Adult smokers are increasingly switching between formats to suit different occasions and keep spending in check.
by Gaelle Walker
There is no disputing that, despite its many challenges, the tobacco category remains an important footfall and sales driver within local stores.
At the last count, tobacco was worth an estimated £14bn before tax a year according to Imperial Tobacco data.
Changes to the category’s constitution however are continuing apace with an almost 50/50 market share split between Factory Made Cigarettes (FMC) and Roll Your Own (RYO), as adult smokers increasingly switch between formats to suit different occasions and keep spending in check.
With the well-documented rise in the cost of living, it certainly comes as no surprise that the value for money trend continues to win out, with products offering the best possible bang for smokers’ buck expected to continue fuelling sales well into 2022.
“This transition towards lower-priced tobacco offerings is a key trend that retailers should be prepared to cater for,” Imperial Tobacco’s Corporate Affairs Director Duncan Cunningham says.
“Tobacco shoppers have an average basket spend worth £19.60 vs non-tobacco at £11.40, and they also visit more frequently.
“Convenience retailers are in a strong position to benefit from these increased visits and basket spend in the years to come, with figures forecasting almost 13% growth in Convenience over the next five years.”
Efforts to reign in the illicit trade have continued in recent weeks with a number of illicit seizures reported and sentences handed down.
Kilmarnock construction worker Thomas Donnelly, who was caught with 324,000 illicit cigarettes was sentenced to 12 months in prison on 31 January 2022.
The sentencing came in the same week that Scottish Trading Standards, in partnership with Sheffield Trading Standards seized more than £275,000-worth of illicit tobacco following a raid on a criminal gang.
The multi-agency operation involved a series of searches on gang-members’ homes, vehicles and storage locations and followed anonymous tips.
It resulted in over 2,000 packets of hand rolling tobacco, worth £32,000, and 500 illicit cigarettes also being seized.
JTI’s UK Sales Vice President Ross Hennessy agrees.
“Price remains a key factor for existing adult smokers,” he says and particularly in the RYO segment where value priced products account for a 53.6% share of sales and growing.
“Retailers should therefore stock up on Value RYO products, such as Kensitas Club RYO and Sterling Rolling Tobacco Essential.
“Kensitas Club RYO 50g sells approximately 184 packs an hour, presenting a profitable opportunity for Scottish retailers,” Hennessy says.
With no papers and filters and an RSP of £13.65 for 30g, JTI’s Sterling Rolling Tobacco Essential also offered a “great value tobacco option for customers” he adds.
While switching between tobacco categories helps adult smokers manage their budgets, it also presents retailers with additional challenges.
A keen focus on availability and local trends will be critical in 2022, Hennessy adds, as will “having up-to-date knowledge on the latest products” and being able to discuss them.
“Through stocking a full range and maintaining good availability of products, retailers and their staff can provide a successful offering and service to their customers without them having to shop around.”
The Association of Convenience Stores (ACS) has launched a new campaign to boost shopper awareness of the Challenge25 policy on age restricted products and better support local retailers.
The enhanced campaign aims to widen the use of Challenge25 beyond alcohol and highlight the policy to customers earlier in their store journey and not just at till points.
The ACS has also worked with the Retail of Alcohol Standards Group to provide a range of new materials which remind customers that they’re likely to be asked for proof of age if they look under 25 and are purchasing age-restricted products.
The new materials include posters, shelf edge labels and online assets. Visit acs.org.uk/challenge25 to download the assets.
