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A FUNDAMENTAL SHIFT has been taking place
across America’s retail landscape—one that may afford
opportunities in the OTP category. Consumers are in-
creasingly seeking out upscale experiences—particularly
in the convenience channel—whether that means opting
for a premium cup of coffee rather than the standard din-
er-style brew or seeking out craft beer instead of the stan-
dard six-pack. This movement toward premium products
translates to opportunity in other categories, says Leonard
Wortzel,
vice president, marketing and product develop-
ment
at Scandinavian Tobacco Group Lane.
That trend, in turn, dovetails nicely with other factors
redefining the way retailers should approach the cigar
category.
“Right now about 85 percent of the OTP set is
dedicated to relatively low-margin pre-priced cigarillos,”
he points out. “There are more than 2,600 SKUs in the
category, but 20 of them drive 43 percent of the volume.
Yet, most retailers carry far more than 20 SKUs. The
typical c-store, for example, carries 60. So you have an
oversaturated category where a small number of prod-
ucts accounts for almost half the volume.”
At the same time, retailers who dove headlong into
the vapor category are showing signs of pulling back,
opening up shelf space for the taking.
The bottom line? The opportunity is ripe for a shift to-
ward premium, higher-margin cigars that will give con-
sumers access to better quality products and boost profits
for retailers. “You need to be in pre-priced cigarillos, but
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Making
theMost
of OTP
Sets
Scandinavian Tobacco Group Lane
is looking for ways to leverage
market trends and help retailers
realize the full potential of an
underappreciated category.
OTP
STG offers customizable shelf sign fixtures.