The UK tobacco category is estimated to be worth more than £22bn each year (Statista). Accounting for the biggest share of all tobacco sales (70%, ITUK), the cigarette category holds a huge amount of value for retailers.
With more consumers looking for ways to reduce spending amid soaring household costs, there is a shift towards lower priced propositions across the entire tobacco category.
“Stocking value tobacco ranges, such as Regal Signature and our new Paramount range, should be a key area of focus for retailers looking to tap into this trend,” comments Andrew Malm, UK Market Manager for Imperial Brands.
“Paramount is a new cigarette brand aimed at adult smokers who are seeking excellent value without compromising on quality.”
Paramount uses top-quality, full-flavour Virginia sun-ripened tobacco, meeting the needs of the majority of cigarette smokers in the UK, where more than 90% of cigarettes sold are Virginia blends (ITUK) and 83% are full-flavour tobacco (ITUK).
Its UK introduction further reflects the demand for value options, with the value sector having grown by 5% in the last 12 months alone (ITUK).
With an RRP of £12.50, Paramount is available in both king-size and super king-size formats, again reflecting the broad demand for both sizes among UK smokers.
Paramount has already successfully launched in Germany, where it is currently the fastest-growing product since hitting the shelves (NielsenIQ), and a number of other European markets.
Meanwhile, the search for value is very much a long-term trend, and smokers are shopping around to find a product they enjoy smoking without hitting them too hard in the pocket. With products in the lowest pricing tiers (economy and value) now worth 72% of all FMC sales (ITUK), it’s clear that sales in the category are very much driven by demand for value.
This trend has seen several new product introductions aimed at capturing the attention and loyalty of this customer segment.
Since its launch in late 2023, Imperial’s Players Max range has rapidly developed a loyal customer base. Featuring cigarette sticks which are 12% longer in size, Players Max contains an intense blend, a preferred choice in consumer testing thanks to its fuller tobacco taste.
Players Max also boasts a modern and stylish, bevelled-edge pack which feels more robust and firmer in hand. This product provides an enhanced smoking experience at a low price point of £14.00 RRP per pack, making it a must-stock for retailers looking to cater for modern smokers seeking full-strength taste alongside great value.
There is generally a continued demand for more intense tobacco blends and greater variety.
This is driving sales in smoking accessory products such as flavour cards and menthol filter tips.
Meanwhile, with 4.5 million roll-your-own (RYO) smokers in the UK (Imperial), the tobacco accessories category provides a substantial sales opportunity for retailers. Recent figures show that king size papers represent around 60% of the sales value and within this, combi papers are the fastest growing segment. Rizla is the UK’s number 1 rolling paper (ITUK).
“Value savvy consumers are increasingly migrating from king size into combi formats due to the added value and convenience they offer,” adds Malm. “Alongside this, we’re also seeing growing demand for unbleached papers as consumers seek out papers with a more natural look. To help retailers tap into this trend, we recently extended our combi range to include a new Classic King Size Combi variant for our iconic Rizla brand.”
Available at an RRP of £1.40, Rizla Classic King Size Combi includes 32 unbleached king size papers and tips to appeal to the rising number of smokers looking for papers with a more natural look and feel with the added benefit of tips in the same pack. This ensures Rizla Classic King Size Combi offers everything smokers will need for the perfect, authentic rolling experience.
In cigarettes, Imperial’s top-selling brands are Players, Richmond, L&B Blue and Lambert & Butler. Richmond is also the fastest growing of Imperial’s Tobacco brands (ITUK).
Many of these products are in the economy and value sectors, reflecting broader growth in demand nationwide for these types of products.
RYO product sales within the value price sector have increased by 8% year on year (ITUK), making it the fastest growing segment, now accounting for almost a quarter (24%) of all RYO sales (ITUK).
JPS Gold Leaf is Imperial’s top RYO seller, followed by Golden Virginia Original and Riverstone. Embassy Signature is the fastest growing in this category across Imperial’s brands (ITUK).
“We would advise retailers to add pod-based devices to their stocks ahead of the imminent ban on single-use, disposable vapes from 1st June. We’d also recommend that they make themselves aware of the impact of other upcoming legislation, in particular the Tobacco & Vapes Bill. The main aim of the Bill is to create the first smoke-free generation while making vapes less appealing to non-smokers. For retailers, this is the time to prepare and mitigate the impact – especially given the importance of tobacco as a contributor to retailers’ revenue,” says Malm.
