Imperial Tobacco Limited is the UK’s largest tobacco manufacturer, with a product portfolio including Lambert & Butler, JPS, Players and Golden Virginia.
Despite numerous legislative challenges in recent years, the tobacco market remains resilient, worth £2.5bn, with factory made cigarettes continuing to make up the majority of the market.
David Robins, Head of Marketing at Imperial Tobacco, tells Grocery Trader about the launch of Embassy Signature, a new range of factory made cigarettes offering premium features but without the premium price.
Why are you launching Embassy Signature at this time – what is unique about this brand?
The tobacco market remains heavily price driven and many consumers continue to seek out products that offer the lowest out of pocket spend. While value is driving the purchasing agenda for adult smokers, many don’t wish to compromise on quality. Through our new Embassy Signature range, we have addressed this by creating a superior modern tobacco blend that uses our finest materials to give the best smoking experiences for consumers looking for exceptional quality but at a decent price point.
Within the new range, what variants are available and at what price points?
The Embassy Signature range comprises Gold and Silver variants, both of which are available to buy with an MRRP of just £9.50 per pack of 20s. Embassy Signature Gold is also available in packs of 100 at an MRRP of £47.50.
The Embassy Signature range features a modern blend using the finest Virginia tobaccos that live up to the high-quality standard consumers have come to expect from the brand, wrapped in premium paper to give smokers a satisfying experience. Embassy Signature Silver also benefits from the addition of special Reduced Smoke Smell (RSS) paper, designed to reduce the linger of smoke smell on clothes or fingers. The Embassy Signature outer promotes the brand’s new modern design with an eye-catching design that will grab the attention of retailers.
Do you have a sales target for how Embassy Signature should be performing one year from now?
We aren’t able to disclose specific figures but we have high expectations for sales of Embassy Signature over the coming year as a high quality proposition that taps into the rising demand for value.
What is the value of the UK tobacco market?
The UK Tobacco market is worth (after tax) £2.5bni. Factory Made Cigarettes (FMC) still account for the majority of tobacco sales with a 55% share of the market and are experiencing volume growth of 4% YOYii. As in the wider category, interest in value for money remains a leading trend, with many consumers seeking products that offer the lowest out of pocket spend.
What trends are driving the market?
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, as more shoppers move to a nicotine portfolio approach. In fact, figures show a quarter of consumers are now dual smokersiii. Retailers must be well-equipped with a strong product range across all categories in order to cater for this trend and keep one eye on their sales so they can adapt their range to meet the needs of their customers.
How has the tobacco market performed since the introduction of the menthol ban?
It’s still really too early to say what impact the menthol ban has had on tobacco sales. 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 products from different segments so it’s important to stock a broad range of products across all the segments to ensure they have ample choice available.
Has Covid-19 had an effect on the market?
Customer service has a particularly crucial role to play at present, given the in-store restrictions in place as part of the Covid-19 pandemic. Many consumers may be inclined not to ask questions at the till point to avoid queues building up behind them, which can be intimidating. With this in mind, retailers need to be prepared to proactively offer them advice at the till point and help shoppers feel at ease by providing knowledgeable answers to their questions that really showcase their understanding of the category.
What advice do you have for retailers on merchandising tobacco in store?
Every store and its customer base are completely unique so there’s no one-size-fits-all approach to follow. It’s important for retailers to consider various factors when deciding their range to ensure it meets the needs of their customers. This includes everything from the gantry and countertop space available, to what products are proving popular with customers (based on EPOS data where possible), alongside the latest market trends.
Ultimately, we’d recommend stocking as broad a range as space allows and then fine tuning this in the weeks and months that follow according to customer feedback and sales. The retailers who can remain agile, will be in the best position to cater for their customers and grow their nicotine sales as a result.
Retailers can also do simple things to drive sales such as using small countertop unit for tobacco-related accessories, especially if it is well organised and fully stocked. Making sure it is positioned in a well-lit part of the counter will also help increase stand out even further.
How do you work with retailers to improve sales?
Independent retailers are a hugely important route to market for us, representing a significant proportion of our sales. As such, we continuously invest in supporting retailers so that they can make the most out of our products with sales and trends advice, promotions, store visits and in-store furniture.
As well as supporting retailers through our team of sales representatives, our Ignite app is another great resource and allows retailers to keep up to date with the latest news, information and training opportunities to help them perform at maximum efficiency. It includes a wide range of tools and advice, including incentive articles, downloadable POS, product information and top tips on how to increase sales in store.
How has the Embassy brand been performing? What share of the total FMC market does the sub economy sector have?
The Embassy brand has enjoyed continuous growth over the last 12 monthsiv and with the sub economy sector worth almost 60% of the total FMC marketv, we’re confident the launch of our new Signature range will drive further sales momentum in the months to come.