New RSP sets Kensitas Club sales alight

The recent relaunch of Kensitas Club with a vastly reduced RSP of £7.65 and a new Superkings variant has had smokers flocking to the brand in the last month at Woodlands Local.

by Antony Begley

The recent relaunch of the Kensitas Club brand at a new significantly lower RSP of just £7.65 and the addition of a Superkings variant was an unprecedented step for a major cigarette manufacturer and one that took the local retailing trade in Scotland completely by surprise.

The brand has long been among the icons of the category in Scotland but recent years have not been kind to Kensitas Club as the long-standing and relentless customer migration towards more economy products took its toll. Kensitas Club retained a very loyal following, but one that had increasingly become a niche one – although awareness of the brand has remained high among adult smokers as most retailers will be aware.

At Woodlands Local we had a few die-hards but when we examined the Epos data in detail, the reality was that we were lucky if we were selling a pack of Kensitas Club a day. We always retained the line however, as the product did sell and the customers who bought it would buy nothing else. A basket spend analysis also revealed that our small but loyal Kensitas Club customers typically spent in excess of £5.40 on incremental purchases alongside their cigarettes.

So, just like other retailers across Scotland, it was with a mixture of excitement and nervousness that we overnight slashed the price of the brand from £10.55 all the way down to £7.65. We also added in the new Superkings variant on the same day, immediately making both lines the cheapest available on the gantry.

Off and running

Woodlands was lucky enough to get the new lines a little earlier than everyone else as brand owner JTI was keen to find out what the impact of the radical new strategy would be in-store. And at the end of the day, it’s for exploratory projects like this that SLR first bought the store, so we were more than happy to give the relaunched products a go.

Naturally, we shared the same concerns around the move as other retailers. Would the change in RSP simply wipe out cash margins? Or would the move drive greater sales volumes and generate a net increase in cash profit? Would the change simply lead to customers switching from the previous cheapest brand to Kensitas Club and have no effect whatsoever?

Well, while the lines have only been in the store for a month, we are already able to discern some early trends – and the great news, from our point of view as retailers, is that those trends are uniformly positive.

The results

First up, sales volumes of Kensitas Club King Size grew from week one, as you might expect from the cheapest product on the gantry. Comparing sales with the previous month, the total uplift in unit sales was 76 packs, a 316.6% increase. More interestingly, sales grew week-on-week for all four weeks of the first month – so it will be interesting to see where they finally level out.

The new Superkings variant also grew reasonably quickly from a standing start and now sits at around 18 packs a week, which doesn’t seem bad at all for a brand-new product.

This all sounds like great news, but what was the impact on the rest of the category? While there are many factors at play, our unit sales for the entire cigarette category grew by 111 last month. It’s not an enormous leap in the great scheme of things – around 30 packs a week – and we certainly can’t put all of the growth down to Kensitas Club, but selling an extra 30 packs a week is not something we’re about to sniff at, particularly when incremental spend is added on top.

Ultimately the figure we are interested in is cash profit and the very encouraging news is that in a declining category, we added just under £50 to our cash profit from cigarette sales last month. Again, we can’t put all that down to sales of Kensitas Club but there’s no question that the brand played its part.

Sales support

It’s worth noting that under current legislation there is very little that we could do in-store to communicate the relaunch of Kensitas Club and the introduction of the new Superkings variants to our customers, short of updating the price list on the gantry. There’s no question however that many customers did notice the price unaided by our staff.

It’s also certainly true that the fact that the lines are the cheapest on the gantry helped drive trial and sales. “What’s the cheapest fags you’ve got?” must be the commonest question we get from customers buying cigarettes.

Kerry Holstead, one of the team at Woodlands Local, commented: “We obviously get a lot of people asking what our cheapest cigarettes are so that gave us the chance to highlight the change in RSP for Kensitas Club. I was surprised though by the amount of people who then asked if it was ‘the same Kensitas Club’ as they were clearly surprised that a pack of cigarettes that used to be the best part of £11 was now just £7.65. After I reassured them, they invariably bought them.”

And what about our existing Kensitas Club customers? Kerry again: “Well, the customers that were already buying the brand were obviously delighted to hear that they had been cut in price so much. Some of them even made a point of buying other things as well because they expected to be spending £11 anyway!”

What’s next?

The success of the relaunch in the store and current sales figures mean that we will definitely retain the two lines. What is likely to be most interesting is where sales go over the next few months once things settle down. We will report back in subsequent issues of SLR and share the longer-term impact on the wider tobacco category of the rebirth of Kensitas Club – but the report card so far must read “so far, so good”.

The results also made enjoyable reading for Andy Stevens, JTI Head of Sales, who said: “Kensitas Club is an iconic brand and most existing adult smokers will be aware of its incredible heritage and superior quality. We were confident that the new lower RSP offers existing adult smokers a unique combination of a premium tobacco experience and a great value price – so we’re naturally pleased to see that borne out in Woodlands Local.

“We remain dedicated to providing retailers with a competitive product range, in line with market trends, and are confident that the drop in RSP along with the introduction of Superkings to the Kensitas Club portfolio will help retailers drive incremental sales, just as it has done in Woodlands Local.”