“Right now, we would advise retailers to check up – or refresh their memories – on the No ID No Sale Guidelines. These offer advice for staff training – crucial to ensure your teams are doing the right things and on the use of a Refusals Register. In addition, the free retail packs offered contain POS merchandise such as Statutory Tobacco Notices and age-related posters along with ‘Scan Me’ and ‘No ID No Sale!’ badges and shelf wobblers.
“Alongside this, there is still very much an issue in terms of illegally imported product being offered to retailers. We’d always advise retailers to check their supply sources rigorously and to continue to be wary of potential suppliers offering products which may be illicit. Retailers should report any suspicious instances via the Association of Independent Tobacco Specialists (AITS) website.”
To help retailers increase their product knowledge and stay on top of the key issues influencing the tobacco and vaping categories, Imperial’s Ignite app is the gateway to a range of helpful tools and advice.
Easily accessible through a handy mobile app, Ignite provides retailers with up-to-date category, legislation and product news with ‘1 minute’ reads. There are opportunities to test your knowledge with fun games and quizzes where you can win cash prizes, and even holidays. Retailers can also ensure their staff stay informed with pointers to help with staff training opportunities, and access exclusive offers or take part in incentives to drive sales.
Imperial supplies a range of different display options that can be tailored to the needs of individual retailers, including everything from counter display units to fully installed gantry furniture.
This allows them to create a strong visual display of vaping products, ideally positioned away from the main gantry where possible, enabling customers to browse at their leisure without the need to handle and inspect products. For those with limited space, a small countertop unit can help achieve this, especially if it is organised and fully stocked. Positioning it in a well-lit part of the counter will also help increase the visibility of the products on offer.
Ignite can help with this too, with downloadable POS and marketing support also available through the app to help retailers boost sales and maximise profits in store.
“As always, it’s very important for retailers to ‘follow the money’. Sales of value products continue to burgeon so there is a clear need to focus efforts there. However, it is worth remembering that premium products can carry higher margin than economy and value products and will always retain a loyal group of smokers, so we would advise against removing these products from any store completely,” suggests Malm.
“Meanwhile, we are seeing that more and more retailers are now engaging proactively with customers to understand what they are looking to purchase – this intelligence then drives decisions around how ranges are tailored on a store-by-store basis.”
Smart retailers are also being more proactive when it comes to checking stock levels to ensure the most popular products are always available. This will help keep customers happy and ensure they have no need to go elsewhere – with the risk they might stay away for good.
Ian Howell, Public Affairs Manager, JTI UK, comments: “At a time when convenience stores across the country are facing unprecedented levels of theft, violence and abuse, we have been urging the Government to consider the views of retailers before implementing any new legislation.”
There is no doubt that retailers are deeply concerned about the generational ban as part of the Tobacco and Vapes Bill, with 63% saying they would prefer raising the minimum legal age of purchase for tobacco to 21 as an alternative (Acorn Retail Promotions). Retailers fear a potential generational smoking ban will result in increased violent behaviour in their stores and will lead to more counterfeit tobacco in their communities. “The latest tobacco duty rises, coupled with the Government’s Tobacco and Vapes Bill, will likely see more smokers turn to the illicit market, meaning this challenge will only grow in the months ahead for retailers. A recent survey found that with 78% of retailers feel like a generational ban would lead to more illicit tobacco in their local area (Acorn Retail Promotions),” adds Howell.
“This is having serious ramifications on the incomes of honest retailers, not only as it impacts their legitimate tobacco sales, but also as they miss out on wider basket spend with shoppers visiting other stores. JTI is committed to supporting our retail partners, and this is why tackling illicit tobacco is one of our top priorities for 2025.
“We also know that verbal or physical abuse against shop workers is sadly on the rise in the UK, with age verification a key reason behind this. If the government presses ahead with a proposed generational ban, retailers will be at greater risk of abuse in the years ahead, impacting on their physical and mental health.
