What’s in Store in the Humidor

As if the turbulent economy, rising state taxes and local anti-smoking regulations hadn’t rendered the retail cigar landscape dangerous enough, enter the U.S. Food and Drug Administration (FDA), which wants to significantly reshape that landscape, but so far hasn’t told anyone—most notably the retailers that will be selling the products—how. Some background: The law granting

Smokeless Sales Stay Strong

Sorting through all of the dynamics at work in the smokeless tobacco category is proving a complex calculation for convenience store operators and consumers alike. For example: retail prices rose with the April 1 passage of an increase to the Federal Excise Tobacco (FET) tax to fund an expansion of SCHIP, the State Children’s Health

Legislative Wrap Up for 2009

With the Democrats controlling both houses of Congress and the White House, this year has seen major federal tax and regulatory legislation signed into law that will dramatically impact the tobacco industry. On April 1, the largest tax increase on a single product in the history of the U.S. became law with the federal cigarette

FDA Clarifies Flavored Cigarette Ban

The FDA hosted a media briefing this morning and has posted documents on the FDA Web site issuing additional information regarding the ban on flavored cigarettes, authorized by the Family Smoking Prevention and Tobacco Control Act that was signed into law in June. According to the new documents, cigarettes containing an artificial or natural flavor

Cigars Enhance Flavor Profile

The SCHIP tobacco tax rates that hit on April 1 are costing cigar smokers more, but sales continue to persevere. As of April, the federal taxes on large cigars rose from 20.719% of the wholesale price with a tax cap of 4.875 cents per cigar to 52.75% of the wholesale price with a tax cap

Roll-Your-Own Climbs Amid Tax Hit

Mounting cigarette costs are driving smokers to test cost-effective tobacco alternatives, such as roll your own (RYO). The 2009 NACS State of the Industry report, which polled 156 retail firms with 20,553 stores as of December 2008, found that pipe and cigarette tobacco sales had the strongest growth of all tobacco products and were up

Dipping Into New Profits

In a market plagued by high taxes, declining gross margin profits on cigarettes and the likely possibility of FDA restrictions on tobacco, retailers more than ever need to manage the tobacco category more closely. It’s no secret that the smokeless category has been growing, with big year-on-year gains in new product sales, flavors and line

Wild Ride Continues for Cigarettes

Once again, cigarettes dominated in-store sales, accounting for nearly one in every three dollars spent in stores, but cigarette gross margins continued to plummet, falling to 15.3%. These low cigarette margins dropped the category to third in terms of gross margin contribution (16%) behind foodservice (23.9%) and packaged beverages (16.6%) Margins promise to continue falling

New Flavors, Demand Drives OTP

Despite the SCHIP bill and mounting state taxes, smokeless tobacco products have experienced a strong year packed with innovation, new flavors and increased consumer demand. According to the NACS 2009 State of the Industry report, smokeless tobacco sales surged 6.1% to $2.96 billion last year. The average c-store totaled $1,703 per month in smokeless sales

Concerns Abound for Cigars

The war over tobacco taxes to pay for an expansion of the State Children’s Health Insurance Program (SCHIP) ended on February 4 when Congress passed the Senate’s version of the bill and new President Barack Obama signed it into law. What that means for c-store operators who sell cigars in an era of a rough

Smokeless Tobacco Market Includes New Flavor Innovations And Increased Consumer Demand

A perfect storm of societal, legislative, retail and economic factors in 2009 appears poised to push sales of smokeless products—the fastest-growing tobacco category—higher than ever. Convenience store retailers and marketers of such leading brands as Copenhagen, Skoal, Redman, Timberwolf, Kodiak, Red Seal, Rooster, Grizzly, Husky and Longhorn have already seen a flurry of activity on

Turbulent Times for Tobacco

Fasten your seat belts because 2009 will likely be one of the most turbulent years for the tobacco industry in recent memory. The outcome of the federal elections has further cemented Democratic control in both the U.S. Senate and the U.S. House and ushered in a new liberal administration with President-elect Obama waiting to be

Preparing for Drastic Tobacco Regulations

Not surprisingly, convenience store industry operators identified the future of tobacco as one of their top five concerns heading into 2010. And with good reason. Operators have entered a period of unprecedented challenges when it comes to selling cigarettes, which means they must find new and innovative ways to market and merchandise this essential product

