Whether it’s NIQ, Circana, Management Science Associates (MSA) or CSX and State of the Industry data via NACS, there is no shortage of data options for the nicotine category. Though the exact information tracked and exact numbers may vary slightly from outlet to outlet, they’ve tended to paint the same picture: Overall sales are declining, led by significant declines in cigarettes that are only partially offset by gains in segments like modern oral nicotine.

“The adult nicotine consumer is a very valuable customer for convenience, which continues to be the first choice for customers looking to purchase nicotine,” said Greg Schmidt, vice president of business analytics at Swisher. “Circana estimates that the c-store channel drives $22.8 billion in annual OTP sales, while cigarettes generate $57.8 billion.”

But, according to Rajeev Sharma, founder and CEO of VideoMining, sales only paint part of the picture.

“Sometimes when you look at total sales, the big picture is hidden,” he said. “Obviously the prices have increased, but that tells only part of the story.”

While many outlets track unit sales or margins, VideoMining uses its proprietary video-based AI sensors to track something entirely different: consumer behavior. How many shoppers are purchasing nicotine, how frequently they come to the store, how much they spend, what else they purchase—and much, much more.

“[We] capture every nuance of their behaviors and every ‘micro moment’ in-store,” said Sharma. “The goal is to unlock unprecedented levels of behavioral insights using a combination of our patented AI platform and behavioral science to analyze what’s working and what’s not working from the perspective of the operator.”

Today, VideoMining tracks more than 400 million convenience store trips. These trips provide insights into not just what’s happening today, but how different shoppers have evolved since the company’s first AI sensors were placed in 2008.

This is especially important for a category like tobacco. Tobacco remains the largest contributor to in-store sales per NACS State of the Industry data, but has regulatory limitations on merchandising, placement and signage. As such, tobacco and nicotine shoppers often have little to no exposure to other parts of the store. When tracking tobacco trips, VideoMining focuses on a few things: who those shoppers are, how many trips they’re making, how they interact with the store clerk, and the impacts of different types of signage.

Here’s a breakdown of what 15-plus years of data has shown about who nicotine consumers are, how they’ve changed and what top retailers are doing to maintain or even grow these shoppers’ baskets.

The fundamental nature of the trip has not changed as much as we think.”

Nicotine Shoppers by the Numbers

Much like more traditional data outlets, VideoMining has tracked ongoing declines in the overall category. And not just in sales.

“The biggest trend we have seen is changes in c-store trips and the number of tobacco buyers,” said Sharma. “There has been a steady decline in overall tobacco trips and baskets, certainly in cigarettes.”

In 2008, tobacco accounted for over 30% of convenience trips. In 2024, that number dropped to 25%. That makes it the fourth-most common trip mission VideoMining tracks (behind refreshment, snacking and caffeine boost). Previously, it was in the third spot.

Additionally, in the first half of 2024, average weekly per-store tobacco buyers were down 8% vs. the first half of 2023, and the overall share of tobacco baskets storewide went from 25% to 24%.

The one hint of a silver lining? Basket sizes increased by 4% during this time, to an average of $12.87 per tobacco shopper.

“Total tobacco performance continues to decline, but pricing is offsetting the damage,” Sharma said.

Shopper Behavior: The Lone Wolf

While many retailers would love to offset purchase declines by encouraging shoppers to add non-tobacco products to their basket, this is uniquely hard given the way most tobacco shoppers behave. Sharma describes the nicotine shopper as “like a lone wolf,” interacting less with the rest of the store than the average consumer—but making more frequent visits.

In fact, VideoMining data shows that 70% of tobacco shoppers go directly to the backbar upon entering a store and 51% of them purchase only tobacco or nicotine products.

“That ratio has been largely consistent over 16 years,” Sharma added. “The fundamental nature of the trip has not changed as much as we think.”

These lone wolf shoppers also spend nearly a third less time in the store than the average shopper—two minutes versus three minutes—and only 17% interact with the tobacco fixture in any way (while 80% only interact with the clerk).

“This indicates highly mission-oriented visits to c-stores for these shoppers,” said Sharma. “Tobacco buyers are not that influenceable—it’s not an impulse purchase.”

Some other insights Sharma provided about tobacco shoppers’ patterns include:

• “They have three peaks in terms of dayparts: morning, lunch and after work. Though it varies by segments, with cigars peaking much later in the evening.”
• “They over-index even more to men for a channel that is already approximately 70% male (tobacco is 75% male).”
• “There are some individual categories that are being purchased more often with tobacco: energy drinks, fountain drinks, candy and sports drinks. In general, though, tobacco is still much more likely to be purchased alone than any other product.”

The Evolving Nicotine Shopper

One thing that has changed in the time that VideoMining has been mapping this consumer is what they’re buying. While the pattern of most tobacco buyers going straight to the backbar and only shopping that category hasn’t changed, Sharma noted “the top products that they’re buying has changed slightly.”