“JTI urges the Government to focus on evidence-based, effective solutions, and implement a minimum age of sale of 21 instead. Government modelling shows that raising the minimum age of sale to 21 could achieve an equivalent fall in youth smoking as a generational ban, when ‘the majority of smokers start before the age of 20’. Not only would increasing the age of sale to 21 help deliver the same health outcomes, but it is also simpler and less burdensome for retailers.”
John Rennie, Director of Commercial Operations, Philip Morris Ltd (PML), comments: “As of December 31, 2023, PMI’s smoke-free products were available for sale in 84 markets, and PMI estimates that approximately 33 million adults around the world had already switched to IQOS and stopped smoking. Smoke-free products accounted for approximately 37% of PMI’s total full-year 2023 net revenues.”
In a significant development within the heat-not-burn category, IQOS net revenues have surpassed those of Marlboro, the world’s most valuable cigarette brand, in less than a decade since IQOS’ launch.
In the UK, as with many other markets, the growth of heated tobacco has been in sharp contrast to the decline in cigarette sales similarly to Europe where heated tobacco unit sales have increased by 9.4% during the first three months of 2024, reflecting continuous growth momentum for IQOS across the continent.
Nationally, the percentage of convenience retailers now selling PML’s TEREA and HEETS tobacco sticks has risen by 42% in two years (Nielsen), while cigarette sales declined by 34% during the same period (Nielsen). This trend is also reflected in grocery multiples, where sales of IQOS kits grew by 269% between September 2021 and December 2023 (Nielsen), while cigarette sales declined by 27% (Nielsen).
And now, with similar signs of rising popularity in the nicotine pouches category which saw volumes increase by 91% in early 2024, the breadth of access to new smoke-free alternatives for adult nicotine users has never been as varied in the transition away from traditional cigarettes.
PML recently expanded the TEREA Pearls capsule range with the launch of two new dual-flavour variants; Riviera Pearl and Provence Pearl, further preventing legal-aged nicotine users from returning to cigarettes. Featuring innovative capsule technology, the TEREA Pearls range enables users to switch seamlessly from a traditional tobacco blend to a unique flavour with a single click. This enhancement elevates flavour delivery, offering an enriched experience for users of IQOS ILUMA, the world’s #1 heat-not-burn device.
Now expanding the full TEREA flavour range to fifteen, the latest duo adds two new flavours to the portfolio, meeting the top taste preferences of legal-aged nicotine users in the UK.
Beyond vaping, other next-gen categories such as nicotine pouches and heated tobacco are important gantry features allowing legal-aged nicotine users the benefit of a varied and attractive range of permissible smoke-free alternatives.
IQOS ILUMA is a great smoke-free alternative because it offers a real tobacco taste and satisfaction, with 95% less harmful chemicals compared to cigarettes – it also enables savings of up to £3,000 a year. It’s these attributes, coupled with evolving preferences among adult smokers and nicotine users, which have helped to establish IQOS as a leading alternative for those directly transitioning from cigarettes.
Adult nicotine users’ preferences will always gravitate towards smoke-free alternatives that not only best suit their tastes, but their lifestyle routines as well. For disposable vape products, this has consistently been in their cost and ease of use. These attributes are where an emerging trend for nicotine pouches is beginning to take root in the UK, driven by a similar convenience and versatility.
“Adopting a multi-category product approach is critical if retailers are going to meet different consumer tastes and preferences,” adds Rennie. “There’s clearly an opportunity for retailers to switch single-use vape users to an alternative smoke-free option, preventing them from reverting back to cigarettes while also protecting their store’s bottom line. However, it must be supported by comprehensive information and education.”
In the UK, 73% of adult smokers have tried vaping, but only 23% have stuck with it (Ash). Recognising that no single smoke-free product can cater to every smoker’s preferences, embracing a multi-category approach becomes indispensable for those investing in their smoke-free portfolio.
Prianka Jhingan, Head of Marketing at Scandinavian Tobacco Group UK, comments: “Our latest data shows the total cigar category to be worth just under £324m, which is a year-on-year value growth of 8% (IRI). The cigar category is split into four segments, the largest of which is cigarillos which has enjoyed rapid growth over the last five years. Next comes the miniature segment, where STG brands like Signature Blue, the UK’s best-selling ‘traditional’ cigar, and Moments Blue, are both must-stocks. Finally, retailers should also consider stocking the top performing brands in both the small and medium / large segments, where our Henri Wintermans Half Corona is the best-selling cigar brand.”
