Within the tobacco market, which is currently worth £14bn (before tax) per year, there is almost a 50/50 market share split across Factory Made Cigarettes (FMC) and Roll Your Own (RYO) categories – at 53% and 47% respectively (Imperial Tobacco research).

Overall, we’re seeing continued movement towards low priced propositions across the entire category as consumer demand for value continues to drive tobacco purchasing patterns.

As part of this shift, the lower price tiers now account for the majority of sales, with the sub-economy segment making up 63% share of FMC, and the economy segment accounting for 51% of RYO, with both value segments growing at 4% YOY (Imperial Tobacco).

“This transition towards lower priced tobacco offerings is a key trend that retailers should be prepared to cater for given the value of tobacco shoppers in terms of the wider sales they generate in store,” comments Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu.

Tobacco shoppers have an average basket spend worth £19.60 vs. non-tobacco at £11.40, and they also visit more frequently, averaging 2.9 visits a week in comparison to 2.5 for other shoppers (Lumina). In order to effectively harness the sales opportunities this presents, retailers must be equipped with the right products and importantly, the right knowledge, to help their customers navigate the tobacco category. Looking at the RYO category in particular, the consumer drive for value remains a big factor, with the economy segment accounting for 51% of sales, and mid-price and premium products comprising 35% and 14% share respectively (Imperial Tobacco).

JPS Players Easy Rolling Tobacco is a new blend of fine cut tobacco that offers an easier rolling experience and benefits from the brand recognition of one of the UK’s best-selling cigarette brands (Imperial Tobacco).

JPS Players Easy Rolling Tobacco features a more vibrant colour and lower levels of moisture, making the blend easier to handle and to roll. The range is available to buy in 30g and 50g and priced at £12.95 and £21.20, and each pouch includes a set of quality rolling papers.

The Riverstone range was recently repositioned to sit within the rising economy RYO segment alongside JPS Players, with its 30g and 50g pouches also priced at £12.95 and £21.20 and including both papers and filters for the ultimate in convenience.

“As more value-conscious consumers shift towards RYO products, this 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.”

Rizla Flavour Infusions comprise flavour cards that can be used with traditional factory made cigarettes or roll your own tobacco products. Consumers 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 currently selling around 450,000 packs per week (Imperial Tobacco) as consumers look to recreate the menthol experience.

Another area of the accessories market that’s proving popular with these value focused shoppers is combi packs such as Rizla Silver Kingsize Combi which, priced at £1.20 offers papers and tips together in one pack.

From an FMC perspective, as demand for value tobacco continues to grow, many consumers are looking for a familiar brand that they know will deliver satisfaction at a low price. With this in mind, Imperial Tobacco recently unveiled a new look for Richmond. As part of the revamp, Richmond now features a bold new look with prominent outer branding to deliver a coherent design across the range. The entire Richmond portfolio is positioned within the new value tier and is available to buy in packs of 20 at an MRRP of £9.75 per pack.

“Ensuring they maintain stock levels at all times is essential within tobacco,” says Cunningham. “Running out of a product is a costly error within a category that is driven by brand loyalty. Therefore, ensuring both the store owner and their staff know to keep an eye on stock, both on store shelves and in the stock room, is really key to avoiding this.”

Imperial’s Ignite app 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.

“Retailers are a hugely important route to market for us, representing a significant proportion of our sales,” continues Cunningham. “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.”

Ross Hennessy, Sales Vice President at JTI UK, comments: “Price remains a key factor for existing adult smokers. Retailers should therefore stock up on Value RYO products, such as Sterling, the No.1 Value RYO brand, and value RMC brands, like B&H Blue, the UK’s fastest growing cigarette brand over the last 12 months.”

Available at an RRP of £13.65, Sterling Rolling Tobacco Essential 30g offers the lowest price point in the Sterling Rolling family as a less for less alternative, creating a great value tobacco option for customers which stays true to the brand’s reputable quality.