While most backbar segments saw their share of tobacco/nicotine purchases fall from 2023 to 2024, pouches and modern oral saw its share double from 5% of category sales in 2023 to 10% in 2024.

“That’s pretty significant,” Sharma said.

And getting more significant by the day. “We expect the segment will continue to grow, eventually reaching the same size as all other smokeless products,” said Cory McDade, senior director trade marketing development at Reynolds American Inc.

Sharma added that while a category like modern oral is too new to have enough data to make exact claims, “The hypothesis is that with the move to the different segments, maybe the nature of the shoppers will change.”

Tobacco buyers are not that influenceable—it’s not an impulse purchase.”

Those newer segments may attract more female consumers and possibly a shopper younger than the typical cigarette consumer—but Sharma noted “we just don’t know yet.”

It’s not just a different shopper: the baskets of those newer product shoppers are also likely to be different than a traditional cigarette shopper. Even if they are only purchasing tobacco, they’re more likely to purchase more than one kind of tobacco product.

“I think it’s never a straightforward switch from one to the other, but rather using multiple nicotine products,” Sharma said of the poly-usage phenomenon showing up on VideoMining’s cameras. “Not just for trial, but maybe even ongoing.”

“Poly-usage has gained popularity among today’s adult nicotine consumers, who remain receptive to new and innovative products,” added Schmidt of Swisher. “Due to factors like inflation, regulations and societal pressures, adult consumers are increasingly willing to explore nicotine products beyond traditional cigarettes.”

The VideoMining data has captured how the trip patterns of vapor and smokeless shoppers differ from those of traditional cigarette shoppers.

“The cigarette purchaser is much more in auto pilot mode, so it’s hard to break through,” Sharma said. “But with some of the newer products, there has been more interaction with the store associates and with information in general. They’re more open to trying different things.”

How to Excel With This Shopper

Sharma said this shift from an auto pilot cigarette shopper to a nicotine shopper more willing to engage with other parts of the store—or at least other parts of the backbar—highlights the importance of testing and mapping what does and doesn’t work.

Of the hundreds of millions of shopper trips VideoMining tracks, Sharma said there are some commonalities in the retailers who have managed to shift that 70% of tobacco shoppers who only engage with the backbar or only buy one product to a percentage that is more favorable.

“If I had to narrow it down to two things, it’s assortment and signage,” Sharma said.

Assortment is key for keeping that tobacco customer. Whether it’s cigarettes or something newer like modern oral, the data suggests there’s “very little substitution” when it comes to the backbar.

“That consumer will not be forgiving if the product is not there—out of stocks are a sure way to lose a customer,” Sharma said. “The retailers who are doing well have a good assortment.”

“The backbar is always an important aspect of retail shopping in the convenience channel,” agreed McDade. “Retailers must ensure that their backbar reflects the growing shift from combustible products to potentially less risky nicotine products like vapor, modern oral and snus.”

The other thing retailers doing well in this category have in common is good signage both in terms of location and messaging. A recent VideoMining survey of tobacco shoppers found:

• 75% of potential tobacco shoppers who purchased just gas reported that they would be influenced a little or a lot by a tobacco pricing (or sale) sign.
• 33% of potential tobacco shoppers said window signs/clings, large banners and front door signs would be most likely to persuade them to go into the store.
• 35% of potential tobacco shoppers said no signage inside the store would get their attention (28% said product promotions would, 27% said cooler door signs would and 26% said promotional tags on products would).

Out of stocks are a sure way to lose a customer. The retailers who are doing well have a good assortment.”

“In terms of best practices, promotional signage particularly works and informational signage in some cases for the new products also works,” Sharma said.

Reynolds has seen this with its retail partners as well. “We find that retailers with fully integrated digital marketing programs like loyalty programs are the most successful at driving noncombustible nicotine products,” McDade said.

Knowing that so many nicotine shoppers head straight to the backbar, Sharma sees this area as prime for promotion.

“Have better ‘front end’ merchandising for improving cross-purchases and impulse for tobacco buyers while they are waiting,” he said. “Especially since so many of them don’t go to other parts of the store.”

That goes for self-service items on or near the counter, but especially for the backbar itself.

“It’s important to evolve the merchandising and signage to encourage trial,” Sharma said. “Trips are going down. If you want to offset that besides just pricing, having the right assortment and signage helps. Maybe that cigarette shopper goes ‘I would like to try a pouch too.’”

“We suggest retailers continue to collaborate with their vendors on a customized promotional strategy while keeping a close eye on the Fair Share SKU Index to ensure the proper mix of nicotine products are carried in stores,” added Schmidt.

As the fourth-highest trip mission tracked by VideoMining, tobacco remains a key category for convenience. Thus, Sharma encourages retailers to monitor not just the dollars and cents—but the actual behaviors.

“The number of trips are significant,” Sharma said. “You have to make sure you are marching along in terms of that shopper composition. And the only way you can do so is by being a little ahead of the trends. If you don’t watch this shopper, it’ll be too late by the time you’ve recognized the shift.”