The cost-of-living crisis has of course helped shape the category over the last few years with value brands and smaller pack sizes often in demand. It’s no surprise that price remains important because that search for value can still be a motivating driver of purchase for adult smokers.
There’s no doubt it’s cigarillos which are the current success story within cigars. This segment within the cigar category only really started five years ago but sales are now worth nearly £150m (IRI) and they account for more than half of all cigars sold in volume terms. In the last 18 months or so, distribution has improved, and sales have really shot up for STG’s Signature Action cigarillo brand. It’s currently worth over £6m (IRI) and its sales have grown by over 50% (IRI) since last year, with consumers appreciating the great flavour and cheaper price point. And this current growth in cigarillo sales shows no signs of slowing, so STG expects this positive performance to continue throughout this year and beyond.
STG has just announced the launch of Signature Action Mix cigarillos into its portfolio, which contain two capsules and combine the flavours of Berry and Mint. They come in ten-packs with an RRP of just £5.85. “Customers who buy cigars and cigarillos are typically quite varied and are probably looking for different things. You’ll have your adult smokers who come in regularly for their usual pack of cigars while others will be looking for value so point them in the direction of a good quality value brand such as Moments. Some will be looking for flavour, so a peppermint cigarillo like Signature Action is a good option, or perhaps our Signature Red Filter brand. Retailers will also recognise that there will be customers who perhaps aren’t regular cigar smokers who come into the store intermittently, perhaps before Christmas, Easter, or during the summer for a larger cigar like our Henri Wintermans Half Corona which they’ll enjoy as a bit of a treat or part of a celebration,” adds Jhingan.
“We always say that in the cigar category, the right range is more important than a large range, as the top ten brands account for well over 90% of sales, so don’t waste your time and limited space with slow-moving brands. And when it comes to pricing, I think it’s always important for retailers to offer a range of cigars with different price points to meet different consumer needs. But in general, I would strongly suggest that retailers follow manufacturers’ guidance on pricing, as our recommendations give value for the consumer and exceptional margins for them, which are typically three times higher than those from cigarettes.”
Roll-your-own specialist Republic Technologies UK is driving increased consumer demand for its brands of choice in the UK’s strong-performing tobacco accessories market.
With the market valued at over £417m, and growing at 15.1% (IRI), Republic Technologies is making a major contribution to sustained category growth, thanks to a combination of ground-breaking NPD, strong retailer relations and trade support for both new and established products.
The £121m (IRI) papers sector continues to perform well, with value sales up 8% (IRI) on last year, and Republic Technologies is increasing its presence in this sector by offering consumers more choice within its fast-growing, environmentally-friendly OCB range.
“Shoppers still want quality and value, which OCB delivers, but the plus point for the range is its environmental credentials which offer a clear point of difference vs most other papers, and this is really resonating with roll your own purchasers,” says Gavin Anderson, Sales & Marketing Director at Republic Technologies.
Organic and chlorine free, OCB Rice Papers are made from a blend of rice and organic hemp. The unbleached, ultra-thin papers deliver a premium rolling and slow-burning experience in a natural, brown paper. With 32 papers per pack, OCB Rice is available in both Slim (RRP, £1.10) and Slim & Tips (RRP, £1.73).
Republic Technologies is also underlining its environmental credentials in the £82m (IRI) filters sector with the rollout of Just Paper plastic free Swan filter tips.
In a category boosting first for tobacco accessories, innovative Just Paper Swan Filters provide consumers with an experience that is similar to traditional cellulose acetate filters, but with a much lower environmental impact
The Swan Just Paper range features a ‘flip-a-tip’ design which dispenses loose extra slim filters, without the use of plastic rods. Each box contains 120 filters, with 10 boxes per outer, with an RRP of £1.45 per consumer unit.
“Choice, innovation and quality are well established drivers of the tobacco accessories category and the Just Paper range delivers in each of those areas. Significantly though, the range has advanced the development of filter tips by offering roll your own consumers a product which not only delivers on performance, but which also has a significantly reduced impact on the environment,” adds Anderson.
Tobacco accessories continues to be a key category for convenience retailers. Sales in this channel account for more than half of all tobacco accessories sales and are now valued at £233m, growing at 14.3% year-on-year (IRI).
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