Predictably, COVID caused an abrupt change in consumers’ buying behaviors, including fuel and toilet paper. It also caused significant supply chain disruptions that impacted every retailer’s ability to keep new fast-moving items in stock. But surprisingly, it also reversed the long decline in cigarette sales both in the US and Canada.
Since approximately 87% of cigarette sales scan out at c-stores, these tobacco retailers had to meet increased demand while adjusting to a disrupted supply chain, leaving many out of stocks in this category. The following discusses the past and current cigarette sales trends and how scan data can help the industry to meet consumer demand.
In the US, the FTC reported a slight increase of 202.9 billion units in 2019 to 203.7 billion units in 2020 after years of decline, approximately 0.4%. In Canada, unit sales increased from 18.6 billion units in 2019 to 19.1 billion units in 2020, a 2.6% increase. Some have suggested COVID restrictions also decreased illegal cigarette sales, which may explain the difference.
So far, both in the US and Canada, 2021 is showing a reversal. Altria reports an industry-wide decrease of 4% for the first half of 2021. Statistics Canada reports, for the first 9 months of 2021, a reduction of 12.5% versus 2020.
Why Should C-Stores and Other Tobacco Retailers Care?
Industry statistics can help you keep track of trends at a higher or macro level. It helps you understand, in retrospect, what you had no control over and where you might have missed opportunities and where you may have left yourself vulnerable to risk. The keyword is “retrospect.” The ability to change the course of a business is found in its day-to-day operations and that’s where back-office and scan data can help the tobacco retailer.
Back-office and scan data apps help you, the manufacturer and the supplier, understand trends in this category in much shorter intervals. What once took months can now be reported on and reacted to weekly across the supply chain. It helps to adjust ordering, manufacturing, and distribution decisions far before industry reports are published.
Our integration with Altria also allows you to set up error-free promotions easily. With Scan Data by Petrosoft:
References:
https://www.cspdailynews.com/csp-magazine/whos-challenging-c-stores-share-tobacco-market
https://www.ftc.gov/reports/federal-trade-commission-cigarette-report-2020-smokeless-tobacco-report-2020
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1610004401
https://investor.altria.com/events-presentations/default.aspx
Earlier this year, the Federal Trade Commission (FTC) released its 2020 cigarette and smokeless tobacco reports. In late October, they released additional findings highlighting that the steady decline in cigarette sales reversed itself in 2020, increasing slightly from 202.9 billion units in 2019 to 203.7 billion units in 2020, approximately 0.4%. Smokeless tobacco also increased to 126.83 million pounds in 2020 from 125.98 million pounds in 2019, about 0.7%.
Here are some more statistics you should know. The cigarette and smokeless tobacco reports are a combination of data from:
The below does not include heated, non-combustible cigarettes since only 1 company reported such data and the FTC will not report the data under those circumstances.
* For this calculation, we used the 380K estimate from CDC’s website. However, since most cigarettes are sold through convenience stores (approximately 87% of volume per Nielsen), the price discount reimbursements could be $35,379.17 or slightly more per store per year.
Back-office and scan data apps help you by setting up error-free promotions, pushing them out to your integrated POS system within a few clicks. It also compiles and sends your weekly reports to meet the periodic reporting requirements of buydown programs.
Use Petrosoft’s Scan Data program to automatically store, access and send tobacco sales to the manufacturer for rebates. Our integration with Altria also allows you to set up error-free promotions easily. With Scan Data by Petrosoft:
References:
https://www.cspdailynews.com/csp-magazine/whos-challenging-c-stores-share-tobacco-market
https://www.ftc.gov/reports/federal-trade-commission-cigarette-report-2020-smokeless-tobacco-report-2020
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1610004401
https://investor.altria.com/events-presentations/default.aspx
Running a c-store business can be complicated. Understanding tax, tobacco, liquor, lottery and fuel rules and regulations can be daunting. Legislation is bound to catch your attention at some point as you wait to see how new rules or laws will impact your business. One such ruling came about in 2020 in the state of Southern Carolina.
The state of Southern Carolina’s Department of Revenue issued SC Revenue Ruling #20-3. It determined that cigarette and tobacco buydowns were to be included in the gross proceeds of sales and subject to the sales tax effective January 1, 2021. Understandably, at a sales tax rate of 6%, this caused an uproar.
The department subsequently released SC Information Letter #20-35 to delay the effective date of SC Revenue Ruling #20-3 until July 1, 2021. Both were superseded after Code Section 12-36-90 was amended in April 2021 to state that buydown are not part of “gross proceeds of sales.”
If you are curious, you can view the document that supersedes the previous ruling, DOR SC information letter #21-12.
Code Section 12-36-90 defines the term “gross proceeds of sales” as the basis or measure upon which the sales tax is calculated. Effective April 16, 2021, the Legislature amended this code section to exclude amounts received from a “buydown” from gross proceeds of sales.
SC INFORMATION LETTER #21-12
“Buydown” – Excluded from Gross Proceeds of Sales (Sales Tax)
Use Petrosoft’s Scan Data program to automatically store, access and send tobacco sales to the manufacturer for rebates. Our integration with Altria also allows you to set up error-free promotions easily. With Scan Data by Petrosoft:
Reference
