By keeping tabs on the latest tobacco launches and trends, retailers can make the most of this crucial category.
Scottish and UK governments have made no secret of their wishes to stub out smoking, but the percentage of adult smokers in Scotland still stands at 13.5%, the highest percentage in the UK constituent countries, according to the Office For National Statistics. By honing their tobacco offer around top sellers and evolving trends, retailers can ensure they meet the needs of this important customer base.
Value remains the overriding trend across the category. “With more consumers looking for ways to reduce spending amid soaring household costs, we’re seeing a shift towards low-priced propositions across the entire tobacco category,” says Andrew Malm, UK Market Manager for Imperial Brands, noting that the trend is particularly prevalent in Scotland.
Imperial Brands has upped its game in the value sector, which the firm claims has expanded by 5% over the past year and currently represents 30% of the UK cigarette market.
Last November saw the introduction of Imperial Brands’ Paramount cigarettes, which promise exceptional value without compromising on quality.
Packs have an RSP of £12, but the company initially offered additional support to retailers, enabling them to sell the product at £11.50 or less if they wished to.
Paramount features premium, full-flavour Virginia sun-cured tobacco, meeting the needs of the majority of cigarette smokers: 90% of cigarettes sold in the UK are Virginia blends and 83% use full-flavour tobacco.
The brand is available in both king-size and super king-size formats.
The UK launch follows Paramount’s successful debut in Germany, where it is currently the fastest-growing cigarette product. Paramount has also launched successfully in a number of other European markets.
The £41m Tobacco Accessories market is positively thriving in Scotland, with double-digit growth of nearly 17% [Total Market Ext IRI Marketplace 52 wks to 22/12/24].
One of the major contributors to this growth is Roll Your Own specialist Republic Technologies UK – the company behind household names like Swan, Zig-Zag and OCB.
Scotland’s £12.3m papers sector [ibid] continues to perform well, with value sales up 10.8% [ibid] on last year, and Republic Technologies is increasing its presence in this sector by offering consumers more choice within its fast-growing, environmentally-friendly OCB range.
“Shoppers still want quality and value, which OCB delivers, but the plus point for the range is its environmental credentials which offer a clear point of difference vs most other papers, and this is really resonating with roll-your-own purchasers,” says Gavin Anderson, Sales & Marketing Director at Republic Technologies.
Organic and chlorine free, OCB Rice Papers are made from a blend of rice and organic hemp. The unbleached, ultra-thin papers deliver a premium rolling and slow-burning experience in a natural, brown paper. With 32 papers per pack, OCB Rice is available in both Slim (RSP, £1.10) and Slim & Tips (RSP, £1.73).
Republic Technologies is also underlining its environmental credentials in Scotland’s £5m filters sector [ibid] with the rollout of Just Paper plastic-free Swan filter tips.
In a category-boosting first for tobacco accessories, innovative Just Paper Swan Filters provide consumers with an experience that is similar to traditional cellulose acetate filters, but with a much lower environmental impact
The Swan Just Paper range features a ‘flip-a-tip’ design which dispenses loose extra-slim filters, without the use of plastic rods. Each box contains 120 filters, with 10 boxes per outer, with an RSP of £1.45 per consumer unit.
“Choice, innovation and quality are well established drivers of the tobacco accessories category and the Just Paper range delivers in each of those areas. Significantly though, the range has advanced the development of filter tips by offering roll-your-own consumers a product which not only delivers on performance, but which also has a significantly reduced impact on the environment,” adds Anderson.
Golden opportunities
In another bid to offer better value to consumers, Imperial Brands released a new pouch size for its bestselling premium Golden Virginia Original hand-rolling tobacco at the end of last year.
The new 40g pouch, which has an RSP of £33.70, offers an alternative to the established 30g and 50g sizes, and rolling papers are included with all pack sizes.
The company claims that the move is a response to continued price inflation and cost-of-living pressures. It follows other 40g pouch size introductions across the market and is designed to help consumers strike a balance between cost and value.
Japan Tobacco International (JTI) is also tapping into the value market with a price repositioning of its Mayfair Gold ready-made cigarettes. Previously, a pack of 20 had an RSP of £13.30, but this has now been reduced to £12.50.
Since its launch in October 2023, Mayfair Gold has climbed its way up the ranks, achieving pole position as the UK’s fastest-growing new brand in 2024 [Circana Marketplace, Ext Independents and Symbols, Volume YTD to 10/11/24, based on new brands launched in the past 12 months]. This has generated an impressive retail sales value of £94.4m [Circana Market Place, Value Sales, Mayfair Gold, Total UK, September 2023 to November 2024], claims JTI.
The adjustment to pricing means Mayfair Gold is JTI’s most affordable ready-made cigarette offering, giving retailers the opportunity to stock a trusted, premium Virginia blend tobacco brand at a competitive price.
The RSP reduction is especially timely as the Ultra Value segment continues to lead in market share growth, now comprising 17.9% of the total tobacco market [Circana Market Place, Volume Share, Total Tobacco Category, Total UK, over the last 12 months to November 2024 (based on slope calculation)]. By offering Mayfair Gold at the RSP of £12.50, retailers can capitalise on this upward trend, meeting consumer demand while enhancing their sales potential.
