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Nov./Dec.
2000

How was business among smoke shops in 1999? Well, it depends largely on who you ask. Among respondents to our annual retailing survey, 62% reported a decrease in sales in 1999 versus 1998; 32% reported an increase; and 6% said they had no significant change. Overall, sales were down 5% among our survey respondents.

And that, truth be told, is probably well above average, since industry officials have pegged the specialty tobacco sales drop in 1999 closer to 10-15%, on average. We certainly won't argue with our sample's performance, but for most retailers it was a second consecutive year of shrinking revenues.

Non-tobacco merchandise continues to make incremental gains, accounting for 14.4% of store volume in 1999, compared to 11.9% in 1998.

Despite a sizeable loss over the past three years, premium cigars nonetheless remained the undisputed volume leader in smoke shops last year, accounting for 38% of all merchandise sold. This was down just slightly from 39% in 1998, and stands in contrast to sharper declines detected in 1998 and 1997. Mass market cigars, as a percentage of total store sales, fell from 3.5% in 1998 to to 2.8%in 1999.

Price points of premium cigars continued to shift downward, with single cigars retailing under $4.50 accounting for 39% of all single stick sales in 1999, compared to 17% in 1998. The highest priced and lowest priced tiers remained largely unchanged, percentage-wise.

Inversely following the past decade's cigar sales trend, cigarettes - sales of which bottomed out in 1995 among smoke shops, at the peak of the cigar boom - have continued to account for larger portions of store sales, making their biggest gain in 1999. Imported cigarettes accounted for 4.7% of store sales, while domestic brands grew to 23% of total store sales on average among our respondents.

Among all tobacco products, smokeless tobaccos remain the least active, representing a tiny - and shrinking - portion of total sales volume, less than 1% for our surveyed sample. Volumes ran about double five years ago.

While there were undeniable gains in the pipe sector in 1999, our survey results among sample stores in fact ran counter to the accepted trends, yielding results lower than expected. Pipes accounted for a meager 3.8% of total store sales among our respondents, down from 5.6% in 1998. Pipe tobaccos dipped to 5.1% from 6.3% in 1998, but held just below the five-year average of 5.5%.

The price breakdown of pipes sold saw high-end units over $100 and those retailing from $15-$49 losing ground to those in the $50-$99 range (23% of all pipes sold in 1999 vs. 19% in 1998) and those under $15, which jumped in volume from 4% in 1998 to 12% of all pipes sold in 1999.

The percentage of stores offering estate pipes held steady at 21% in 1999, which average annual sales among our sample totaling $1,730.

Humidor revenues, with Smokeshop magazine first began to track separately from tobacco-related accessories in 1996, continued fall in 1998.

The breakdown of smoke shops who carry only tobacco and tobacco-related merchandise showed its first decline in six years last year, accounting for 49% of stores surveyed compared to 67% in 1998. Likewise, among all retailers, non-tobacco purchases accounted for 42% of weekly transactions, compared to 30% in 1998. The average store made 997 weekly sales.



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