While tobacco sales are in decline, there are still big opportunities in the cigars market. Uldduz Sohrabi Larki explores how to take advantage of the category
A £64m opportunity
The cigar category is worth £64m to independent convenience retailers and provides an opportunity to boost tobacco sales and profits.
Recent research by Scandinavian Tobacco Group (STG) suggests that switching one cigarette smoker to cigars will help you to increase your profits by £250 a year.
Mark Dudden of Albany Road Post Office in Cardiff says: “There are great margins on cigars and we really only need one regular customer for a cigar line to be worth stocking.”
Tony Lyles, field development manager at Ritmeester, says: “With 73% of all cigar sales now being miniatures, retailers should see that consumers now do not have the chance to smoke larger cigars in their everyday lives.”
What should you stock?
Café Crème Blue is one of the bestselling products in both volume and market share, having a value of £34.3m.
The top five cigars are Cafe Crème Blue 10s, followed by Cafe Crème 10s, Hamlet Miniatures 10s, Hamlet 5s and Classic 5s.
“The best way to sell cigars is by knowing your customers and building relationships with them. We also stock bestsellers like Café Creme Blue all year round,” says Dudden.
Jens Christiansen, head of marketing & public affairs at STG, says retailers should look carefully at their local demographics to decide their own range.
“Retailers should take time to talk to their customers and understand exactly what it is they need.
“Depending on space, a basic cigar range covering miniatures, panatellas, premium and value for money segments is a good place to start,” Christiansen adds.
Lyles recommends stocking Ritmeester Mini Moods as it has a double filter system, which attracts both regular cigar and cigarette smokers.
“In fact, comparisons for April 2017 (before 10-packs of cigarettes were made exempt) and April 2018 show that Mini Moods have seen a rise in sales of 127%,” says Lyles.
“As cigarillos are not governed by total plain packaging, we are still able to produce in packs of 10 and that has proved attractive to those who do not want to have 20 sticks in their pocket.”
How to maximise merchandising
Cigars and cigarillos still come in branded packs and will naturally stand out on the shelf when doors are opened, so will attract attention.
Lyles says this is an opportunity retailers can take advantage of as the packaging is more appealing compared to cigarettes and rolling tobacco.
“That bit of colour should be used to its advantage, and cigars should be merchandised so they can be seen when those doors are open,” he adds.
Christiansen recommends retailers make the most of this by avoiding hiding them away at the bottom of the gantry where they can’t be seen.
Lyles agrees and says cigars tend to be forgotten by retailers and placed at the bottom of a gantry or shoved in a cupboard.
“Cigars give a larger profit on return than both cigarettes and RYO so it makes sense to have them at the top or as near to it as possible,” he says.
How to train your staff
Your staff must understand your customers’ needs. They need to actively communicate with customers, not necessarily about tobacco, but anything that will clarify the understanding of their
buying habits.
“This is insight you can act on. The obvious solution is to upsell them to a segment with higher margins, such as cigars or pipe tobacco, or move them from value for money to mainstream or premium brands,” says Christiansen.
Often, cigar smokers smoke for a completely different reason to cigarette smokers and it’s important to understand what they’re after.
Christiansen says that many cigar smokers use cigars as a reward after a good meal, hard day at work or just a nice break.
“The same goes for indulgence; cigars are much more than the nicotine fix. Think of it as switching from beer to wine,” he adds.
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