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TOBACCO BUSINESS
JANUARY/FEBRUARY 2014
Seymour, Indiana, in 2013 was a familiar
high to many tobacco stores these days:
electronic cigarette growth, according to
Andrea Myers, president of the 18-store
chain. “The category just exploded, and
I feel like we did a good job keeping up
with it,” she says. Moist snuff growth also
drove the tobacco category for the chain
last year, she adds.
From the challenge department, “the
constant squeeze of margins in the entire
tobacco category continues to impact us,”
Myers reveals.“While electronic cigarettes
were a big growth category for us in sales,
the margins decreased this year.”
In 2014, Myers expects e-cigs to
continue to have a very strong year in her
chain: “Even if they are taxed, they still
offer something a traditional cigarette
does not,” she says.
hot and Bright
Like other tobacco players, the best
thing that happened to the 18-store
chain of Cox’s Smokers Outlet in
Louisville, Kentucky last year “was the
sudden extreme growth in the e-cig/
vapor products category,” as Bill Grantz,
owner and operator, tells it. “This
includes the latest craze in the e-cig
category, the tank vapor devices, as well
as all of the related items, including
the e-liquids, atomizers, replacement
batteries, etc. I have not seen a category
as hot as this since the inception of the
RYO/pipe tobacco category several
years ago due to the taxation on standard
RYO tobacco.”
Grantz says that the best part of the
vapor category is the profit margins
being well over 50 percent, with
numerous as high as 80 percent, some of
which the chain has never experienced
before, according to him.
He expects the e-vapor category to
continue to grow “as we start into 2014,
as the category seems to be evolving
almost weekly with new and better
products becoming available. The profit
margins may not hold up as the category
becomes more competitive with more
retailers jumping on board.” He does
not expect the margins to drop below
the 50 percent level “any time soon.”
The chain has also grown its business
with categories it believes will hold into
the future: liquor, wine and premium
cigars. “With the increase in volume in
these categories, we have been able to
buy these lines at a lower cost, which
keeps us competitive,” Grantz explains.
His outlook for 2014 is bright. “With
the change in focus on developing other
categories, we have made great strides,”
he says. “I cannot see our company
ever completely walking away from
the tobacco category as it has been our
backbone since day one. We have seen
steady growth in premium cigars and
