How will the bans on tobacco flavorings impact convenience store sales?

Banning the sale of flavored adult tobacco products will widen the budget hole in many states, threaten the survival of small retailers and endanger the jobs of frontline workers at these companies.

What is the impact of the tobacco flavoring bans on convenience store sales?

In short: bad.

Flavored tobacco products have always been very popular items. They add variety, excitement and freshness to the category, and consumers expect it. In addition, Limited Time Offers (LTO) helped drive customer traffic and increase sales by category. Taking them off store shelves and denying free choice to legal-age US consumers does no good.

While operators have always been forced to navigate volatile regulatory waters, this latest challenge cannot help but be what one operator has called a blow to the entire business. Tobacco-related products remain a mainstay of inside sales, reaching 40-50% in some places. The inevitable result will be reduced foot traffic and reduced income.

Of particular concern is the inclusion of mint and menthol under the heading of flavored tobacco products, as is the case. Data from Management Science Associates (MSA) shows that over 36% of cigarette sales in the proximity channel are mentholated. In the smoke-free category, it is estimated that over 90% of sales are in mint, menthol and wintergreen.

The operator of a dozen convenience stores in California argued in a Sacramento Bee op-ed that flavor bans poke fun at his city’s excellent 97% compliance rate for sales subject to a limit. age in convenience stores and limits the choice of products available. adults.

Most product-oriented tobacco regulations are not only bad for convenience stores, but also bad policy, often resulting in increased black market activity. The irony that government officials ignore or fail to realize is that contraband tobacco is extremely profitable and is a key strategy deployed by terrorist organizations and crime syndicates.

“There is a market today for menthol cigarettes and banning them will only shift those sales to the black market,” said Lyle Beckwith, senior vice president of government relations at NACS. “Black market sellers of tobacco products do not verify the age of their buyers, do not pay sales tax, and sell more than menthol cigarettes. NACS is urging the FDA to implement a plan to shut down the current black market and prevent a new one before banning a product that we know will lead to a large number of new black market sales.

Many convenience stores choose to present the challenge in positive terms, as another way to demonstrate their adherence to the law and their commitment to their customers by helping to eradicate underage smoking. It is important that store staff make it clear to customers that the absence of their favorite products is not due to the retailer, but to the government.

At the same time, working with lawmakers to craft regulations that will minimize damage to retail sales has never been more important to convenience store owners. The combination of flavor bans and the rise of black market items is a double whammy that will only hurt the law-abiding retailers in the convenience store industry.

“As convenience stores struggle to keep the doors open to serve local communities, some elected officials want to further undermine the economic viability of these essential small businesses,” said Jim Calvin, president of the New York Association of Convenience Stores (NYACS) . “Especially when such a ban would reduce tax revenues by hundreds of millions of dollars a year, lead to job losses and intensify an illegal tobacco trade already at the forefront of the country.”

Banning the sale of flavored adult tobacco products – such as cherry pipe tobacco and menthol cigarettes – would widen New York State’s budget hole, threaten the survival of thousands of family-owned retailers, and place jobs in New York State. frontline workers in these companies. at risk.

This is the conclusion of an economic study carried out by Regional Economic Models Inc. (REMI) for NYACS. REMI estimated that the proposed action would cost the state $ 3.4 billion in tax revenue over the next decade, cost store owners nearly $ 500 million per year in lost sales, and cut 1,200 jobs in retail and allied industries.

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