Highlights from the Convenience Store News 2020 Tobacco Report

Despite public health and legislative successes in tobacco control policy over the recent years, tobacco products maintain a dominant presence in the retail environment and in convenience stores in particular. The “Tobacco Deep Dive” Convenience Store News 2020 Industry Report provides meaningful insights on trends in tobacco sales within the convenience store sector and from the perspective of retailers. Conducting our own ‘deep dive’ into these findings, from the lens of tobacco control practitioners, can help to identify the most appropriate and effective point-of-sale strategies for tobacco prevention and control. Here are a few key takeaways:

The fight against tobacco is far from over.

According to the report, cigarettes and other tobacco products account for 35% of all in-store sales in convenience stores. While cigarette sales dropped for the second straight year in a row, this rate of decline was smaller in 2019 than 2018. As well, in 2019, industry sales of other tobacco products (OTPs), which include smokeless tobacco, e-cigarettes, cigars, papers, and pipe tobacco, rose by 16.1%, mainly driven by a more than 50% rise in e-cigarette sales from 2018 to 2019. The share of OTP in-store sales has increased for five straight years with smokeless tobacco providing the second greatest segment of sales after e-cigarettes. Unfortunately, these figures align with the rapidly increasing numbers of middle and high school students using e-cigarettes, with numbers rising from 3.6 million in 2018 to 5.4 million in 2019—a difference of about 1.8 million youth.

Location of retailers plays a major role in cigarette purchasing behaviors.

The report lists store location as the top factor influencing cigarette purchases in convenience stores. Research has consistently shown that a greater availability of and exposure to tobacco products, in part resulting from high retailer density and proximity, is associated with increased smoking rates in both youth and adult populations. From a health equity standpoint, this finding is particularly concerning since tobacco retailer density is higher in neighborhoods with more low-income and marginalized residents. Retailer licensing and zoning are two of the most lasting strategies to impact the density of tobacco retailers, types of retailers that can sell tobacco, and location of tobacco retailers.

Increasing the price of tobacco has the potential to influence sales and reduce health inequities.

The second most reported factor influencing cigarette purchases in convenience stores was “good price/value”. Keeping prices low is one of the primary tactics Big Tobacco uses to rope in and maintain a stronghold on consumers. According to the Surgeon General, raising the price of tobacco products is one of the most effective strategies for reducing tobacco product initiation, decreasing consumption, and increasing cessation. As well, research suggests that adult and youth smoking rates could decline by 5% and 7%, respectively, for every 10% increase in cigarettes prices. Furthermore, recent evidence has shown that increasing the cost of tobacco products may promote health equity by reducing disparities in tobacco use and tobacco-related morbidity and mortality across racial and socioeconomic lines. Over the years, several successful strategies have been promoted to raise the price of tobacco products. Raising excise taxes is the gold-standard, but non-tax approaches, like strengthening minimum price laws and banning price discounting, can be helpful strategies for states and communities facing political barriers to excise tax increases. In jurisdictions that have already successfully raised excise taxes, implementation of non-tax approaches is still encouraged to ensure tobacco prices are kept high.

In the end, who really benefits from tobacco sales at convenience stores…? The tobacco industry.

The three concepts above reinforce the need for sustained comprehensive efforts to counteract commercial tobacco product sales and marketing at the point of sale. Reports like this one are often used to support economic arguments against point of sale policies. However, data shows that tobacco is actually a relatively low-margin product for convenience stores. In 2016, while 34.1% of in-store sales were from tobacco, only 18.2% of profits were from tobacco products. In comparison, prepared foods comprised 22% of sales, but 35% of profits, and packaged beverages comprised 15% of sales but 19% of profits. At the same time, the tobacco industry is well aware of the value of the retail environment on their bottom line. In 2018, the tobacco industry spent over $7.2 billion to advertise and promote their products at the point of sale, with a majority of this money directed towards price promotions and promotional allowances paid to retailers. Not only do these incentives paid to retailers help lower prices for consumers to keep them hooked on tobacco, but they also keep the retailers dependent on tobacco companies through detailed contracts dictating sale price and product placement.

The good news is that plenty of strategies exist to counteract commercial tobacco product sales and marketing in the retail environment. These strategies include those mentioned above, like licensing tobacco retailers and raising tobacco prices through non-tax approaches, as well as others like restricting the sale of flavored tobacco products and the placement of tobacco products and advertisements. Our website offers a full menu of evidence-based, flexible strategies to help local, state, and federal practitioners select the best and most effective solutions for their communities.