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By combining the FTC data with data from other trusted industry sources, we’re able to answer that question.

Here are a few stats to get us started. The FTC reported the following totals for “Price Discounts -Retailers”:

  • 2016 — $5,806,108,000 or 67% of cigarette manufacturer promotional and advertising spending
  • 2017 — $6,188,802,000 or 72% “”
  • 2018 — $6,154,985,000 or 73% “”
  • 2019 — $5,695,845,000 or 75% “”
  • 2020 — $6,065,320,000 or 77% “”

What Falls Under Price Discounts?

The FTC defines these as:

“Price discounts paid to cigarette retailers in order to reduce the price of cigarettes to consumers, including off-invoice discounts, buy-downs, voluntary price reductions, and trade programs; but excluded retail-value-added expenditures for promotions involving free cigarettes and expenditures involving coupons.”

“Retail-value-added expenditures for promotions involving free cigarettes (e.g. buy two packs, get one free), whether or not the free cigarettes are physically bundled together with the purchased cigarettes, including all expenditure and costs association with the value-added to the purchase of cigarettes (e.g., excise taxes paid for the free cigarettes and increased costs under the Master Settlement Agreement).”

More Stats to Help Build Our Estimate

  • C-stores have nearly 87% volume share of all tobacco sales, according to Nielsen*
  • The U.S. has 150,274 convenience stores as of December 31, 2020, according to NACS*
  • There are 380,000 U.S. tobacco retailers in the U.S., according to the CDC*

Our Estimates

With a simple multiplication of price discounts X 87% / 150,274, we arrive at $35,114.71 per location per year for cigarettes only.

You can then add in other tobacco product rebates for a larger estimate. That report is also available on the FTC website*. You can also conservatively estimate price discounts / 380K retailers for $15,961.37 per retail location per year.

Download the Spreadsheet

Cigarette Buydown statistics Spreadsheet Download (PDF)

*Resources

https://www.cspdailynews.com/csp-magazine/whos-challenging-c-stores-share-tobacco-market

https://www.convenience.org/Research/FactSheets

https://www.cdc.gov/statesystem/factsheets/licensure/Licensure.html#anchor_1562854271

https://www.ftc.gov/reports/federal-trade-commission-cigarette-report-2020-smokeless-tobacco-report-2020

Lottery tickets are an integral part of c-store sales, and data from the Arizona Lottery Commission shows that sales have risen over 30% from 2020 to 2021. Lottery game sales reached over $1.4 billion over the past year.

However, the growth of lottery games comes with the risk of inventory issues such as internal theft. Petrosoft’s loss prevention analytics software will help you manage your lottery inventory and keep employee theft at bay. While inventory management is always important for all products, it becomes even more vital for lottery tickets.

Did you know that one stolen $30 lottery ticket could take as much as $1,200 in ticket sales to make up for the loss? That’s, of course, given you assume a typical 5% commission and a 50/50 gross profit split. That one ticket unaccounted for or unpaid can be a substantial hit to your profits.

How Easy is it for a Lottery Ticket to be Stolen?

Here are just three ways employees might try to commit theft with lottery tickets:

  • Price adjustment scams
    The price adjustment scam is when a cashier purchases a lottery ticket by legitimately scanning it but adjusting the listed price of the item to be less expensive, or voiding the sale entirely.
  • Partial or “Micro” scratching
    Before the ticket is purchased, a cashier will very lightly scratch off just enough to determine whether or not the ticket is a winner. Then, the losing microscratched tickets are returned for later sale while the winning tickets are cashed in.
  • Win/Lose swaps
    The cashier determines which tickets are winners, either before or during a legitimate purchase, and cashiers report no win to the customer while pocketing the prize.

How Can You Prevent Lottery Theft?

