Tobacco remains a vital and resilient category for convenience retailers, but legislative and lifestyle changes mean retailers need to constantly adapt to meet the needs of consumers.
Progressive tax increases, the ban on menthol cigarettes and restrictions on travel have all had an impact on the tobacco category in one way or another. And when once smokers stuck rigidly to one brand and one pack format, now they are increasingly taking a “nicotine portfolio” approach, creating sales opportunities for a range of new products.
The key trend in the category, however, is not a new one: value for money.
Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu, says: “The tobacco market remains heavily price-driven and this has led to an uplift in consumers switching into Roll Your Own (RYO), as well as value Factory Made Cigarettes (FMC). We’re also seeing a rise in dual users buying both RYO and FMC for different occasions – a quarter of consumers are now dual smokers.”
As a result of this continuing shift, RYO now accounts for 45% of tobacco sales, and brands in the economy RYO segment are also rising.
“Since its launch in November 2019, Lambert & Butler RYO has been growing its share and, in July 2020, it accounted for 4.7% of all sales within the economy RYO segment, making it a must stock product line for retailers,” argues Cunningham.
“Restrictions on travel due to Covid-19 have reduced the amount of tobacco purchased abroad for consumption in the UK which, in turn, has led to increased domestic sales. For example, the volume of Golden Virgina Original sold to consumers in July 2020 was almost 50% higher than before the pandemic in February 2020. We expect this trend to remain as consumers continue to buy in bulk.”
The shift towards RYO creates new sales opportunities for tobacco-related accessories, he continues. “Retailers should make sure they’re fully stocked at all times of filters, papers, lighters and other flavour-related innovations like Rizla Flavour Infusions and Rizla Polar Blast Crushball filters, to cater for the rising number of consumers buying into the RYO segment,” he says.
Rizla Flavour Infusions, launched in late 2019, comprise flavour cards that can be used with traditional factory made cigarettes or RYO tobacco products to impart an additional flavour (Fresh Mint or Menthol Chill varieties are available). The brand is currently selling more than 900,000 packs per week as consumers look to recreate the menthol experience following the ban on menthol and capsule cigarettes in May last year, Imperial reports.
Customer service
With in-store restrictions in place, retailers need to be prepared to proactively offer customer advice at the till point and help shoppers feel at ease.
Education
It’s essential that staff know what products are stocked in store and where they are positioned on the gantry, and they should be encouraged to read up on the latest category developments.
Go digital
The Ignite app is a great resource and allows retailers to keep up to date with the latest news, product information, advice, and downloadable POS.
Cunningham maintains that adult smokers are still deciding on what solution suits them best post-ban. “It’s still really too early to say what impact the menthol ban has had on tobacco sales overall, as it will take time for shoppers to settle on the nicotine products most suited them. In the meantime, it’s likely they’ll be looking to trial different products, so it’s important to stock a broad range of products across all the segments,” he suggests.
Despite the growing trend towards RYO, factory-made cigarettes still account for the majority of tobacco sales with a 55% share of the market. As in the overall tobacco category, value for money remains a key trend, and Imperial Tobacco recently announced a range extension for Embassy Signature with a Gold Superkings variant to cater for shoppers looking for premium products at a value price.
Embassy Signature Gold Superkings carries an RSP of £9.50 per pack of 20 and is a straight swap for Embassy No.1 Red Superkings.
The 2019 launch of JTI’s Sterling Dual Capsule Leaf Wrapped gave the UK cigarillo category a boost, to the extent that it is now the fastest-growing sector within cigars, and accounts for 32.2% of the total.
The company has recently released a 20s format for Sterling Leaf Wrapped to stand alongside the original 10s pack, currently rolling out in selected wholesalers and soon to be across all channels nationally.
JTI has also entered the heated tobacco sector with the UK launch of Ploom S.
Initially, the heating devices (RSP £89) are being sold online via www.ploom.co.uk and through 60 selected retailers in London plus – when they are able to re-open – two branded lounges in the capital and a number of pop-up shops.
The tobacco sticks – sold under the EVO brand name – are available in four different flavours with an RSP of £4.50 per pack, and are only currently available within the M25 region.
But Ross Hennessy, Sales Vice President at JTI UK, is confident that soon retailers everywhere will be able to participate in the growing market for heated tobacco.
“Ploom S is a sleek, unique and innovative heated tobacco device which offers existing adult smokers an alternative but familiar tobacco experience by heating tobacco instead of burning it,” he explains. “It is predicted that by 2025 there will be nearly one million heated tobacco users nationwide, and that traditional retail will contribute to two thirds (67%) of this volume.”Key advice for retailers
