How Convenient, Episode 18: All in on Flavor, the Tastes Trending in Tobacco

Today’s tobacco flavor preferences are trending back to the basics with significant favorability towards menthol.
In this week’s episode of How Convenient, Koupon's Senior Data Analyst Bokai Zhuang joins Greg Crow to provide important insight as to what’s happening in menthol in the tobacco category including recent purchase behaviors from nearly 1 million loyalty members, as well as potential FDA limitations.
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Greg Crow: In this episode, we highlight how consumer flavor trends are changing tobacco. Welcome to How Convenient, a new podcast about the essential role convenience stores play in the busy lives of consumers. Our hope is to equip innovative C-store store leaders as they seek to earn lasting shopper loyalty. In each weekly episode, we'll briefly share an update on C-store sales trends and what we're learning from billions of in-store purchase transactions. Today's episode is recorded on April 22nd, 2021. I'm Greg Crow with Koupon, today we have Bokai Zhuang. Bokai, introduce yourself and tell us what have you been thinking about recently?

Bokai Zhuang: I'm very excited to be here at How Convenient. Thank you, Greg, for having me today. My name is Bokai. I'm a data analysis and [inaudible 00:57] with Koupon since joined 2020 after graduating from Southern Methodist University. At Koupon, I help uncover and deliver insights to clients from hundreds of promotion campaigns and billions of consumer transactions in convenience stores. Outside of Koupon, I love outdoor activities and am planning to paddleboard at [inaudible 01:20] drinking hard seltzer in summer.

Greg Crow: Fantastic. Hard seltzer has been a theme on the podcast, a lot going on in that category. Before we get started, we love your feedback, we'll let you know how you can share that with us in a few moments.

Flash for this week, this is for the week ending April 18th, in store sales are up 14% versus year ago. It feels good to say that. Alcohol is up 16%, candy 4%, beverages 3%, tobacco 2%, food 2%, and snacks flat. In store trips are up 14% and basket dollars are up 7%.

It's great to see this performance, a year ago basis, but obviously a year ago, things were quite difficult for us as a country and in the industry. We also want to share how we're doing compared to the previous week and on that basis, sales per store grew 1% and trips peer store grew 1% as well.

We did a bit of a pivot this week, we were looking to cover another topic with the FDA announced that they may choose to enforce the cigarette nicotine limits in addition to implementing the menthol ban that's been talked about in recent years. So, while it's unclear whether these policies will see the light of day and when, we thought it would be helpful to provide you some context for what's happening in menthol in the tobacco category. And so Bokai, you've been looking into this recently, what's standing out for you.

Bokai Zhuang: Yes. From Koupon's database, I'm seeing Menthol VapoPads are drive majority of closed system VapoPads sales. Six of the top 10 VapoPads across brands are menthol today are up from two a year ago. If we take a closer look at the major players in vapor, Juul, Vuse and Njoy all at least tripled their menthol share in [inaudible 03:18] from 2019 to 2020. Juul went up from 14% to 52%, Vuse from 15 to 56% and Njoy from 15 to 54%. So, the flavor ban drove consumers who remained in category primary towards menthol over tobacco flavor options.

Greg Crow: Yeah. What strikes me about the numbers that you share Bokai, is that they're so consistent across brands. And so, obviously this is a consumer trend, category trend, not something that's brand driven. And so, obviously menthol is resonating with vapor consumers who were previously using flavored pods. I think pre-banned flavored pods certainly would have been the majority of units in the category. And we also know that many former smokers prefer for menthol over tobacco flavors, regardless of whether they were primarily menthol or non-menthol users in combustible.

So, we did talk about in episode 17, we are seeing more retailers introduce disposable brands. You talked about the closed systems brands, more disposable brands are entering the C-store space and it will be interesting to see how many of these new menthol vapor users switch to disposables in order to return to the flavors that they had enjoyed in the past. Bidi is currently leading that trend in our retailer panel and we will certainly dig into that growth in the future. We talked about vapor, obviously menthol is a big play in cigarettes. What did you see there Bokai?

Bokai Zhuang: Menthol cigarettes products grew 12% in 2019 and 20% in 2020 on a sales basis. Menthol represents roughly a third of the overall cigarette category by its growing share over now non-menthol each year. And on a unit and distribution growth basis in 2028 versus a year ago, a few brands are worth highlighting. Eagle 20's growth unit 71% with no distribution growth. [inaudible 05:19] growth distribution and sales and a near even rates and Eve distribution growth, outgrow unit growth. Seneca has also been growing at a fast rate.

Greg Crow: There's so many interesting trends there. We know that menthol has been a growing trend in the category cigarettes for a number of years, but what you're talking about I think is that you've got a number of consumers that are moving to menthol from a flavor standpoint and some specific brands maybe that are conquesting within the menthol cigarette space. So, Seneca and Eagle 20's we know are supported by heavy promotions, which is likely helping them convert consumers from alternative menthol brands and they're both interesting, I think because they're brands with modest distribution today. And so, there's room for growth amongst people who choose to remain in the combustible category. As we think about consumers Bokai, I'd love to just hear more about what we're seeing in terms of these types of switching trends.

Bokai Zhuang: Yes. We vetted nearly 1 million loyalty members who have non-menthol smokers before trying menthol products and followed these consumers for the next six months after trial. We found nearly 33% of these consumers reduce their consumption of non-menthol products over that six months period. These are high conversion rates there.

Greg Crow: Yeah, that is a super high conversion rate. Generally, I think in the cigarette category, you're either menthol or non-menthol as a consumer and so that's interesting. We've seen a lot of disruption coming both in vapor in particular, as we think about the COVID health concerns that were raised a year ago and some work disruptions that impacted the historical growth rate in the vapor category. And certainly, at the time we saw a lot of former combustible users revert from vapor back to cigarettes, which is certainly moving in the wrong direction on the risk matrix. And we talked about the FDA earlier, they also recently provided an update on PMTA progress, which really makes it clear that we're still a long way from having the regulatory clarity that we might've hoped for. Obviously, we understand that they've taken on a pretty important and complex task, but the longer that it takes to get that clarity, I think more questions are going to remain over the relative risk profile of these two categories.

So, none the less, in 2021 the vapor category has returned to growth again, and combustible users continue to trial and convert into the category either on a dual use or committee to vapor entirely. And so that's a continuing a long-term trend, which we believe lowers the risk profile for consumers, which is good for everyone.

Thanks for joining us today Bokai, we will certainly dig more into what's happening in this category in the future. And in our next episode, we'll be discussing 2021 insights with the focus on loyalty consumer trends.

Thank you for listening to How Convenient. If there is a topic that you would like to see us cover, or you think that we got some of our facts wrong, we would love to hear from you. You can reach us at Don't forget to subscribe and review us, and you can find more insights at