Demand for low prices and value for money remains sky high in the tobacco category.
By Gaelle Walker
When it comes to tobacco, adult smokers’ pursuit of value for money is one which has been long-since heavily documented.
And now, in the thick of the cost-of-living crisis and with a further 95p slapped on the price of a packet of 20 cigarettes in the Spring Budget, that dogged quest has been sent into overdrive.
Tom Gully, Head of Consumer Marketing UK&I at Imperial Tobacco explains: “Today’s shoppers are much more conscious about their spending habits, which means we’re now seeing a shift towards low-priced propositions across the entire tobacco category.
“As a result, the lower-priced tiered products now account for a large proportion of tobacco sales.
“For example, the sub-economy segment now makes up for 63% of Factory Made Cigarette (FMC) sales, while the economy segment accounts for just over a half (56%) of Roll Your Own (RYO) and these segments are showing strong growth at 3% and 5% YOY respectively.”
The growing demand for products that offer adult smokers greater value for their money recently prompted Imperial to update and upgrade its Lambert & Butler (L&B) brand with a fresh new identity and new features for Blue Real Blue and Blue Bright Air Filter, which were also renamed as Blue Original and Blue Bright respectively.
JTI meanwhile, recently repositioned its Sovereign Blue brand, bringing it into line with its other ultra-value offerings, in a bid to increase choice within the segment.
Billy Gatt, Premier Whitehills, Banff
Tobacco sales continue to hold their own and remain an important sales and footfall driver.
The trend towards value brands has been running for quite some time but given the current cost-of-living crisis, value is more important than ever for adult smokers and we are now routinely asked what our cheapest cigarettes are.
Cigarettes still account for the largest share of sales and our sales are being driven by brands such as Players and L&B Real Blue.
Roll Your Own tobacco sales are growing steadily though, as adult smokers look for ways to get even more value for their money.
Roll Your Own
Adult smokers’ pursuit of value for money is also being felt particularly keenly within the RYO segment.
“With many shoppers looking to cut down their household spending, we’ve noticed a significant increase in the number of RYO sales,” Imperial’s Gully adds. “In fact, the category now accounts for nearly a half (46%) of all tobacco sales.
“As the cost-of-living crisis continues, it’s likely that the need for value products is going to continue to be a dominant trend in the category for some time, so retailers need to make sure they can cater for this demand by having the right product offering.
“With this in mind, we strongly advise that retailers check that they stock a wide range of leading roll-your-own brands, including Riverstone and Players JPS, so that they are fully prepared for this continuing rise in demand for value tobacco products.”
And, with value meaning different things to different shoppers, Gully also recommends that retailers ensure their ranges include products that offer low prices, as well as products that offer added value – such as its Players JPS Easy Rolling Tobacco, which offers both filters and papers in the same pack.
In a bid to make more of the added value opportunity, JTI has also refreshed its Sterling Essential Rolling product for 2023, adding rolling papers, an “enhanced blend” and a convenient zip pouch.
Accessories
The rise in RYO sales is also creating an increasingly lucrative opportunity for retailers to make more of tobacco accessories, including filters, papers, and flavour-related innovations.
The tobacco accessories category in Scotland is currently worth £31.4m according to Republic Technologies and continues to show year-on-year growth of 4.7%.
Sales and Marketing Director Gavin Anderson, elaborates: “Cash conscious shoppers are turning to more affordable RYO products as a way of saving money, versus factory-made cigarettes.
To make even more of the category, Anderson urges retailers to ensure that their accessories ranges are in step with the key trends of the moment. These trends, according to Republic Technologies, include a move towards more natural, sustainably sourced and packaged products – products such as OCB Virgin Slim: unbleached papers made using OCB natural gum, sustainably sourced from African acacia trees.
Demand for filters containing crushballs has also been on the climb since the ban on menthol cigarettes in 2020, with further growth expected this year.
Republic Technologies offers two types: Swan Cool Burst Crushball and Swan Fresh Burst Crushball. Both are also available in a slim vertical shelf-ready box, “enabling convenience retailers to maximise returns from their space more effectively,” Anderson adds.
Given the economic climate, accessories that offer adult smokers added value are also experiencing strong demand, Imperial’s Gully notes. As such, Imperial’s Rizla Silver Kingsize Combi is also “proving to be popular.”
With an RSP of £1.20, it offers both papers and tips in one pack to provide shoppers “with the ultimate convenience,” he says.
- Value products are in demand as adult smokers look to reduce spending so make sure that you offer a strong range of well-known value and ultra-value brands.
- However, keep in mind that every store is different, so make sure that you also tailor your range to meet specific local demands.
- Make sure that stock levels are continuously maintained. Running out of popular products can be a costly mistake.
- Offer a wide range of tobacco accessories to make more of impulse purchases, including different types of filters, papers, flavour cards and lighters.
- Staff training is also crucial. Encourage staff to keep on top of local and latest industry trends.
Cigars
The cost-of-living crisis is also being felt across Scotland’s cigar category, where, just as with FMC and RYO, adult smokers are seeking out products and brands that offer them the best value for their money. The trend, Scandinavian Tobacco Group UK says, is evidenced by the continued success of its Moments Blue brand, which “offers a quality smoke at a low price”.
The brand was recently refreshed with a modern new on-pack look for Moments Blue and Moments Original, with packs of Moments Panatella set to follow in May 2023.
“Moments Blue has been the fastest growing value-for-money cigar in the UK and is well-known amongst tobacco-selling retailers as a popular choice amongst those customers who are looking to save money,” STG UK Country Director Alastair Williams says.
“Now, more than ever, it is important for retailers to offer their customers a range of credible value options across the store, as the current cost of living crisis continues to put pressure on households and forces consumers to make difficult decisions on what they can afford to purchase.”
To make even more of the cigar opportunity in 2023, Williams also urges retailers to “stock the right range rather than a big range,” – as the top 10 brands account for over 90% of sales, he says.
“Alongside cigarillos, it’s miniatures which are the engine room of the cigar category, so it is important to get this segment right,” he adds.
“By far the biggest player here is our Signature range, which is ably supported by our Moments brand, which offers a good quality smoke at a cheaper price.
“It’s also always worth reminding retailers that as cigars are exempt from the plain packaging legislation, we recommend they stock them on the middle shelf of the gantry where they are visible, and more likely to be purchased by adult smokers who can see them,” Williams concludes.
