The UK tobacco market is worth (after tax) £2.5bn, Imperial Tobacco estimates. Factory Made Cigarettes (FMC) still equate for the majority of tobacco sales with a 53.5% share of the market and are experiencing volume growth of 2.5% YOY.

The tobacco market remains heavily price driven and this has led to an uplift in consumers switching to Roll Your Own (RYO), as well as value 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,” says Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu. “In fact, figures show a quarter of consumers are now dual smokers. With this in mind, 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.”

As a result of this continuing shift into RYO, the segment has expanded its market share and now accounts for 46% of tobacco sales, with recent data showing volume sales continue to grow by around 30% as consumers seek out greater value for money, Imperial Tobacco estimates.

In line with this growing demand for value, sales in the economy RYO segment are also rising. Since its launch in November 2019, Lambert & Butler RYO has been growing its share and, in December 2020, it accounted for 4.9% of all sales within the Economy RYO segment.

“This increasing consumer shift towards RYO products also presents new sales opportunities for tobacco-related accessories,” adds Cunningham. “In order to tap into this trend and take advantage of the incremental sales on offer, retailers should make sure they’re fully stocked at all times of filters, papers, lighters and other flavour-related innovations like Rizla Flavour Cards and Rizla Polar Blast Crushball filters, to cater for the rising number of consumers buying into the RYO segment.”

In 2019, Imperial launched the Rizla Flavour Infusions range. Rizla Flavour Infusions comprise flavour cards that can be used with traditional factory made cigarettes or roll your own tobacco products. Simply insert a flavour card into a packet of cigarettes or roll your own tobacco and wait at least 60 minutes, or leave it in longer for a stronger, more intense flavour. Latest figures show they are flying off the shelves and currently selling around 900,000 packs per week as consumers look to recreate the menthol experience.

While we’re seeing a growing trend towards RYO, Factory Made Cigarettes (FMC) still account for the majority of tobacco sales with a 53.5% share of the market and are experiencing volume growth of 2.5% YOY, Imperial Tobacco estimates. 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.

Imperial actively monitors the emerging market trends in the tobacco category and adapts its product offering to ensure it is well positioned to help retailers tap into the latest sales opportunities. In recent years, this has included the repositioning of some of its leading brands into the sub-economy sector, such as L&B Blue and Embassy, which both now offer premium quality and at an affordable price. Imperial also launched a raft of new innovations in the wake of the menthol ban to help retailers provide suitable solutions for ex-menthol shoppers, including Green Filter and JPS Bright.

“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,” Cunningham suggests. “Many consumers won’t wish to handle products, such as lighters, flavour cards or other accessories, in order to look at them before they buy and may also 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.”

Imperial Tobacco has announced a range extension for Embassy Signature with the launch of its new Gold Superkings variant to help retailers cater for shoppers looking for premium products at a great price.

Embassy Signature Gold Superkings is a straight swap for Embassy No.1 Red Superkings to help differentiate the new Embassy Signature range from the existing Embassy premium offering, which includes Embassy Filter.

The latest addition to the range, which is available to buy now at an MRRP of £9.50 per pack of 20s, will help to increase the availability of the Embassy Signature range and appeal to superkings down-traders and switchers looking for premium features at a value price point.

As with the rest of the range, Embassy Signature Gold Superkings variant 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.

Ross Hennessy, Sales Vice President at JTI UK, comments: “With everything that has happened this year, the tobacco market still continues to be one of the biggest and most resilient FMCG categories in the UK and a category that drives footfall and revenue for stores nationwide.”

With 8.1 million kilograms of rolling tobacco sold in the UK each year (IRI), this category offers a significant opportunity to maximise sales.

Price remains a key factor for existing adult smokers. To remain competitive, retailers should stock up on Value RYO products, such as JTI’s Sterling Rolling Tobacco, which is currently the UK’s fastest growing tobacco brand (IRI).

JTI’s Sterling 3-in-1 Rolling Tobacco, which recently transitioned from a box to a pouch, offers existing adult smokers the fuss-free and convenient format they want, at the same value price as before.

With a current market share of 36.1%, cigarillos are the fastest growing cigar sector and now worth circa £6 million a month (IRI). To capitalise on this growth, retailers should stock up on products such as Sterling Dual Capsule Leaf Wrapped, which is the No.1 cigarillo brand, with a 92.6% share of the UK cigarillo market (IRI).

JTI recently announced the launch of Sterling Dual Capsule Leaf Wrapped in a brand-new 20s format. Following the same stick configuration as the successful king size cigarillo 10s, the new format has a mentholated Virginia blend tobacco and capsule filter that when crushed releases a peppermint flavour.

Sterling Dual Capsule Leaf Wrapped offers a good value and high-quality product, with an affordable RRP of £9.10 for a pack of 20 cigarillos.

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.

At the end of 2020, JTI launched Ploom S, a sleek, unique and innovative heated tobacco product which offers existing adult smokers an alternative but familiar experience by heating tobacco instead of burning it. The device can be used exclusively with EVO tobacco sticks which are now available for retailers within the M25. The EVO tobacco sticks are available in four different flavours with an RRP of £4.50.

Kate O’Dowd, Head of Commercial Planning UK & Ireland, Philip Morris Limited, comments: “Over the past 12 months, we have seen demand for heated tobacco increase significantly. Following the menthol cigarette ban in May last year, a third of the 1.3 million smokers who chose menthol cigarettes were looking to make a switch to either a heated tobacco or e-cigarette product. We moved quickly, scaling our community of retailers and the support we offered, to help them meet demand and offer adult smokers a better choice than continued smoking.”