With no filters and papers, it provides existing adult smokers with the freedom to purchase their preferred tobacco accessories. It also comes in a paper insert pouch packaging which contains less aluminium, whilst the blend generates less leaf waste compared to other RYO brands due to its unique whole leaf blend.

] Building on the success of the 30g, JTI announced the new 50g format at the end of last year, which offers the same RYO quality at a competitive RRP of £22.25.

Sterling 3-in-1 Rolling Tobacco offers existing adult smokers the fuss-free and convenient format they want, with tobacco, papers and filters in one handy pouch.

“Retailers should look to stock up on Sterling 3-in-1 to provide an option for customers looking for great value and extra convenience,” adds Hennessy. “To capitalise on the growth of the cigarillo market, which is the fastest growing cigar sector, retailers should stock up on products such as Sterling Dual Capsule Leaf Wrapped, which is the No.1 cigarillo brand, with a 92.7% share of the UK cigarillo market.”

Sterling Dual Capsule Leaf Wrapped includes a mentholated Virginia blend tobacco and capsule filter that when crushed releases a peppermint flavour. It offers a good value and high-quality product, with an affordable RRP of of £4.95 for a pack of 10 and £9.70 for a pack of 20 cigarillos.

A growing number of existing adult smokers are looking for an alternative but familiar tobacco experiences in the form of heated tobacco products.

The heated tobacco category is now worth nearly £2 million a week in traditional retail, (IRI) whilst supermarkets in the UK have sold over 8.6 million units of heated tobacco products in the last year, growth of 84.7% YoY (IRI).

Illicit tobacco continues to be a serious issue for law enforcement, retailers, suppliers and communities across the UK. HMRC estimates that the total cost of tobacco smuggling, in terms of lost tax revenue, is close to £49bn since 2000. This includes £2.3bn in 2019/20, with 9% of cigarettes and 34% of roll your own (RYO) in the country coming from illegal sources.

“While cheap illegal tobacco products may appear a bargain to some smokers, it is underpinned by criminal organisations and this illicit trade undercuts local businesses, as law-abiding local retailers lose sales and footfall in their stores,” says Ian Howell, Fiscal & Regulatory Affairs Manager at JTI UK.

Kantar research shows the problem is particularly concentrated in Greater London, where 46% of smokers purchased illegal tobacco in November 2021, for example. Areas such as Wales, the West Midlands and the North, at 37%, were also above the average level across the country.

“At JTI, we don’t take this issue lightly, and we’re committed to supporting retailers and providing them with the tools they need to become more knowledgeable when communicating the dangers of the illicit tobacco trade to their customers,” adds Howell.

The Don’t Be Complicit in Illicit campaign and dedicated microsite – www.jtiadvance.co.uk/DontBeComplicit – which features a host of useful articles and advice, helps retailers join the fight against illicit tobacco in their area by providing them with more information on the scale of the issue.

JTI assists law enforcement to stamp out illicit trade through a variety of no-nonsense measures. The firm regularly conducts test purchasing to identify retailers selling illegal tobacco and since the start of 2020 has gathered evidence on over 160 of them.

With the support of our service providers in 2021 JTI issued its 20,000th takedown notice against online sellers offering counterfeit JTI products and also completed its 20th private prosecution.

The increasing shift to roll your own (RYO) amongst smokers is continuing to provide major profit opportunities for retailers.

The UK tobacco accessories category is currently worth £320 million and continues to show YoY growth, currently at +4.8% (IRI), highlighting the importance for retailers to tap into these sales.

Gavin Anderson, Sales & Marketing Director at Republic Technologies (UK) Ltd, says: “Cash conscious shoppers are turning to more affordable RYO products as a way of saving money, versus factory made cigarettes.

“The pandemic and subsequent lockdowns brought more shoppers than ever to local convenience stores, as people chose to stay local and minimise supermarket visits. This gave retailers an even bigger opportunity to drive visibility of margin-boosting tobacco accessories products.

