The growth of cigarillos is helping drive the cigar category in Scotland, as SLR discovered when it caught up with Scandinavian Tobacco Group UK MD Gleb Pugacev.
The cigarette category may be in slow and terminal decline but there’s one bright spot in the wider tobacco category in Scotland and that’s cigars, a fact celebrated by Scandinavian Tobacco Group UK Managing Director Gleb Pugacev.
He comments: “Our latest data shows the total UK cigar category to be worth £309m in annual sales, which is a value increase of just over 9% versus the same time last year. The picture is similar in Scotland, where total cigar sales are currently worth £27.7m and are up in value terms by 8.6% year on year.”
This positive performance is largely down to cigarillo sales, which account for the largest of the four segments in the cigar category. Across the UK, cigarillos are now worth just over £124m in annual sales and are responsible for just over half of total cigar volume sales. In Scotland, sales of cigarillos have now topped £11.5m.
Cigarillos star
That strong performance of the cigarillo segment has also meant that, remarkably, total volume sales are now slightly in growth too, currently up by 0.8% versus the same time last year – and cigars remain exempt from plain packaging legislation.
“I’m pleased to say STG UK has both the second- and third-bestselling cigar brands in Scotland, with Moments Blue and Signature Blue respectively,” says Pugacev.
He believes that, broadly speaking, the positive performance is down to three key factors: heritage and tradition, flavour, and festivities.
“Cigar smokers are typically brand loyal and prefer to stick to high quality, established brands which they know and trust,” he advises. “So stick to stocking the top-performing brands which you know – and your customers love – such as Signature Blue, which is the UK’s bestselling traditional cigar and a must stock for any tobacco retailer.” The entire Signature range benefitted from a contemporary redesign earlier this year in the wake of the brand’s 60th anniversary in 2023.
Secondly, while perhaps not on the same scale as mainland Europe, flavoured cigars are growing in popularity in the UK and in Scotland too. Pugacev explains: “This doesn’t only mean peppermint-flavoured cigarillos. Other flavoured cigars are popular too, particularly in the miniature segment, so make sure you have some good quality options in stock. Our Signature Red Filter brand is currently the UK’s bestselling aromatic filter cigar, with a smooth taste and vanilla flavour, which proves very popular with those adult smokers who enjoy a flavoured cigar.”
Finally, the role of parties and celebrations cannot be underestimated when it comes to driving cigar sales. “Whether it’s Christmas, Easter, Father’s Day, or just a summer party or family celebration, many regular cigar (and cigarette) smokers will turn to a larger cigar to enjoy as a treat or part of their celebrations when they have more time to enjoy it,” comments Pugacev.
“Our Henri Wintermans Half Corona is easily the UK’s best-selling medium/large cigar and a particular favourite at Christmas, although it remains popular all year round.”
Convenience matters
But just how significant is the cigar category in local retailing? Pugacev says: “Cigars remain an important category for convenience retailers to get right, not only for the revenue it brings into their till, but as a driver of footfall and repeat business from regular customers and the associated basket spend which goes with that. Whilst traditional tobacco sales have been in decline for some time now, what’s left is still huge and of course many consumers have been transitioning over to next gen products such as vapes or nicotine pouches, which have become an important part of the mix.”
The key then is to ensure that your cigarillo offer is on point while also stocking a range of the most-popular larger-format cigars to cater for as many tastes and requirements as possible.
“It’s definitely cigarillos which are the current success story within cigars,” says Pugacev. “The category barely existed four years ago but sales are now worth over £120m and they account for more than half of all cigars sold in volume terms.”
Value remains critical, though that has been a factor in the cigar category for many years, evidenced by the success of STG UK’s Moments Blue brand, which is the second bestselling cigar brand in Scotland.
“Our Moments Blue 10s packs are actually the biggest brand in the Value For Money segment while our Signature Action brand is the most affordable in the cigarillo segment,” concludes Pugacev.
- Cigars and cigarillos offer benefits to retailers that other forms of tobacco don’t, including great margins – often three times higher than cigarettes.
- It’s more important to stock the right range than a big range. Stock the top two or three brands in each of the four main cigar segments.
- The top 10 biggest sellers overall account for well over 90% of sales.
- Staff training is key and nothing beats face-to-face communication.
- Talk to STG UK’s growing field sales force and visit stgtrade.co.uk for the latest information and advice.
All figures sourced from IRI MarketPlace, Value and Volume sales w/e 18-02-2024, unless otherwise stated.
