In 2023, menthol smokers accounted for 32.5% of all cigarette smokers, according to the Centers for Disease Control (CDC). That’s a core customer segment that c-stores might lose if the U.S. Food and Drug Administration (FDA) enacts its federal menthol cigarette and flavored cigar bans. The menthol ban has been looming on the horizon for more than a decade. While President Biden delayed the ban even further in April, retailers need to prepare now for this shakeup in the backbar even though enforcement could still be a year or more away.
Menthol cigarettes and flavored cigars account for about 6% of c-store inside sales, or roughly $18 billion for the industry, according to Kretek International, an importer and distributor of premium tobacco products.
Retailers in California and Massachusetts have already seen revenue losses firsthand after the states instituted menthol bans, with users either driving across state lines to stock up on products or, even worse for everyone involved, buying illicit versions on the black market. This behavior shows that menthol smokers are loyal enough to the flavor that when menthol cigarettes are banned, many won’t just quit or switch to regular cigarettes or other tobacco options.
A looming ban and the significant loss of sales dollars that comes with it means retailers need to position themselves to retain this segment of customers.
But with consumers having distinct reasons to smoke menthols, a preference for the flavor’s experiential quality, and for many, a distaste for non-flavored cigarettes, it begs the question—where will menthol smokers turn in the absence of the product they’re loyal to?
Kretek commissioned two years of independent product research and focus group studies to learn what really makes menthol smokers tick—their habits, their needs and preferences and most importantly, what they’ll likely buy if they can’t smoke menthols.
Menthol Means More
Menthol smokers have distinct preferences from cigarette smokers and overall tobacco users. For example, in consumer surveys conducted by Kretek, 59% of menthol smokers ranked taste as their main motivating factor, compared to only 24% who said nicotine was most important.
“For menthol smokers, the word ‘taste’ is shorthand for everything about their enjoyment,” said John Geoghegan, a consultant for Kretek with over 30 years in the tobacco industry, noting that these consumers consider smoking a menthol cigarette a unique, multisensory experience. “It’s a deeper feeling of relaxation and calm that goes beyond words.”
“There is an expressed ritual to a menthol smoke that we didn’t hear from non-menthol smokers in our research,” he continued. “A dedicated moment set aside to just ‘be.’ They liken it to that first cup of coffee you have when you wake up.”
Around half of menthol smokers said they are so drawn to this multisensory experience that if menthols were banned, they would quit altogether. In reality, Geoghegan thinks not nearly that many will actually quit because nicotine dependency still influences their usage. However, the sentiment underscores the key motivator of menthol smokers for whom nothing can replace the feeling of a menthol smoke. Their strong taste loyalty is why Kretek has created a nicotine-free, non-tobacco version of filtered menthol that aims to fill the void.
The overall experience is influenced by the menthol agent itself, according to research and studies from the Duke University and University of Kentucky Schools of Public Health. Sven-Eric Jordt, a sensory neurobiologist, led the studies at Duke University.
“Menthol basically activates [your] cold receptor, and that’s why we feel cooling when we are exposed to menthol, when we inhale it or when we put it on our skin,” explained Jordt. “In turn, the receptor partially moderates how we perceive pain, which ultimately gives menthol the ability to dampen irritation or discomfort.”
But there’s another component to menthol cigarettes that is important—nicotine.
Will Nicotine-Free Work?
It’s common for menthol smokers to perceive the neurological effect of menthol as part of the nicotine buzz—they include this feeling in what they describe as their cigarette’s “taste.” Nicotine is part of the ritual and sense of calm experienced while smoking, but is perhaps less impactful for some smokers.
Despite many smokers’ self-noted dependence on nicotine, Kretek’s smoker research found that a nicotine-free menthol option would be a viable solution for a substantial segment of smokers. Many are in fact trying to cut down on nicotine usage—Kretek’s research confirmed CDC studies that showed 62% of consumers said they had health concerns about nicotine.
Response to smoking trials inferred that around 20% likely have a low enough level of nicotine dependence to make the switch to a nicotine-free product as long as the menthol taste meets their expectations, explained Geoghegan.
When current menthol smokers in Kretek’s product trials tried nicotine-free alternatives, 51% said they “missed the nicotine a little,” and 18% said they were “glad it’s gone,” according to Kretek’s Benjamin Winokur, brand manager of emerging brands at Kretek, who oversaw the project and development of SPLASH nicotine-free menthol smokes. “Our view is that nicotine-free menthols can end up with 8-12% of the current menthol population across several brands,” said Winokur. He noted that the moment of truth will be when customers walk into the store to buy their preferred brand and it’s no longer available.
Even as zero nicotine products begin to attract share in the backbar, Winokur said retailers should manage their expectations for replacements after a flavor ban. “Menthol smokers who opt for the nicotine-free smokes won’t make up the volume difference of what will be removed because of the ban, but even retaining 10% of those customers could easily create a billion-plus dollar business,” he explained.
What’s Next?
A federal menthol ban won’t go into effect overnight, but it’s never too early for retailers to begin laying the groundwork to retain this customer base. While Kretek and a few other manufacturers are bringing non-tobacco menthol smokes to market, others are launching menthol-flavored vapor devices that offer nicotine, even if the smoking ritual is lost.
“There’s a larger potential loss of revenue without that menthol consumer—a large majority of these buyers visit the same store week after week and add other items to their basket,” said Winokur. “Having the right products in place for a menthol smoker after a ban helps to retain those consumers in your store, and offers additional revenue from the other basket items that they buy.”
To retain menthol smokers, retailers will need to offer them something to fill the void and provide the unique experience of a menthol smoke. Bringing together its years of research and consumer studies about menthol smoker preferences, Kretek and its manufacturing partner PT Djarum, an Indonesian maker of filtered clove cigars, collaborated on the development of SPLASH menthols, a nicotine-free, non-tobacco filtered menthol smoke. During focus groups and trials, 56% of trial users indicated they liked the taste of SPLASH enough to switch after the ban (“very likely or somewhat likely”). Kretek is launching SPLASH at the 2024 NACS Show and plans to roll out the product in trial markets in California (where menthol cigarettes are currently banned statewide) in early 2025.