Republic Technologies (UK) Ltd (RTUK) has been a leading light in the UK tobacco accessories market over the years, with a commitment to NPD and a focus on merchandising. As the factorymade cigarette market faces increased pressure, roll-your-own cigarettes are seeing a new lease of life. RTUK believes there is still plenty more potential for further growth and it is crucial that suppliers maximise this opportunity by working with retail partners to understand shoppers’ needs and drive sales of tobacco accessories in-store.
Gavin Anderson, General Sales Manager at Republic Technologies, has had a varied career with plenty of experience of high-pressure jobs, as he says at the start of our interview: “I began my working life as a chef and moved out of a hot kitchen into a fastpaced sales environment, working with a couple of large wholesalers in a variety of sales roles. My previous positions included a mixture of account management and sales management before joining Republic Technologies UK in 2002.”
Gavin believes in putting in the hours visiting retailers with his team: “Building sustainable partnerships requires an investment of time from both sides, so getting out and seeing retailers is important. I review customer data daily and am enthusiastic to know what’s going on, what the challenges are and how best to direct resources.”
Gavin has implemented a channel structure linking customers with Republic Technologies’ sales specialists, who use their knowledge, skill and experience to drive mutual profitable growth through merchandising, range development and sales analysis. He follows retail, wholesale and cash and carry activity throughout the day, and stays in touch with the team via Republic’s interactive software. Staying connected with customers’ commercial teams and business owners is very important.
“You’d struggle to find a UK retailer that doesn’t stock at least one of our products, be it matches, lighters, filters or cigarette papers… we work with everyone, some directly and others indirectly but it’s our products on the shelves nonetheless.”
RTUK’s channel structure touches all levels of retail including convenience, high street and supermarkets: “Our experience and knowledge of the UK market is sizeable. Our sales teams work with some of the largest retail, wholesale and distribution groups, developing their businesses through best practice category management.”
As the tobacco ban continues to impact on cigarette sales, says Gavin, retailers in England and Wales are increasingly using tobacco accessories to signpost the wider category in-store and, with RTUK’S help, are meeting the needs of today’s more discerning tobacco accessories consumers.
“Our product range provides a one stop shop for retailers and includes household brand names such as Swan, which has a dominant* share (value) of the filters market and is complemented by other fast-growing filters and papers brands such as category-boosting ZIGZAG and OCB. Together they provide the choice, quality and value that today’s discerning rolling tobacco smokers are seeking, at an affordable price.”
The company is also a major force in the UK’s £20+ million** matches market and has rejuvenated the matches category with a major upgrade of its matches range. Key elements included NPD for the iconic Swan brand and new packaging for Cook’s, Bryant & May Extra Long and Ship matches, reflecting the growing appeal of sustainability and increased demand for eco-friendly matches. The lighters sector is also performing well and is in double digit growth, up 11%* on the previous year, with Republic Technologies accounting for more than 35%* of the £83 million market*.
Based on market research, Gavin and the Republic Technologies team have a very clear view about the users of their products and the demographics: “Most of our customers are people who’ve been smoking for some time and have opted for roll-your-own (RYO) for various reasons. The core age range is 25 to 34, but RYO smokers span a much broader age range and we know music plays an important part in the lives of our core consumers, with many also enjoying a traditional night out at the pub.”
Better value for money versus factorymade cigarettes remains a key consideration for RYO smokers, says Gavin, while many like the ritual and tactile aspect of rolling, which also has the added benefit of reducing consumption as smoking becomes less instant. Of those who prefer RYO cigarettes, Gavin points out, 38% also smoke pre-made cigarettes and 39% also vape, according to Consumer Research in 2019***:
“There is quite a bit of overlap with pre-made cigarettes and vaping, but with RYO smokers this is occasion or convenience driven as most of our consumers prefer the RYO experience.”
Environmental considerations are impacting on the tobacco accessories market, says Gavin, as demand for more natural products, reduced packaging and concerns over single-use plastics increases:
“In recent years we’ve focused heavily on environmentally friendly NPD which exceeds customer needs and expectations, to maintain growth in tobacco accessories.”
The company’s environmentally led NPD includes OCB Virgin Slim and Slim & Tips and Swan Ultra Slim, the thinnest ever Swan filter, a premium quality product aimed at discerning smokers. Featuring an unbleached paper with a natural brown colour, OCB Virgin Paper is a top-quality rolling paper, offering a silky touch, lightweight feel, and premium quality, providing consumers with the best possible rolling experience. Each leaf is gummed with OCB natural acacia gum sustainably sourced from African acacia trees, which is 100% natural and vegetarian.
“We have a close working relationship with all our multiple retail customers, including those who operate convenience stores. Our ongoing dialogue includes sharing insights into the latest market trends, and changes in consumer preferences and purchasing habits, and these play a part in retailers’ decisionmaking. Our channel specialists can focus on specific requirements for each retailer. We have seen instances where some retailers do not place enough importance on the opportunities and profit this category brings to the business. When we have the opportunity to highlight the extra profit potential, we usually convert the retailers’ focus.”
In England and Wales, tobacco accessories are not subject to the display ban.
“In convenience outlets we encourage retailers to maximise sales by implementing easy-to-follow display tips. For example, we advise them to stock a broad product range including core range filters, papers, matches and lighters, as well as the latest product innovations.”
RTUK’S consumer activity programme for 2019 focuses on driving awareness of OCB Virgin across the country, ensuring retailers are aware of the surge in consumer demand for environmentally friendly RYO accessories.
In addition, Republic has renewed its Cook’s Matches partnership with Tom Kerridge for another 12 months, including recipe usage on-pack and social media activity.
As referenced earlier, almost 60% of RYO smokers are heavily into music, and this has been a key focus for Republic Technologies in recent years, with ZIG-ZAG’s partnership with the Academy Music Group continuing this year, including sponsorship of the smoking areas at AMG/O2 venues and extensive social and digital activity.
“We are very optimistic about the future of the category for many reasons,” says Gavin. The combination of increasingly high cigarette prices and RYO accessories offering higher margins, will continue to drive category growth, with both NPD and effective instore merchandising playing a key role.
As demand for more sustainable options grows, we expect to see more NPD within this space. The removal of 10-packs of cigarettes following the introduction of EUTPD II means consumers are now driven to purchase a larger pack size, so RYO products offer more choice and better value.
“Whilst the vaping sector continues to expand, thus far it is not inhibiting the sustained growth of RYO accessories by any means. We expect the category to enjoy continued growth as adult smokers seek more economical options. The price of cigarettes is expected to continue to rise and with menthol cigarettes being discontinued from May 2020, RYO and tobacco accessories may well provide a solution for consumers.”