Lottery theft, although widespread and potentially devastating for c-store profits, can be managed with increased vigilance and help from technology. To cut off lottery theft:

  • Ticket storage and monitoring
    To prevent theft of lottery tickets, it is important to keep your ticket rolls in a safe, locked place when possible. It is essential that employees keep track of which ticket numbers they started and ended their shift on. Cameras should face the area where lottery tickets are sold, cashed and stored when possible.
  • Stay current with audits
    The more recent your last lottery audit, the more likely you are to catch theft and narrow down the perpetrator. Lottery audits should be performed often to notice any patterns of missing tickets quickly and effectively.
  • Invest in a dedicated loss prevention system
    Loss prevention analytics can keep track of everything from which ticket numbers have been sold, which sales have been voided and what shortages your store might be experiencing. An electronic loss prevention system can be invaluable for catching thefts early in a way that isn’t too time-consuming or intensive as working manually.

It can be hard to keep track of every lottery purchase and ensure its legitimacy. That’s why a loss prevention system specifically designed to spot theft is necessary for all lottery retailers. Get a notification and video footage of every no-sale, lottery pay-out and price change so that you can have the peace of mind that your store’s lottery inventory is in good hands.

Petrosoft’s loss prevention analytics system goes above and beyond to supplement inventory management so that you have every tool at your disposal to counteract lottery theft.

Interested in learning more about how Loss Prevention Analytics can help you keep track of lottery ticket inventory?

I’m Interested

Reference: https://www.arizonalottery.com/media/2404/08-20-21-az-lottery-commission-report-v2.pdf

This chart was published from the CDC database. Which state or territory has the highest take rate per packet?

Also note some new tax rates effective in 2021 for Colorado, Maryland and Oregon.

State/TerritoryTax $ Per Cigarette PackEffective Date
American Samoa $                6.007/1/2015
Puerto Rico $                5.104/29/2017
Palau $                5.001/1/2015
District of Columbia $                4.9410/1/2018
Connecticut $                4.3512/1/2017
New York $                4.357/1/2010
Rhode Island $                4.257/1/2017
Guam $                4.0010/1/2018
Maryland $                3.753/14/2021
Northern Mariana Islands $                3.759/16/2017
Massachusetts $                3.518/1/2013
Oregon $                3.331/1/2021
Hawaii $                3.207/1/2011
Vermont $                3.087/1/2015
Minnesota $                3.041/1/2017
Washington $                3.035/1/2010
Illinois $                2.987/1/2019
California $                2.874/1/2017
New Jersey $                2.707/1/2009
Pennsylvania $                2.608/1/2016
Wisconsin $                2.529/1/2009
Delaware $                2.109/1/2017
Oklahoma $                2.038/23/2018
Alaska $                2.001/1/2005
Arizona $                2.0011/7/2006
Maine $                2.009/19/2005
Michigan $                2.007/1/2004
New Mexico $                2.007/1/2019
Colorado $                1.941/1/2021
Nevada $                1.807/1/2015
New Hampshire $                1.788/1/2013
Montana $                1.701/1/2005
Utah $                1.707/1/2010
Ohio $                1.607/1/2015
South Dakota $                1.531/1/2007
Texas $                1.411/1/2007
Iowa $                1.363/15/2007
Florida $                1.347/1/2009
Kansas $                1.297/1/2015
West Virginia $                1.207/1/2016
Arkansas $                1.153/1/2009
Kentucky $                1.107/1/2018
U.S. Virgin Islands $                1.103/22/2017
Louisiana $                1.084/1/2016
Marshall Islands $                1.008/20/2008
Indiana $                1.007/1/2007
Mississippi $                0.685/15/2009
Alabama $                0.6810/1/2015
Nebraska $                0.6410/1/2002
Tennessee $                0.627/1/2007
Virginia $                0.607/1/2020
Wyoming $                0.607/1/2003
Idaho $                0.577/1/2003
South Carolina $                0.577/1/2010
North Carolina $                0.459/1/2009
North Dakota $                0.446/30/1993
Georgia $                0.377/1/2003
Missouri $                0.1710/1/1993

Reference: https://nccd.cdc.gov/STATESystem/rdPage.aspx?rdReport=OSH_State.CustomReports

How can Loss Prevention Analytics help you to keep track of age-restricted sales?

