As Tobacco Habits Change, Retailers Find Growth Opportunities in OTP

Simplification is helping retailers capture bigger transactions without sacrificing shelf space.

It’s no secret that cigarette sales continue to decrease year over year. For retailers who rely on this revenue, the transition to other sources—and other tobacco products (OTP) in particular—can be challenging. Often, adding SKUs can feel like a gamble for operators working with limited space and a continuously changing segment like OTP. However, operators are finding success when targeting OTPs consumers trust and already enjoy. Discovering these brands and listening to customers is often a winning formula for creating greater loyalty and higher average basket sizes.

Mohammed Ali, who runs two high-volume retail locations in Florida, realized the difference a trusted OTP brand could make for his business. It started when Ali noticed a trend: many “snowbirds,” or Northern customers who travel south during the winter, were asking for Cheyenne. Cheyenne has a long history of helping operators achieve sales success, whether that is through fourth-tier cigarettes, moist snuff, or filtered cigars.

Ali decided to invest in Cheyenne Cigars’ “Core Four” flavors: Full Flavor, Menthol, Wild Cherry, and Classic. Rather than overextending into too many options, Ali focused on these proven, high-demand SKUs, which helped reduce risk while maximizing sell-through.

These popular SKUs paid off quickly. “Customers are loyal to their specific Cheyenne flavor,” Ali says. “Now I keep every style of Cheyenne Cigars in stock.” Many customers transitioned from buying a pack or two to purchasing entire cartons, proving that a focused assortment of trusted products can drive both loyalty and higher volume. By keeping these core flavors consistently available, Ali was also able to build repeat traffic and reinforce purchasing habits among his regular customers.

According to the NACS State of the Industry Report, OTP represents the third-highest source of in-store revenue outside of foodservice, making it one of the most important categories for convenience retailers to manage effectively. While cigarette sales continue to decline, OTP sales have shown steady growth, creating new opportunities for operators willing to adapt to changing consumer preferences.

For Mohammed Ali, success came from keeping the strategy simple. By paying attention to customer demand and focusing on proven products, he built stronger loyalty, increased repeat purchases, and drove larger transactions. His experience highlights an important lesson for retailers navigating today’s tobacco category: you don’t need more products – you need the right products. A focused assortment of trusted, high-performing brands can help maximize limited shelf space while delivering the consistency consumers expect.