Mark McGuinness, Marketing Director at JTI UK, says: “We’re incredibly pleased with the performance of Mayfair Gold since its launch, and this price repositioning further strengthens its appeal. With a reduction on the RSP of 80p per pack, we are making the brand even more accessible to shoppers, while providing retailers with an excellent opportunity to increase sales.”
He adds: “As costs continue to rise and consumer budgets tighten, we remain dedicated to offering retailers top-quality products at the most competitive prices, ensuring they can maximise their profit opportunities.”
This price repositioning follows the successful introduction of Mayfair Gold Rolling Tobacco into the Ultra Value category in September 2024, underscoring JTI’s ongoing commitment to innovation and meeting consumer preferences.
When assessing the outlook for the tobacco sector in 2025, a key influencer will be upcoming legislation, in particular the Tobacco & Vapes Bill.
The bill passed its second reading in November at the House of Commons where 415 MPs voted for, while just 47 voted against it.
The bill is currently at the reporting stage, after which a third reading will take place.
“The main aim of the Bill is to create the first smoke-free generation while making vapes less appealing to non-smokers,” says Andrew Malm, UK Market Manager for Imperial Brands. “For retailers, this is the time to prepare and mitigate the impact – especially given the importance of tobacco as a contributor to retailers’ revenue.
The company advises retailers to check up, or refresh their memories, on the No ID No Sale Guidelines. “These offer advice for staff training – crucial to ensure your teams are doing the right things and on the use of a Refusals Register,” says Malm. “In addition, the free retail packs offered contain POS merchandise such as Statutory Tobacco Notices and Age-Related posters along with ‘Scan Me’ and ‘No ID No Sale!’ badges and shelf wobblers.
“Alongside this, we’d always advise retailers to check their supply sources rigorously and to continue to be wary of potential suppliers offering products which may be illicit.”
Retailers may also wish to refer to the Scottish Grocers’ Federation’s guide for retailers selling vaping and tobacco products, which has recently been updated with all the latest information.
Cigar insights
Scandinavian Tobacco Group (STG) UK concurs that demand for value is fuelling the market. “The cost-of-living crisis has of course helped shape the category over the last few years, meaning value brands and smaller pack sizes have often been in demand,” says STG UK Head of Marketing, Prianka Jhingan. “So it’s no surprise that price remains important because that search for value can still be a motivating driver of purchase for adult smokers.”
But just because you are offering good value to cigar customers, doesn’t mean you can’t make a decent margin. “When it comes to pricing, I think it’s always important for retailers to offer a range of cigars with different price points to meet differing consumer needs,” she says. “But in general, I would suggest they follow manufacturers’ guidance on pricing, as our recommendations afford value for the consumer, whilst giving exceptional margins for them, typically three times higher than those from cigarettes.”
The cigar category is experiencing solid growth, claims the company. “Our latest data shows the total cigar category to be worth just under £324m, which is a year-on-year value growth of 8% [IRI MarketPlace, value sales, w/e 22-12-2024],” states Jhingan.
You don’t need a large range of cigars in order to capitalise on the category, she observes. “Tobacco remains 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,” says Jhingan.
“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 also become an increasingly important part of the mix. So, with cigars, we always say that the right range is always more important than a big range, as well over 90% of sales come from the top 10 brands.”
When it comes to what is driving growth in cigars, it’s certainly a case of good things coming in small packages. “There’s no doubt it’s cigarillos which are the current success story within cigars,” she says. “This segment within the cigar category only really started five years ago, but sales are now worth nearly £150m and they account for more than half of all cigars sold in volume terms [IRI MarketPlace, value and volume sales, w/e 22-12-2024].”
Jhingan claims that over the last 18 months or so, distribution has improved, which has resulted in a welcome sales spike for STG UK’s Signature Action cigarillo brand. “It’s currently worth over £6m and its sales have grown by over 50% since last year, with consumers appreciating the great flavour and cheaper price point,” she says. “This current growth in cigarillo sales shows no signs of slowing, so we expect this positive performance to continue throughout this year and beyond.”
There’s a fresh and fruity new addition to the cigarillo segment with new Signature Action Mix cigarillos.
Containing two capsules, the new launch combines the flavours of Berry and Mint, offering consumers the best of both. Available in 10-packs, Signature Action Mix cigarillos have an RSP of just £5.85, which is lower than competitor brands, but still offers an attractive margin for retailers. The new line will be a key focus for STG UK’s growing sales force, who will be targeting over 10,000 convenience stores in the coming months to talk to them about the launch, as well as offering them branded merchandise. There will also be promotions in the wholesale channel for both Action and Action Mix, as well as a significant trade comms campaign to support the launch too.
STG UK’s Signature Action brand launched just five years ago and sales are growing by over 50% year-on-year.
Prianka Jhingan, STG’s UK Head of Marketing, says: “We know many adult smokers continue to look for features they used to enjoy with cigarettes such as flavour, click filters and smaller pack sizes, so these new Signature Action Mix cigarillos should really hit the spot. The continued positive performance of the Cigarillos category is showing no sign of slowing, so we’d urge retailers to get behind this exciting launch and enjoy those profitable sales.”