In the months that followed the retail value share of IQOS and HEETS heated tobacco sticks grew.

IQOS is now the number one smoke-free product in the UK.

“No single smoke-free product will ever be able appeal to all adult smokers,” adds O’Dowd. “It is important then, that retailers provide a wide range of alternatives for smokers who can’t or won’t quit. This is the best way to ensure that consumers’ differing preferences such as taste and sensory experience, are met.”

Gavin Anderson, Head of Sales at Republic Technologies (UK) Ltd, comments: “Driven by category-boosting NPD and consumers spending more time at home, with less day-to-day restrictions on tobacco use, the UK’s tobacco accessories market continues to deliver a really strong performance.”

Sales in the convenience channel are now worth over £230 million (making up more than three quarters of the tracked total tobacco accessories market), up 3.1% year-on-year (IRI).

Filters continue to be the category’s strongest performer, with sales rising 10% year-on-year, now worth more than £75 million and growing three times faster than the total accessories market (IRI).

Meanwhile, environmental considerations continue to influence shoppers, with increasing demand for more natural products, reduced packaging and removal of single-use plastics, resulting in Republic Technologies increasing its focus on environmentally friendly NPD.

This has led to a surge in demand for category-boosting products such as OCB Virgin Slim and OCB Virgin Slim & Tips, which are unbleached papers, with OCB natural gum which is sustainably sourced from African Acacia trees. Both are available in a slim vertical shelf ready box, enabling retailers to manage display space more efficiently.

“We’ve also seen increased interest in Premium Paper & Tips formats, such as OCB Virgin Slim & Tips, OCB Premium Slim & Tips and OCB Organic Hemp Slim & Tips, with the sub-category now worth nearly £14m and growing at 80% year-on-year. Demand for OCB products is such that it is currently the fastest-growing paper brand in the market,” adds Anderson.

Republic Technologies is maintaining its NPD focus this year, starting with the launch of its Flavour Fusion Cards, a new sub-category for the company.

Flavour Fusion Cards enable consumers to create their own level of flavour in a packet of cigarettes or roll-your-own tobacco in just 30 minutes and come in two variants, Fresh Burst and Menthol (RRP: 39p per card). Each outer contains 25 individual cards.

“Following the change in legislation last May, we have seen a significant number of consumers looking for flavour alternatives to menthol cigarettes. The iconic Swan brand is a beacon within the tobacco accessories category and is synonymous with quality and value. Our Swan Fresh Burst Crushball filter is already the best performing menthol capsule filter in the market, less than one year after launch, and we’re confident that this latest product innovation will enable retailers to drive sales within their tobacco accessories fixture,” says Anderson.

Republic Technologies is supporting its Swan Filters and OCB Slim & Tips ranges with space-efficient counter display units (CDUs).

The Swan CDU holds five packs of each Swan menthol variant and enables retailers to showcase the breadth and choice in menthol from the UK’s No.1 filter brand (IRI), featuring Menthol Extra Slim, Cool Menthol Extra Slim, Cool Burst Crushball and Fresh Burst Crushball.

In addition, Republic Technologies is rolling out an OCB counter display unit, supporting the UK’s fastest growing paper brand (IRI) with a CDU which contains 10 booklets of each of the three OCB Slim & Tips products: OCB Virgin, OCB Premium and OCB Organic Hemp.

“The display units not only enable convenience retailers to showcase the very latest tobacco accessories NPD, creating awareness and driving impulse purchase, they also enable retailers to signpost the tobacco category,” concludes Anderson.

Alastair Williams, Country Director at Scandinavian Tobacco Group UK (STG UK), comments: “Trends in the cigar category don’t tend to change very much and throughout the pandemic tobacco sales have remained pretty resilient. Obviously for a while now we’ve seen a consistent growth in adult smokers being price conscious and looking for good quality value for money propositions, and with the current economic forecast not looking too rosy, I would only expect the value for money trend to accelerate, so cigar brands like Moments are likely to grow in importance. However, there is also one fairly recent trend worth highlighting which is the medium / large segment enjoying something of a renaissance at the moment, growing by over 11.6% in volume and nearly 16% in value versus the same time last year. This is being led by our Henri Wintermans Half Corona brand which is responsible for nearly three quarters of all sales in this segment.”

STG UK supplies Signature Blue, the UK’s best-selling cigar. But the portfolio also includes Moments Blue, a good quality value proposition and the fastest growing miniature cigar on the market; the Henri Wintermans Half Corona, the best-selling medium / large cigar; and Signature Action, a launch into the fast growing cigarillo sub-category.

The Signature filter cigarillo brand is transitioning to be called Signature Action to maintain consistency within STG’s global brand portfolio.

The bulk of cigar sales do go through the multiple grocer channel, but this dipped slightly when the pandemic first hit last year and seemed to be picked up by independents, symbols and CTNs. However, STG’s latest thirteen-week data picture shows that the grocery multiples have increased their share back up to pre-COVID level at 64.5%.

“Obviously retailers have been working unbelievably hard and doing an incredible job in very difficult circumstances at the moment, and for that we are all very grateful,” adds Williams. “They have had to be agile and adapt quickly in response to fluctuating demand for products and challenging supply chain issues which is no mean feat. From an STG perspective, we consider ourselves as the ‘cigar category champions’ meaning we work closely in partnership with all our multiple grocer customers, from offering promotional support, to visiting head offices providing up to date advice on adult cigar consumers’ smoking habits or assessing inventory levels in order to maintain continuity of supply.”


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