“By ensuring they are fully stocked with a range of tobacco accessories from trusted brands, retailers can cater for every customer and drive sales across the category. As category specialists, we’re continuing to innovate. Not just with NPD, but with a renewed focus on merchandising solutions, enabling retailers to highlight NPD and increase visibility of best-selling products.”

Countertop display units are a great way to signpost the category and drive visibility for bestselling products or highlight NPD. Republic Technologies launched an OCB counter display unit last year which contains 10 booklets of each of the three OCB Slim & Tips products: OCB Virgin, OCB Premium and OCB Organic Hemp.

To drive RYO sales, Anderson suggests retailers focus on the type of products that meet customers’ specific needs and stock the brands and formats that they’re seeking in these areas. As consumers demand more choice and variety, effective new product development is more important than ever.

Swan is the brand of choice for many RYO shoppers and Crushball filters have built up a strong and loyal consumer following since legislation changed in 2020.

Swan Cool Burst Crushball (RRP: £1.29), packaged in a 2-part sliding pack containing 54 filters, delivers a cool menthol flavour sensation.

Swan Fresh Burst Crushball (RRP: £1.29) delivers a strong peppermint flavour and is currently the best performing menthol capsule in supermarkets, high street and convenience supermarkets (IRI).

Alastair Williams, Country Director at Scandinavian Tobacco Group UK (STG UK), comments: “There’s not too many established categories in the grocery sector that can say their retail sales value has increased by 20.3% over the last year, but that is certainly the case with cigars, and it now stands at just over £285m.”

Cigar volume in the same period has also increased significantly, growing by 24.3% to 426.6 million cigars (IRI), underlining the growing importance of the category to retailers.

This stellar performance is largely driven by the fast-growing cigarillo segment, which already accounts for 43.7% of all cigars sold in volume terms, and totals £89m in annual sales (IRI).

However, the total category growth has also been supplemented by the continual rise in the medium / large segment, albeit from a smaller base.

Miniatures are still the largest segment within cigars, currently worth just over £104m in annual sales and led by STG’s Signature Blue brand (IRI), while the small cigar segment appears to be continuing a slow but consistent decline.

“I think it’s always important for retailers to offer a range of cigars with different price points to meet the different needs of their customers,” adds Williams. “Typically, as Spring approaches, bringing with it more outdoor smoking opportunities, some adult smokers will treat themselves and ‘trade up’, but of course this doesn’t mean that retailers need to start stocking larger more expensive hand-made cigars! It may be as simple as a Miniature cigar smoker opting to jump to a Panatella for example.”

The search for value has also been a consistent trend in cigars for a while now, evidenced by the success of STG’s Moments Blue brand, which offers a quality smoke at a low price.

“It is now the sixth best-selling traditional cigar brand in the UK in value terms, and interestingly most of its’ sales go through the multiple grocery channel,” says Williams. “And with the continued impact of the pandemic on the economy for the foreseeable future, I would only imagine this move towards value will increase.”

STG has Signature Blue which is the UK’s best-selling traditional cigar. Moments Blue is a good quality value proposition and the fastest growing miniature cigar on the market, while the Henri Wintermans Half Corona is the best-selling medium / large cigar. Signature Action is growing steadily in popularity and is the cheapest cigarillo in the UK at £3.99 for a pack of ten.

“There’s no escaping the dramatic rise in cigarillo sales of late, but let’s not forget it is miniatures which are still very much the engine room of the category so ignore the top brands like Signature at your peril! In terms of merchandising and ranging, it’s more important to stock the right range rather than a broad range as the top ten cigar brands account for over 90% of sales,” Williams continues. “And as cigars are exempt from the plain packaging legislation, we recommend retailers stock them on the middle shelf of the gantry where they are visible, and more likely to be purchased by adult smokers who can see them.”

STG works closely in partnership with all its 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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