Altria Lands UST

On paper Altria Group’s estimated $11.7-billion deal to acquire UST Inc. is a deal for the ages that will meld its powerhouse Marlboro line with the immensely popular Skoal and Copenhagen smokeless tobacco brands. The combination of Altria, parent company to Philip Morris USA, and UST, creates the premiere tobacco company in the U.S. with

Alon Emerges

Alon USA At a Glance: Alon USA is a Dallas-based independent refiner and marketer majority owned by Alon Israel Oil Co. Ltd. It was formed in 2000 when Alon Israel purchased the downstream operations of Atofina Petrochemical. Today, Alon owns and operates the Fina fuel brand and Southwest Convenience Stores LLC (SCS), the largest 7-Eleven

Tobacco’s Cloudy Future

Selling tobacco products at retail continues to get harder—this time because of H.R. 1108, the Family Smoking Prevention and Control Act, which passed overwhelmingly in the House on July 30 and would, if it becomes law, be the first time the U.S. Food and Drug Administration (FDA) has regulatory authority over tobacco manufacturing and retailing.

Philip Morris USA Pulls High-Tech Filter Cigarettes

Philip Morris USA, the nation’s No. 1 tobacco company, has ended test markets of Marlboro-branded cigarettes that use a high-tech filter. The operating company of Altria Group Inc. said it pulled the plug on Marlboro Ultra Smooth, which uses an activated carbon filter. The company had stopped making new shipments of Marlboro Ultra Smooth to

How Rutter’s Stays on Top

There was a time not long ago in this industry when bigger was always thought to be better. Fortunately, the folks at Rutter’s Farm Stores knew better.  With 52 stores in five Pennsylvania counties, Rutter’s focus has never been on reckless expansion simply for the sake of having a larger store count. Rather, its has

A Tobacco-Free County: Could it Ever Happen?

I remember it clearly. It was an overcast day in June 2002 in Lancaster County, Pa., when I attended a meeting that has always left me with a lasting impression. As the tobacco buyer for a major oil company, I quietly sat (not something I’m known for) and I listened to the discussion that one

Cigarettes: Taxation Taking a Toll

Cigarettes by far continue to be the top in-store category based on sales dollars. On a monthly basis, the industry per store average for 2007 was $39,127. However, its gross profit contribution slipped to 3.2% to $6,152 falling behind package beverages ($6,526.) The reason tobacco fell to No. 2 is simply taxation. Since 2002, 43

Other Tobacco products: OTP On The Rise

A surefire marketing strategy: Develop a need where consumers don’t even know they have one. The flipside: Wait until a need becomes so apparent, so prevalent and so overwhelming that it can no longer be justifiably ignored as a legitimate need. A pocketful of lawsuits and a barrage of tax increases in its portfolio, and

N.C. Chief Wants Increase In Smoke Tax

In his final budget proposal as an officeholder, North Carolina Gov. Mike Easley wants lawmakers to raise the state tax on cigarettes from 35 cents per pack to 55 cents, mainly to boost teacher salaries to the national average and repair the state’s mental health system, The Associated Press reported. Easley’s $21.5 billion spending plan

Tobacco products that reduce harm featured at Tobacco Plus Expo

It all began to take place on April 23, 2008 on US Airways flight #797 as I was headed to the Tobacco Plus Expo 08 in Las Vegas. As usual I was excited to explore new products and programs at this year’s show, and as I would learn, the show would not disappoint. The night

Retailers Salute Their Leading Suppliers

Despite the much-ballyhooed growth of chains like Walgreens, Starbucks, Dunkin’ Donuts and Wal-Mart, it is convenience stores that remain an important daily stop for the nation’s busy consumers. As a result, convenience stores represent a powerful sales opportunity for product and service supplier companies, CSD set out to find the industry’s top performers as identified

Cigarettes

TOP PERFORMERS Philip Morris USA R.J. Reynolds Tobacco Co. Lorillard Tobacco Co. HONORABLE MENTIONS Commonwealth Brands Inc. Brown & Williamson Tobacco Corp. No single category has been as important to the convenience store industry over the years as cigarettes. The 86 retailers to participate in the CSD Brand Preference Study reported a total of $5

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