Smoking has been banned for a number of years in many public places in the UK, including pubs and railway stations. In a more recent development, tobacco products now have to be sold in plain packaging, and are subject to advertising and in store display bans. Faced with heavy excise duty on factory made cigarettes, more smokers are opting to switch to roll your own tobacco, which is perceived as better value.
Yet despite this seemingly prohibitive environment tobacco and smokers’ accessories continue to show strong sales performance and remain a traffic builder for retailers. The value of tobacco sales in the UK totalled £14.6 Billion in the last year, with the cigarette market accounting for £11.2 Billion. Against this backdrop the tobacco and smokers’ accessories companies continue to innovate with products that meet consumers’ changing needs and tastes.
Talking to the individual suppliers, Duncan Cunningham, Head of Corporate & Legal Affairs at Imperial Tobacco UK&I, says downtrading is one of the notable current trends that Imperial base their commercial strategy around. Earlier this year they announced plans to reposition Embassy from its traditional home in the Premium price sector to the more popular Economy price sector, due to the trend towards down-trading. Embassy’s repositioning means it is now available to retailers in King Size 20s, with an RRP of £9.35 for Embassy Red and Bright Blue, a competitive price point that will appeal to adult smokers seeking premium quality at an affordable price.
Staying with factory-made cigarettes, another recent innovation from Imperial is L&B Blue Bright Air Filter, combining a recess in the filter tip with a firmer filter structure. L&B Blue Bright Air Filter is available in King Size 20s at £8.70 RRP. The crushball (capsule) sector also continues to flourish, with over 15% of the overall FMC market. Imperial Tobacco offers JPS Player’s Crushball (£8.70 RRP for a pack of 20) and JPS Crushball (£9.35 RRP for a pack of 20).
The shift from factory made cigarettes (FMC) to roll your own is another trend Imperial Tobacco have been following. In the UK, RYO has been consistently growing its share of the tobacco category, but since EUTPD II’s introduction in May 2017, this growth has got significantly faster. By November 2018 RYO’s UK market share in relation to FMC stood at almost 39%. As the roll your own trend grows, Imperial has launched a new RYO tobacco brand, Riverstone, appealing to FMC smokers moving to RYO as well as dualists smoking both RYO and factorymade cigarettes. Offering a high quality, easy-to-roll blend at an affordable price, Riverstone is available in 30g and 50g packs, at RRPs of £11 and £18.15.
On the accessories front Imperial have recently released a new Rizla Crushball filter, Rizla Polar Blast is the UK’s first ever RYO filter tip to contain a Crushball, enabling smokers to ‘click’ to enjoy the taste of mint whenever they roll their own. Rizla Polar Blast is available in packs of 60 tips, RRP 99p. Rizla have also redesigned their papers packaging, with packs now featuring a ‘tuck in’ closing mechanism to reduce wastage, plus a ‘soft touch’ finish making the packaging more tactile. The bestselling Medium Thin Green and Rizla Medium Thin Red variants are available in packs of 100 (Regular) and 50 (King Size) at RRPs of 27p and 67p. Rizla tips are available in several variants, from Slim (RRP 72p per pack), Ultra Slim, Natura Ultra Slim and Menthol Ultra Slim (all with RRPs of 79p per pack).
Ross Hennessy is Head of Sales at JTI UK, the UK’s No.1 tobacco manufacturer with a combined market share of 43.2%, 41.4% for cigarettes and 45.7% for rolling tobacco. Ross agrees about smokers being increasingly priceconscious:
“The value segment continues to grow as consumers seek out value for money products. As part of the growing value trend, the RYO category has increased 10.5% year on year. Adult smokers on the whole want value for money, making price a key factor when choosing where to shop for tobacco products. Retailers should look to remain competitive by selling at RRP or below. “
Retailers are of course free to sell tobacco products at whatever price they choose. Availability of smokers’ regular brands in their local store is another major factor, says Ross:
“Research has shown that nearly a third of smokers will choose to buy elsewhere if their preferred brand is unavailable. It is therefore crucial for retailers to maintain good availability across their range. If they don’t, they could be in danger of losing sales. To maximise sales, retailers must also be knowledgeable about the tobacco category and the brands they stock, making staff education and training a must. JTI’s website JTI Advance (www.jtiadvance.co.uk) provides regular training to suit the busy schedule of retailers.