We can help you be sure that employees adhere to laws and internal policies with verifiable proof.
Learn more

On Jan 1, 2022 the Oregon Laws 2021, chapter 586 (a new ACT) goes into operational effect, requiring retailers to have a tobacco retail license. This is to help bring consistency to the enforcement of cigarette sale compliance across the state of Oregon. Here are a few facts you should know as a cigarette or tobacco retailer:

  • The license requirement begins January 1, 2022.
  • You can apply for a license in December 2021 and you should receive a letter from the state in November.
  • You can complete your license application online and it will need to be renewed yearly.
  • Have more than one location? A license fee will apply to each location on the application.
  • The total statewide tobacco retail license fee is $953.
  • The state will conduct an inspection at least once a year.
  • Who do you contact? Until the operational period begins on Jan 1, 2022, you can reach out to spa.help@dor.oregon.gov​. 

Colorado also instituted license requirements in 2021 which leaves 9 states without license provisions:

  • Arizona
  • Kentucky
  • Michigan
  • Missouri
  • North Carolina
  • South Carolina
  • South Dakota
  • Tennessee
  • Virginia
  • Wyoming

How does Oregon fare against other states when it comes to maximum business penalties for tobacco retail sales violations?

State/TerritoryMaximum Business PenaltyCitation
American Samoa No Maximum A.S.C.A. § 13.1113
Ohio No Maximum OHIO REV. CODE ANN. § 2929.21(c)(4)
New Mexico $       10,000SB 131
Rhode Island $       10,000R.I. GEN. LAWS §§ 44-20-3 and 11-9-13.15
Washington $       10,000WASH. REV. CODE ANN. § 9A.20.021
Arkansas $         5,000ARK. CODE ANN. §§ 26-57-226 and 5-4-201 and HB 1980
California $         5,000CAL. BUS & PROF CODE § 22981
District of Columbia $         5,000D.C. CODE ANN. § 47-2422
Georgia $         5,000GA. CODE. ANN. § 48-11-24
Illinois $         5,00035 ILL. COMP. STAT. ANN. 130/3-10
Oregon $         5,000SB 587
Palau $         5,00011 PNCA § 1718
Alaska $         2,000ALASKA STAT. § 43.05.290(h)
North Dakota $         2,000N.D. CENT. CODE § 57-36-33; N.D. CENT. CODE § 12.1-32-01(5)
New Hampshire $         2,000N.H. REV. STAT. ANN. § 651:2(IV)(a)
Nevada $         2,000NEV. REV. STAT. ANN. § 193.140
New York $         2,000N.Y. TAX LAW § 480-A(3)(a) 
Texas $         2,000TEX. TAX CODE ANN. § 154..501(b); TEX. TAX CODE ANN. § 155.201(b)
Colorado $         1,000HB 1001
Connecticut $         1,000CONN. GEN. STAT. ANN §12-286
Delaware $         1,000DEL. CODE. ANN. tit. 30, § 5343
Kansas $         1,000KAN. STAT. ANN. § 79-3322(a)
Maryland $         1,000MD. CODE ANN. BUS. REG. § 16-214(b)(1)
Northern Mariana Islands $         1,0004 CMC § 50144
Pennsylvania $         1,00072 PA. CONS. STAT. § 228-A
Utah $         1,000UTAH CODE ANN. § 76-3-301 and HB 324
Wisconsin $         1,000WIS. STAT. § 139.44(5)
Alabama $            500HB 41
Florida $            500FLA. STAT. ANN § 569.005(1)
Louisiana $            500LA. REV. STAT. ANN. §47:859(A)
Maine $            500ME. REV. STAT. ANN. tit. 22, § 1554-B
Mississippi $            500MISS. CODE ANN. § 27-69-7 
Montana $            500MONT. CODE ANN. § 16-11-148
Nebraska $            500NEB. REV. STAT. § 28-106
U.S. Virgin Islands $            50027 V.I.C. § 307
Idaho $            300IDAHO CODE § 39-5709
Guam $            25011 GUAM CODE ANN. § 6307
New Jersey $            250N.J. REV. STAT. § 54: 40A-24(a) 
West Virginia $            250W. VA CODE § 11-12-4a(c)
Iowa $            200IOWA CODE ANN. § 453A.31
Vermont $            200VT. STAT. ANN. tit. 7, § 1002(e) 
Minnesota $               75MINN. STAT. ANN. § 461.12(2)
Massachusetts $               50MASS. GEN. LAWS ANN. ch. 64C § 10
Oklahoma $               30OKLA. STAT. tit. 68, § 304(2) 
Arizona No Provision  
Hawaii No Provision  
Indiana No Provision  
Kentucky No Provision  
Marshall Islands No Provision  
Michigan No Provision  
Missouri No Provision  
North Carolina No Provision  
Puerto Rico No Provision  
South Carolina No Provision  
South Dakota No Provision  
Tennessee No Provision  
Virginia No Provision  
Wyoming No Provision  

