Expert Interview: How To Improve Tobacco Sales
With over 40 years of experience in the tobacco industry, we sat down with Vice President of Sales & Marketing at Cheyenne International, Ernie Teague, to pick his brain on the latest market trends and insights expected to impact convenience store tobacco profits throughout the upcoming year. As the tobacco industry continues to evolve at an impressive rate, check out what Ernie had to say about the best ways to maximize your sales and profitability in 2024.
Q: What do consumers look for in a tobacco product when shopping in-store?
A: Inflation and ongoing financial uncertainty have profoundly reformed the buying behaviors of adult tobacco consumers. In response to economic pressures, consumers have become inherently more price-conscious with the intent to spend focused on finding the most value for their money. Regardless of brand, consumers want a quality product at a fair price, something that tastes good, is consistently available and fits within their budget.
Q: How should retailers cater their tobacco inventory to meet today’s consumer demand?
A: Retailers should make sure they have a mix of premium, mid-tier, and value brands. Plus, the tobacco set is more than just cigarettes, so OTP considerations are important too. Not all shoppers are alike, and there’s no one-size-fits-all brand or product out there. This is why it’s critical to look at the depth and breadth of your tobacco offerings on the shelf.
Q: With the current downtrading we’re seeing in the market, what should retailers do to combat premium sales losses?
A: Just as consumers are finding the value in price-value tobacco products, so should retailers. Retailers should embrace the fact that the sentiment, “you get what you pay for,” no longer rings true for the modern-day tobacco consumer experience. Take cigarettes, for example. We know that while the overall category is declining, deep discount cigarette brands are growing. Adult consumers have become more educated than ever about the brands they buy and are realizing that quality products can come at a lower price. Retailers should invest in deep discount brands from reputable manufacturers as they can deliver on all these fronts.
Q: Outside of cigarettes, what are other opportunities in value tobacco products that retailers should be exploring?
A: Price-value is not subjective to cigarettes alone and touches all tobacco channels. While there are plenty of opportunities to grow your cigarette sales and expand your profits with deep-discount brands, retailers should also be looking to capitalize their tobacco revenue through other profit-generating categories like smokeless, cigars and other forms of OTP. Adult consumers like options, and diversifying your tobacco category segments with value options in moist snuff and filtered cigars, for example, can prove beneficial to your overall tobacco sales. Building a robust OTP category allows you the ability to offer the right mix of products to consumers, which is especially important at a time when consumers expect choice.
Q: Besides price, what else are consumers looking for when making the switch to price-value tobacco brands?
A: Consumers want reliability. Between supply chain issues and regulatory compliance, thoughtful action must be taken so that the end consumer feels no disruption to their brand experience. Consumers don’t want a product that’s here today and gone tomorrow – nor do retailers. The manufacturers you choose to work with matter, and retailers should stay conscious of this fact.
