Current trends indicate that adult smokers are increasingly shifting their purchasing habits between segments and expanding the range of nicotine products they buy to cater for different occasions.

This has led to a rise in the number of dual users buying both factory made cigarettes (FMC) and roll your own (RYO) products, as well as moving into vaping and new, emerging segments such as nicotine pouches.

“We expect the arrival of the menthol ban to accelerate this trend further, with smokers seeking out different nicotine solutions that suit their lifestyle,” says Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu. ”As a result, stocking a range of products from the different nicotine segments is of key importance for retailers. However, it’s even more crucial that retailers and their staff understand the products they are selling so they can offer informed advice to their customers and help them find the right product for their needs.”

Imperial Tobacco monitors the latest market trends and adjusts its portfolio to ensure it meets the needs of shoppers, while also providing tobacco stockists with the right products to grow their sales.

FMC remains the largest segment within the tobacco category, accounting for approximately 60% of total volume sales, Imperial Tobacco estimates. As part of the sustained shopper demand for value, sub-economy brands are proving particularly popular.

Over the last few years Imperial Tobacco has repositioned a number of its FMC products to help tobacco stockists cater for this down trading trend. This includes shifting L&B Blue into the sub-economy sector in 2018 and, more recently, repositioning Embassy from the premium price sector to the more popular economy sector, both with competitive price points that will appeal to adult smokers looking for premium quality, at an affordable price.

Demand for value for money is a dominant trend within the tobacco category. “As more consumers seek out the lowest out of pocket spend, we’re seeing an increasing shift away from FMC and into RYO,” adds Cunningham. “As a result, the segment continues to grow its share of the market as value seeking shoppers move into RYO or become dual users, smoking both FMC cigarettes and RYO products on different occasions.”

As value for money continues to be a focus for many adult smokers, the economy RYO segment continues to go from strength to strength and now accounts for 45% share of Fine Cut Tobacco sales, vs 38.3% last year (Report on Trade, August 2019), with further growth expected to come. Despite launching only a year ago as a new economy RYO brand, Riverstone has already become one of the fastest growing tobacco brands in the market (Imperial Tobacco estimates) as it taps into this trend with its high quality, easy-to-roll blend and affordable price.

“While offering great value for money is crucial, many consumers making the move into RYO are looking for reassurance on quality by buying products from well-known brands they can trust,” Cunningham suggests. “With its strong tobacco heritage and brand recognition, Lambert & Butler is well placed to respond to this trend with its new RYO variant.”

From 20th May this year, both cigarettes and Roll Your Own tobacco containing characterising flavours such as menthol will be banned from sale in the UK, leaving many existing adult smokers without their product of choice. While some adult smokers may simply switch to other traditional tobacco alternatives, many menthol consumers may also use this as an opportunity to explore new ways to stick with their flavour preference and move into vaping.

Menthol and crushball sales are collectively worth 26% of the total UK tobacco market (Imperial Tobacco estimates), which means they make up nearly 1 in 4 cigarette sales. Given its sizeable share of the tobacco market and store sales, this is an important change that retailers need to be prepared for to avoid missing out on sales.

“We believe conversations around the forthcoming menthol ban should start happening now,” Cunningham continues. “Experience tells us that consumer awareness of tobacco legislation tends to be relatively low until it hits the shelves and they can’t buy product they want, so encouraging retailers to talk to smokers ahead of the ban is important.”

Cunningham adds: “It’s also worth remembering that crushball filter tips, as a stand-alone smoking accessory product, remain unaffected by the menthol ban, so products such as our Rizla Polar Blast Crushball filter tips present another great option for these shoppers. By stocking the accessories in a highly visible location, at the till point or within an open gantry, retailers can attract the attention of shoppers and help highlight that tobacco products are available.”

As the industry prepares itself for the next raft of legislation to hit the tobacco category, Imperial Tobacco has announced the launch of Rizla Flavour Infusions, a new product from the world’s most popular rolling paper brand (Report on Trade, September 2019).

Rizla Flavour Infusions comprise flavour cards that can be used to mentholate traditional factory-made cigarettes or roll your own tobacco products. The Rizla Flavour Infusions range of flavour cards includes two different variants – Menthol Chill which provides a stronger, more intense flavour and Fresh Mint which is slightly smoother and more mellow – which are packed and wrapped separately, allowing retailers to sell them individually at an RRP of just 25p each.

“The value segment continues to grow as consumers seek out value for money products,” says Ross Hennessy, Head of Sales at JTI UK.

As a result, the RYO category has grown 5.5% year on year, now generating sales of £2.8 billion (IRI).

With 6.5 million kilograms of rolling tobacco sold in the UK each year (IRI), this category offers significant opportunity for retailers to maximise sales by stocking up on Value RYO products, such as JTI’s Sterling Hand Rolling Tobacco – which is now the UK’s fastest growing tobacco brand (IRI). Another key brand to stock is Amber Leaf, which is the No.1 tobacco brand in the UK with a 30.1% share of the RYO market (IRI).

