While price points of single stick premium cigars where very consistent with our previous survey, in box sales there was a significant downward trend towards the least expensive brands - under $20 per box. Sales of single sticks over $10 each rose from 9% in 2001 to 12% of stick sales last year.

In box sales, the greatest activity was once again reported in the $100 and over price range, where 31% of all box sales fell, followed by the $40-$75 range (29%), the $75-$99 range (22%), the $20 and under (10%), and finally the $20-$39 segment (7%).

Among single stick sales, those in the $4.50-$6.99 range accounted for 38% of all single stick sales, followed by the $1-$4.49 segment (27%) and then the $7-$9.99 segment (21%).

Overall, cigarette sales in smoke shops accounted for a full 25% of all store sales in 2002, up from 20.7% in 2001 and continuing a multi-year trend. Pipe sales slumped slightly, but pipe tobaccos showed a small jump.

Price points of pipes show significant downmarket trends among our surveyed sample of retailers. Pipes in the $25-$49 range accounted for 38% of all pipe sales, followed by the $15-$25 segment (34%). Pipes over $50 accounted for only %16 of pipe sales last year, compared to 37% in 2001.

Estate pipe tracking is admittedly hit or miss; over time, the numbers vary drastically. Among this reportıs surveyed sample, 7% reported dealing in estate pipes, accounting for a mere $2,052 in annual business.

Humidor sales among our surveyed retailers was only 1.2% of total store sales, down from 3.1% in our previous survey. Clearly, the least expensive models continue to gain ground: 79% of all units sold among our survey sample were priced under $149, with 49% retailing for under $74.99. Stores reported an average annual humidor business of $7,245.

The percentage of stores selling strictly tobacco and related merchandise held steady at 52% in 2002 after falling significantly in previous years. Future surveys will attempt to identify specific merchandise categories that have accounted for the growth in non-tobacco merchandise.

Lighters also saw a slide in 2002 among our respondents, dropping to only 2.3% of overall store sales compared to 4.9% in 2000. Nearly all non-tobacco categories, like lottery tickets (1.1%) candy and gum (.1%), and writing instruments (.07%) lost momentum and have become entirely inconsequential to most storeıs bottom line.

A minority of store reported offering beverages of some kind (46%), either for purchase (66%) or for free (33%). Soft drinks were the most popular beverage available (40% of all beverages), followed by brewed coffee (20%).

The average total annual store sales among our respondents was $603,741 for 2002 versus $624,915 among last yearıs survey participants for the year 2000. Revenue sources among this yearıs survey participants remained essentially unchanged. In-store sales accounted for 75% of revenues, followed by "other" sources at 12%; the Internet (7%); and mail order catalogs (6%).

The vast majority of the surveyed smoke shops were independent stores (87%), 7% were part of a chain, and 7% were franchises. After S-Corporations (34%), proprietorships (31%) were the most common store ownership type, followed by C-Corporations (23%) and partnerships (8%). Most shops were located in suburban settings (61%), followed by urban sites (17%), while only 5% were located in rural regions.

Strip malls were the dominant site for shops (52%), followed by mall locations (24%), and stand-alone shops (19%).

Once again, stores in 2002 reported significantly fewer competing shops within a radius of one mile (.15 shops on average) and within five miles (.85 shops on average). In all, 42% of surveyed shops reported no competing smoke shops within one mile of their store last year, and 24% reported no competing smoke shops within five miles.

Continued...

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