Smoking Out Tobacco

When it comes to the way tobacco is made, sold and consumed, to borrow a line from Bob Dylan, “the times they are a changin’.” 

In the past decade, the tobacco industry has undergone a dramatic transformation. Advances in technology have inspired a new crop of innovative products that are taking the industry by storm. In essence, a cigarette, cigarillo or cigar is no longer a smoker’s only option. 

“Where the traditional combustible products could once be developed and sold without any restrictions other than the adult consumers’ willingness to buy the new products, the industry has moved to the new e-products to develop new ways for consumers to enjoy their tobacco,” says Ralph Brown, vice president of legislative affairs for Cheyenne International, based in Grover, N.C. “These new products have developed at a phenomenal rate and have lead the industry into a new and uncharted course that had never been experienced before, such as flavors and the ways that tobacco and nicotine can be delivered to the adult consumer.”

In the infancy of this new wave of products, e-cigarettes, cig-alike and disposable products took off, but industry observers say those products may be on the way out as consumer preferences have changed. For example, vape consumers prefer to use high-powered devices like MODs and tanks that are filled with premium e-liquids. 

“With advances in innovation and technology, we are witnessing an ever-evolving range of high quality products and device styles,” says Anthony Hemsley, vice president of corporate affairs and communication for Logic Technology Development, based in Princeton, N.J. “From the easy-to-use disposables and rechargeables like Logic Power Series, to open tank systems and uniquely designed closed tank systems like Logic Pro, adult smokers have never had so much choice before.” 

As these new product innovations have become popular with consumers, new retail competitors, like online retailers and independent vape shops, have emerged, leaving grocery stores at a loss for how to capture a share of the market. 

“The tobacco category is remaining flat in grocery stores with most stores still trying to figure out how to compete with other stores that sell tobacco products as their primary product line,” says Brown. “Grocery stores are trying vapor but with very limited SKUs. It is very difficult for them to compete with stores that sell hundreds of items in the e-products category.” 

Limited space for merchandising is a challenge for grocery stores, says John J. Wiesehan, Jr., CEO of Charlotte, N.C.-based Ballantyne Brands, which makes Mistic Electronic Cigarettes, HAUS by Mistic and the HAUS Craft Collection. “Grocery is tough because of where vapor products are merchandised,” he says. “They are usually located at a customer service desk away from the checkout next to the cigarettes. This makes it hard to initiate a consumer into an impulse or first time buy. If consumers are buying at grocery for example, it is because they already know the merchandise they plan to purchase and where it is located in the store. It’s hard for a grocery store to adopt new e-cig consumers based on their current product placement.” 

The best way for retailers to capture the portion of the market they have lost, say observers, is to offer products that consumers want. “A common misunderstanding is that adult smokers want a product that tastes identical or looks identical to a combustible cigarette; that’s not necessarily true, especially when many smokers are actively seeking an alternative rather than a replica,” says Hemsley. “Consumer demand and expectations for the products are changing quickly, and keeping pace with this and delivering products that meet the needs and preferences of adult smokers is key.”   

Consumers look for several key attributes when shopping for e-cigs and the like. Taste, experience, design and varying levels of nicotine rank high, observers say. “It has to taste good. Whether they are looking for a tobacco flavor or some other type of taste profile, it is essential that the product taste good,” says Wiesehan Jr. “Second is experience in the vape. It has to satisfy consumers from an experiential standpoint. If the product isn’t made well or doesn’t perform all the time, it won’t satisfy the consumer.” 

Nicotine is another element, says Wiesehan Jr., noting that Ballantyne Brands offers products with varying levels of nicotine, which gives the consumer control over how much nicotine they are consuming. 

Working with reputable suppliers that offer products consumers seek is also imperative to succeeding in the category. “As with any new category, suppliers will come and go, so it’s important to work with the ones that are sustainable and here for the long haul, not just those trying to earn a quick buck,” Hemsley says. “Suppliers like Logic stand behind their products and are prepared to support and educate the retail community. We are working hard to support our retailers so that they have the information at hand to answer the questions of their customers.” 

Ballantyne Brands also offers strong support to retailers. “We are working with our retailers with our HAUS Craft Collection products to help get those consumers back to national retailers,” Wiesehan Jr. says. “HAUS Craft Collection offers similar products that vape shops offer but at a lesser price point. Our belief is once consumers know they are available at national retail, price and convenience will beat out online and vape shops.”

Suppliers are valuable resources for retailers, however, merchandising is still important to get those consumers out of independent shops and into grocery stores for their specialty tobacco needs. “Once you know what you want to sell, let the adult consumers know that you are in the business to sell the product,” Brown says. “The old rule ‘out of sight, out of mind,’ plays heavily in these new products, and thus is vitally important to let the adult consumer know what you offer and the prices that your are selling at.” 

Capturing Smokeless, Tobacco-less Consumers 
E-cigs, cig-alikes, MODs and tanks are not the only tobacco categories that grocery retailers may struggle to capture sales in; moist smokeless tobacco products, like chew, moist pouch and snuff products, can also be tough to sell. While convenience stores have made progress in the category, grocery has had a harder time making the category work, says Dave Savoca, president of Smokey Mountain Chew, based in Sandy Hook, Conn. 

“To drive growth, retailers must be dedicated to the category,” he says. “They should work closely with both category captains, and smaller innovative companies, to develop a set that is attractive to their adult consumer base. The sections should be well-stocked with fresh product, and also visible with an ease-of-purchase element.”

Smokey Mountain Chew works with its retail partners to deliver tobacco and nicotine-free smokeless snuff and pouches in line with current flavor and product trends. “We pride ourselves on being the market leader and innovator of our particular niche by developing better products and superior brands,” Savoca says. 

The company also supports its brand through a comprehensive national advertising campaign. Smokey Mountain’s efforts include NASCAR team sponsorships, national radio and television advertising and social media presence. “We also have retired athletes as spokespeople who are tied into our programs including, football player Randy White, baseball star Chipper Jones and wrestler Shawn Michaels,” Savoca adds.