“Price remains a key factor for existing adult smokers when choosing where to shop for tobacco, so retailers should look to remain competitive by selling at the RRP or below to help drive sales,” Hennessy suggests. If you are unsure of RRPs, please visit or speak to your JTI sales representative.

“To maximise the RYO opportunity, retailers should be knowledgeable in the category, making the most of JTI Advance training modules for advice on trends, merchandising and products,” Hennessy advises. “Maintaining full availability and stocking a wide range of products that cater towards the different needs of existing adult smokers will ensure repeat custom.”

“Nevertheless, there is still a significant demand for premium and mid-priced brands, therefore retailers need to ensure they stock a full range that reflect their customers’ needs, to avoid losing out on sales and to become or continue to be a destination of choice for existing adult smokers,” Hennessy believes.

In January JTI announced the launch of Sterling Dual Capsule Leaf Wrapped, a new cigarillo product.

The King Size Cigarillos contain a Virginia blend tobacco and, unlike conventional cigarettes, are wrapped in tobacco leaf.

Sterling Dual Capsule Leaf Wrapped has a mentholated capsule in the filter, which existing adult smokers can click to release a peppermint flavour. The cigarillos join the successful Sterling Dual family, which has a sector share of over 40% (IRI).

Sterling Dual Capsule Leaf Wrapped will also allow retailers to tap into the current value trend, with an RRP of £4.50 and 10 pack size.

Ross Hennessy says: “We are committed to providing retailers with as much choice as possible by launching innovative new products that respond to current trends.

“We expect that Sterling Dual Capsule Leaf Wrapped cigarillos will become a popular choice for adult smokers and appreciated by those looking for value-for-money tobacco options.”

Last September JTI announced the expansion of its popular American Spirit brand, with the launch of American Spirit Essential Blue rolling tobacco, which comes in a 30g format and a brand-new paper pouch pack, unique to the JTI portfolio.

The Roll Your Own category shows no signs of slowing down, growing 7.6% year on year and generating sales of £2.7 billion a year, making it a must-stock for retailers (IRI).

Ross Hennessy comments: “We’ve responded to the market by introducing a unique offering for loyal customers. American Spirit Essential Blue provides a great opportunity for retailers to profit from this category, especially with the unique paper pouch format which is completely new to the JTI portfolio and the market.”

American Spirit Essential Blue has an RRP of £14 and is available in independent and convenience stores across London and selected wholesalers across London, Brighton and Bristol. The new product will be supported with a regional launch campaign including wholesale point of sale materials (POSM) and a salesforce focus.

For more information, retailers should visit the refreshed site, or speak to their local JTI sales representative.

Kate O’Dowd, Head of Field Force UK and Ireland at Philip Morris Limited (PML), believes success for independent retailers after the menthol cigarette ban will be built upon their ability to offer a diverse range of alternative products, like heated tobacco, while guiding consumers to make the best choice for themselves.

“May 2020 is when 1.3 million menthol smokers will be asking retailers for menthol cigarettes, and retailers are going to have to think carefully about how they respond to that question,” says O’Dowd. “The best thing a smoker can do is to quit, but if they aren’t able to, then they will be looking to retailers for advice on an alternative product.”

PML’s analysis shows that 75% of menthol smokers will move away from cigarettes and look for a new alternative after the ban comes into force on 20th May. Menthol flavoured vapes and menthol heated tobacco are unaffected by the ban and will still be available for purchase.

“The more retailers are informed, the more smokers will be informed and then able to make the best choice for themselves,” O’Dowd believes. “Retailers still have time, if they act now.”

An individual menthol smoker spends on average £56 each week and so providing a range of alternative products, and having a good understanding of them will be crucial to hold onto their custom. As this will be new to a number of retailers, PML are here to help them through this process, a company statement said.

“We recommend retailers study the range of products from each of the different alternative nicotine categories so they can help customers make an informed choice, and then look to build up their stock,” O’Dowd continues.

To support this effort, PML’s field force is being deployed nationwide and a dedicated call centre will provide retailers with further assistance if needed. PML has also launched for retailers to register and receive the latest information on margin support and generating sales by selling IQOS – the only heated tobacco product available in the UK.

PML has also committed to a buy-back scheme that will allow retailers to return their unsold menthol cigarettes after the ban.

Retailers have a significant opportunity in heated tobacco which is exempt from the ban. Not a cigarette, nor a vape, IQOS uses technology to heat tobacco, producing a nicotine containing vapour with a real tobacco flavour. Once made aware of this option, more than half of all menthol smokers (51%) said they would consider heated tobacco after the ban.

By registering at retailers now have the opportunity to sell a special menthol heated tobacco kit directly to customers for the first time. The kit includes an IQOS device and two variants of mentholated heated tobacco sticks known as ‘HEETS’.

