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TOBACCO BUSINESS INTERNATIONAL
SEPTEMBER/OCTOBER 2015
RYO, suggestive selling and category
education is still a viable sales tactic.
“We have conversion programs whereby
our staff is trained to inform customers
how they can save up to 80 percent in
RYO cigarette costs after their initial
investment of $10 to $60 for an electric
machine,” says Justin Samona, director
of operations for Wild Bill’s Tobacco in
Clawson, Michigan. “We show them the
various tubes, filters and machines, and
then they take them home and really
learn through trial and error. After we
teach them once and they go home and
practice, it seems like they come back
knowing what they want.”
“If a customer comes in and complains
about the price of cigarettes,my people are
trained so that the first thing that comes
out of their mouth after that is, ‘Have you
tried roll-your-own?’” says Kerstein.
Collett admits that “we’re not as
proactive as we have been in the past with
selling the category—now it is more on an
as-needed basis,” but the education part
of RYO is still a point of differentiation
for tobacco outlets. “Gas stores don’t have
the time to show them,” he says.
Of course, teaching does not include
making a cigarette for a customer or
sampling them anymore, as that is
against federal regulation.
Promotions push more product—
Samona praises the category as one
that delivers “great products with great
customer service. I love dealing with
the manufacturers and wholesalers here
because they really work with us. The
big players like Republic offer a lot of
discounts and incentives and rebates, and
tobacco customers still respond very well
to that.” He relays that “buy a block of
tubes and receive 50 cents off a 6-ounce
bag of tobacco” is currently a good promo
that his customers respond well to.
Collett also does well with the 50
-cents off “manager’s special” in the
category, and this includes his own
Smoker Friendly RYO brand that
“we put a lot of emphasis on,” he says.
Samona, too, does well with Wild Bill’s
private label tobacco in the category—
“It’s our No. 1 seller,” he says. “After that,
it’s Kentucky Select and Gambler.”
The math adds up to big profit—
Tobacco retailers admit that the
stabilizing of the RYO category is due
to several factors, and a large one is the
wild proliferation and popularity of vape
and e-cigs as cost-effective, cool, and
reduced-harm alternatives to smoking
cigarettes. But RYO is still very much in
the game, with math numbers that add
up big time.
“All day long I’d rather sell you a
1-pound bag of Gambler pipe tobacco
and two bricks of tubes and ring a
$22 sale than sell you two cartons of
cigarettes at $150,” states Kerstein.
“That’s because I’m making more on that
$22 sale than on that $150 sale. I’m all
about bottom-line profit; I don’t need
huge sales numbers.”
According to Leonard Wortzel, vice
president of marketing and product
development
for
Scandinavian
Tobacco Group, “what roll-your-
own lacks in volume it makes up in
margins, which are far healthier than
machine-made cigarettes. Accessories
like papers and tubes make the basket
even bigger.”
Industry estimates put cigarette profit
margins in the 6-8 percent range, while
RYO hovers around 30-35 percent.
TBI
“We have conversion programs whereby our staff is trained to
inform customers how they can save up to 80 percent in RYO
cigarette costs after their initial investment of $10 to $60 for
an electric machine. We show them the various tubes, filters
and machines, and then they take them home and really learn
through trial and error.”