces, enough to roll three packs of cigarettes. With herbs as with other rising products, he added, “don’t wait until the trend arrives. Look for it, identify it and get it into your store. That’s when you make the margin, when you’re one of the first to have it. When everybody has it the margin goes away.”
Hawatmeh conceded that taxes, penalties and the FDA’s involvement in the tobacco category have “absolutely” hurt business, claiming that “it has hurt our profitability more than anything because we have had to cut our margins that much further. As the price went up our margins went down to stay competitive.”
Top LIGHTER BRANDS: Lighters remained an important part of the tobacco accessories category totaling more than $411.48 million in sales in 2009, according to IRI. While overall sales dollars suffered a modest .83% drop, the average price of a lighter in U.S. convenience stores was up four cents in 2009 to $1.31. Total unit sales, however, dropped 4.18% to 312.96 million. The top selling SKUs in c-stores according to IRI in 2009 were:
|BRAND||SALES DOLLARS||UNIT SALES||AVERAGE Unit PRICE|
|Bic Limited Edition||$64,181,560||41,512,900||$1.55|
|Bic Pro Series||$9,532,344||5,631,411||$1.69|
|The American Match||$6,899,979||8,067,112||$0.86|
|Bic Comfort Lite Lighters||$4,656,952||2,049,430||$2.27|
|Liberty Light Lighters||$4,491,285||4,912,027||$0.91|
|Clipper Brio Lighters||$3,867,687||3,186,121||$1.21|
|Bic C2 Metal Lighters||$3,796,777||1,034,671||$3.67|