As a manufacturer, Philip Morris International has invested billions of pounds in developing heated tobacco products that are satisfying and less harmful alternatives for smokers who would otherwise continue to smoke. As a result, IQOS has grown in popularity since its launch in the UK 3 years ago, and 80% of smokers who try IQOS for 7 days switch completely from cigarettes. High levels of consumer demand for the quality, choice and value provided by roll your own accessories products is contributing to strong growth of the sector.

As the tobacco ban continues to impact on cigarette sales, accessories continue to outperform the total tobacco market, with better value for money than factory-made cigarettes remaining a key consideration for RYO smokers.

The RYO accessories market is currently worth more than £290m, up 5.4% year-on-year, outperforming total tobacco, with filters leading the charge, showing value growth of 8.4% year-on-year (IRI).

“As category specialists, we’re continuing to innovate with NPD and new merchandising solutions to help our retail partners meet the needs of the growing number of RYO smokers. This is helping to maintain the strong growth the category has seen in recent years,” says Gavin Anderson, General Sales Manager at Republic Technologies (UK) Ltd.

The company has also invested heavily recently to ensure it has a very clear understanding about RYO smokers and their requirements.

“Most of our customers have been smoking for some time and whilst value for money is a key consideration, particularly in times of economic uncertainty, many prefer the tactile aspect of roll your own which for some also provides the added benefit of reducing consumption as smoking becomes less instant,” adds Anderson.

“There is quite a bit of overlap with pre-made cigarettes and vaping, but with RYO smokers this is occasion or influence driven as most of our consumers prefer the RYO experience.

As environmental considerations are influencing smokers more than ever before, with demand for more natural products, reduced packaging and removal of single-use plastics at record levels, Republic Technologies is accelerating its environmentally friendly NPD, with the promise of more to come this year.

The company’s focus on more environmentally friendly NPD has led to the introduction of category-boosting products such as OCB Virgin Slim and Slim & Tips, both of which are available in a slim vertical box, enabling retailers to manage shelf space more efficiently.

“We’re really optimistic about the future of the RYO accessories market,” adds Anderson.

“The combination of rising cigarette prices and the higher margins offered by RYO products will continue to drive growth. Whilst the vaping sector continues to expand, it’s not inhibiting the sustained rise in demand for RYO accessories and with menthol cigarettes being discontinued from May 2020, accessories may well provide the solutions and options which consumers will be seeking.”

Tobacco accessories specialist Republic Technologies (UK) Ltd is launching its biggest ever NPD programme with the introduction of six new filters from the market-leading Swan brand to the UK’s £292 million category (IRI).

The major new product rollout comprises a carbon paper filter for enhanced filtration, a Swan Long Extra Slim Filter (50% longer than standard), the most environmentally friendly filter in the UK market and three menthol products, including two crushball filters.

“As increasing numbers of smokers are turning to roll your own, we’re developing a wider range of products for improved customer choice, enabling retailers to capitalise on the strong performance of the accessories category and to take advantage of the margin opportunities offered by Swan, the UK’s best-selling filter brand,” says Gavin Anderson, General Sales Manager, Republic Technologies (UK) Ltd.

Suggested RRPs for the new products range from £1.03 for the Swan Long Extra Slim Filters (80 per box) to £1.39 for the Swan Eco Loose filters (200 per box).

“We’re confident that the introduction of six new filters from the iconic Swan brand will contribute to the sustained value growth of the tobacco accessories category in the future,” concludes Anderson.

Alastair Williams, Country Director at Scandinavian Tobacco Group UK (STG UK), comments: “The UK Cigar market is well established and may not be as dynamic or fast moving as something like Vaping, but it is still worth just under £200m in annual sales, and the products within it typically offer three times better profit margins than cigarettes, so it’s absolutely one that is worth getting right. Scandinavian Tobacco Group is by far the biggest player with over 53% of all cigars sold in the UK.”

The key trends in the cigar category have remained pretty consistent over the last few years, according to Williams. First, there is the continued rise in Miniature cigars which now account for just over 74% of total sales.

“This is up 5% on last year, and features Signature, the jewel in our crown, which is the number one cigar brand and easily the best-selling miniature,” continues Williams. “Secondly, we have seen for a while now a consistent growth in adult smokers looking for good quality value for money propositions like Moments, which is the fastest growing cigar in the UK.”

Formerly known as Café Crème, and with a brand heritage going all the way back to 1963, the Signature range accounts for just over 36% of all cigars sold in the UK, making it by far the number one selling brand and a must stock for any tobacco retailer. The name may have recently changed but the product inside most certainly hasn’t, and Signature Blue is the UK’s favourite cigar, well renowned for its smooth taste. It’s complemented in the brand family by Signature Original and Signature Red, the UK’s number 1 aromatic cigar.

In February, STG launched new Signature Dual cigarillos in a pack of 10, with an RRP of £4.95.

The key product feature of Signature Dual is that it has an acetate filter containing a peppermint capsule under a lasered marker to give a smooth smoking experience. In addition to the capsule, it’s made with Virginia leaf tobacco and has a natural leaf wrapper.

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