Lighting Your Way to Profitability

When sold responsibly, lighters are a dependable source of revenue, even as the number of smokers declines. Lighters are a much-needed tool for the home grill and candles. Another trend helping push lighter sales in c-stores is flavored cigars, which continues to grow at an impressive rate.

“Tobacco accessories are alive and well, evolving with the tobacco business as it changes,” reported Lou Maiellano, founder and managing director of TAZ Marketing and Consulting in Sevierville, Tenn.

From decorative lighters and rolling papers to hookahs and a wide array of other products, business will continue to be brisk in 2012. “New opportunities exist for the buyers who are looking for those incremental sales associated with their traditional and non-traditional tobacco sales,” Maiellano said.

Indeed, accessories retain their potential for growth. “It’s a part of the business that folks need to take a look at,” Maiellano said. “Operators need to realize that lighters can still be a big part of their business.”

The rough and tumble economic times and federal government’s continued assault on tobacco products may have some Americans smoking less, but Maiellano doesn’t believe it has affected accessories. “I just don’t see that there is a correlation,” he said. “I think that people who buy accessories will continue to buy accessories.”

Even given the limited number of companies supplying products, lighters produce an excellent margin—between 40% and 60%—and 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.

Filling a Need
Maiellano said that even while fewer people are smoking cigarettes, retailers have to remember that more people are smoking cigars.

Jared Sturtevant, director of marketing for Nice N Easy Grocery Shoppes of Canastota, N.Y., is unsure of the source of the counterintuitive relationship between fewer smokers and more lighters.

“With the huge decline in cigarette sales we are experiencing in New York, it is puzzling to see an increase in lighter sales,” said Sturtevant. “I don’t know how we have grown the category. Placement hasn’t changed and the space hasn’t increased, but I do know what is growing.”

Nice N Easy also has a store-branded lighter as well as the BIC mini—the lowest-priced lighters in the stores—have led the growth in Nice N Easy’s lighters sales.

Another emerging trend worth noting is hookahs. The Middle Eastern custom has become extremely trendy in the U.S. The hookah devices allow users to smoke flavored tobacco filtered through a liquid, usually water. As such, there is an opportunity for convenience stores to sell hookah tobacco and accessories, which carry a higher price point and a higher margin.

Safety First

According to U.S. Consumer Product Safety Commission (CPSC), retailers could be 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. The CPSC has mandatory child-resistant standards and voluntary safety standards for pocket lighters that apply to imported and domestically manufactured disposable and novelty lighters. Convenience store retailers should know who manufactures the products they sell in their stores and if these manufacturers have adequate insurance coverage.
BIC identified some best business practices for c-store retailers to follow 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.

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