Interested in learning more about how Loss Prevention Analytics can help you keep track of lottery ticket inventory?

I’m Interested

References:

https://nccd.cdc.gov/STATESystem/rdPage.aspx?rdReport=OSH_State.CustomReports

https://www.oregonlegislature.gov/bills_laws/lawsstatutes/2021orlaw0586.pdf

https://www.oregon.gov/dor/programs/businesses/Pages/Statewide-Tobacco-Retail-License.aspx

Each year, many organizations publish loss prevention statistics. We’ve highlighted data from the National Retail Federation (NRF) and the National Association of Convenience Stores (NACS).

NRF Shrink Statistics

Who is the NRF? The National Retail Federation (NRF) define themselves as the world’s largest retail trade association.

  • Total inventory shrink for the retail industry in 2020 was $70.4 billion in losses
  • The average shrink rate for the retail industry is 1.6% of inventory for 2020
  • 53% of those surveyed said internal theft was a top priority
  • The average dollar loss per employee theft is $1,551.66 per case
  • The average dollar loss per shoplifting incident is $461.86 per case
  • The average dollar loss per robbery incident is $7,594.48 per case
  • For 2021, 50% of those surveyed said they would specifically invest in loss prevention (LP) equipment

NACS 2020 Shrink and Spoilage Statistics

Who is NACS? The National Association of Convenience Stores (NACS) is a leading global trade organization for convenience and fuel retailers.

If you are a convenience store operator, manager, or just curious, you can find both average shrink and spoilage rates by company size below.

  • Average merchandise shrink for 1-10 stores was $2,868 per store per year
  • Average merchandise shrink for 11-50 stores was $9,024 per store per year
  • Average merchandise shrink for 51-200 stores was $9,000 per store per year
  • Average merchandise shrink for 201-500 stores was $14,208 per store per year
  • Average merchandise shrink for 500+ was $19,704 per store per year
  • Average spoilage for 2020 for 1-10 stores was $10,188 per store per year
  • Average spoilage for 2020 for 11-50 stores was $8,604 per store per year
  • Average spoilage for 2020 for 51-200 stores was $13,908 per store per year
  • Average spoilage for 2020 for 201-500 stores was $33,708 per store per year
  • Average spoilage for 2020 for 500+ was $62,328 per store per year

References:

https://nrf.com/media-center/press-releases/retail-sales-now-exceed-444-trillion-2021-nrf-revises-annual-forecast

https://cdn.nrf.com/sites/default/files/2021-08/2021%20National%20Retail%20Security%20Survey%20updated.pdf

https://www.convenience.org/Research/SOISurveys