“Our advice is to continue investing in the tobacco category to take advantage of the profit opportunity it presents. Ultimately, those retailers who are focused on stocking a full range and are competitively priced will reap the rewards.”
Retailers should make sure to adapt their range to reflect trends to maximise sales in the category, says Ross, stocking new products that meet the needs of existing adult smokers. Looking at innovations, JTI have extended their Capsule range with two new products – Sterling Dual Triple Green, the UK’s first triple menthol cigarette and Benson & Hedges Blue Dual Double Capsule, the UK’s lowest priced Double Capsule offering. Sterling Dual is the No.1 capsule brand, with a sector share of 40.9%: Benson & Hedges Blue is the fastest growing capsule brand: Sovereign Blue KS Dual is the fastest growing capsule product.
Another important part of the tobacco category, the UK cigar market, currently worth £198m, is reporting a minor increase of 1%, with the Miniatures and Medium/Large cigar segments reporting increases of 5% and 1%. Alastair Williams is Country Director at Scandinavian Tobacco Group UK, whose Miniature cigars dominate the market, with 73.6% of cigar volume and £105m in value sales.
STG UK’s miniature brands contribute 69% of value sales to the segment. The lineup includes Signature Blue, previously Café Crème Blue, with 30.5%, Moments Blue with 17.8% and Signature, previously Café Crème, 10.9%, three of the top five cigar brands in the total market.
STG UK’s miniature brands collectively represent £72.6m in value sales over the last 12 months, over twice as much than all other miniature brands combined. Looking specifically at value for money within miniature cigar brands, Moments Blue is bigger than all the other miniature brands together, at a value of £15.2m, making it an important must stock for any tobacco stockists.
In the Medium/Large cigar segment, which is also in growth (+1%), Henri Wintermans Half Corona is the UK’s favourite Medium/Large cigar brand with 73.3% market share and value sales worth £14.4m a must stock for tobacco stockists looking to capitalise on the sales opportunities available through larger, celebratory cigars.
The top 10 cigar brands account for 89% of total cigar sales and 85% (£169m) of value sales, highlighting how important it is for retailers to stock the leading brands. STG UK brands account for five of the Top 10, including Signature Blue (previously Café Crème Blue), the No.1 cigar brand in the UK.
Leading Cigar Brands by Volume Share
1. Signature Blue (previously Café Crème Blue) – 22.4%
2. Moments Blue – 13.1%
3. Hamlet Miniatures – 11%
4. Hamlet – 10.2%
5. Signature (previously Café Crème) – 8%
6. Royal Dutch Miniatures – 7.3%
7. Classic – 5.7%
8. Signature Red (Café Crème Red Filter) – 4.9%
9. Royal Dutch Miniature Blue – 4%
10. Henri Wintermans Half Corona – 2.5%
With tobacco accessories not subject to the ban on advertising and instore display, new product development and an increased focus on merchandising are driving growth in the UK tobacco accessories market, says Gavin Anderson, General Sales Manager at Republic Technologies:
“The UK tobacco accessories category is now worth over £287m, with increasing pressure on suppliers to innovate to make their mark. Papers and filters are the most buoyant areas, with papers worth £100.3m and growing 8.0%, and filters worth £87.4m and growing 12.2%.”
Republic Technologies has recognised the need for greater choice with NPD that taps into consumer trends including OCB Virgin Slim and Slim & Tips, for consumers looking for an unbleached paper and a softer smoke; Swan Ultra Slim, the thinnest ever Swan filter and a premium quality product aimed at discerning smokers; and Swan ‘Eco’ filters, the most environmentally friendly Swan product ever. Featuring an unbleached paper with a natural brown colour, OCB Virgin Paper offers the highest level of rolling paper quality. Manufactured to the highest standards to offer a silky touch, lightweight feel and premium quality, OCB Virgin provides 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, vegetarian, and GM free. OCB Virgin Slim and Slim & Tips are now also available in a slim vertical box, helping retailers to manage shelf space.
Republic Technologies has also overhauled its matches range with new packaging and a category-boosting extension for its Swan brand. The relaunch included a new pocket-sized Swan match with a new colour scheme for additional shelf standout, a new pack design for Bryant and May ‘Extra Long’ and a new design for Ship matches. The move reflected the growing appeal of sustainability and increased demand for eco-friendly matches, following the removal of all Strike Anywhere match formats in the UK market.