Why stock heated tobacco
Although vaping has rapidly taken off since its introduction in the UK two decades ago, heated tobacco is a younger technology which has taken some time to build momentum. Philip Morris Limited (PML) entered the marketplace in 2016 with its Iqos device and the organisation has since pledged to be smoke-free by 2025.
This commitment was brought about due to the raft of laws affecting the tobacco industry, and increasing evidence that heated technology is a less-harmful alternative to traditional smoking. While heated tobacco carries its own risks for users, a 2020 Dutch study from the National Institute for Public Health and the Environment found that heated tobacco was associated with 10-to-25 times lower exposure to carcinogens compared to combustible cigarettes.
And the advantages of heated tobacco do not end there, these products also dodge the menthol ban and can be enjoyed in more social scenarios due to the fact they do not create smoke. The technology, which uses electricity to heat sticks of tobacco, is proving popular among those looking to quit cigarettes as it gives an experience closer to smoking than vaping.
Despite these benefi ts, heated tobacco isn’t always successful for convenience retailers, with many feeling there still needs to be greater awareness of the product and that a lot of dedication and education is required for it to be a success. “Retailers and suppliers need to build more awareness around heated tobacco products,” says Amrit Singh Pahal, from H & Jodie’s Nisa in Walsall, West Midlands. “It is hard to move people from vaping to heated tobacco because they have got used to the intense fl avours. We need to target traditional smokers if we want this category to move. It is important to communicate this to customers who may not know about the product.”
While Iqos had been driving awareness of heated tobacco by giving incentives to retailers and opening several stores and pop-up locations, the arrival of JTI UK’s device Ploom in 2020 is also putting energy into the category. With added competition, and more people quitting smoking, retailers should certainly consider heated tobacco.
What does the future hold?
Although vaping is leading the way as the alternative to smoking, more than half (58%) of people are yet to fi nd a satisfying replacement to cigarettes. One way retailers are attracting these potential customers is by adding depth to their smoke-free offering, according to Kate O’Dowd, head of commercial planning UK & Ireland at PML.
“Complementing vape and nicotine pouches with a real tobacco alternative will generate new revenue streams and enable retailers to offer a more rounded smoke-free range for consumers,” says O’Dowd. “PML are selling almost 50 times the volume of Heets each month than it did, on average, in 2017.” JTI UK sales director Gemma Bateson says the supplier predicts that by 2025, there will be one million Ploom users worldwide, with traditional retail contributing to 67% of sales.
With heated tobacco already representing 18.6% of the total reduced-risk product market in the UK in 2021 and growing by 86% compared to 2020, there are potential gains for retailers who can invest the time, energy and research that this category demands. “With smoking rates continuing to decline, convenience retailers who embrace heated tobacco as part of a multicategory offering will ensure they can offer a better choice, both for their businesses and, more critically, for the adult smokers they serve,” says O’Dowd.
Avtar Sidhu, St John’s Budgens, Kenilworth, Warwickshire: “We have an 18-month exclusivity deal with Philip Morris Limited (PML) on Iqos, and they give us rewards, mostly on selling the devices. I have a category expert in store that lives and breathes this category for me, which is really helpful. The rewards PML gives us go to that category expert as they are the ones that have made the sale. The long-term benefi t of this expertise is that PML and our store are more likely to gain new customers, and they are likely to come back to us to buy the Heets that go in Iqos. Heated tobacco needs this level of dedication and expertise, and being with PML from near the start of their journey means we now have dozens and dozens of customers using this product.”
Talk to your customers
Promoting Iqos for the past five years, St John’s Budgens owner Avtar Sidhu brings in more than £1,000 per week from his Heets sales, and says he sells about 20 sleeves and three devices each week. Selling a more modest twoto- three Heets sleeves per week,
Singh Pahal still believes in the future of the product, adding: “It is important to stay on trend and move with the times.” However, Retail Express also spoke to retailers who, despite trialling Iqos and Ploom, have not been able to generate any sales. With cigarette sales still strong, Anita Nye, from Premier Eldred Drive Stores in Orpington, Kent, says she keeps Heets in store just for one customer, while Simon Dixon, from Premier Lower Darwen in Lancashire, says he sells Heets once every month or so. Due to the hit-and-miss situation in heated tobacco, retailers should consider their demographic before investing, and talk to customers to see if this is a product that might work for them.
Merchandising and promotion
To give themselves the best chance of success in this category, retailers must stay educated about heated tobacco through trade press and maintain contact with suppliers and reps. JTI’s top merchandising tips for the category include maintaining good stock levels, having devices available for instore demonstrations and using the platforms available, such as JTI’s trade website jtiadvance. co.uk, to generate repeat sales.
“JTI has also recently announced the transition of its sales force to business advisers, who are allocated smaller, dedicated catchment areas where they will be responsible for every trading channel within it,” says sales director Gemma Bateson. “This means they can provide a more bespoke, personal service so they can identify commercial opportunities with their trade partners to an even greater extent.” Educating yourself and your team on the range of smoke-free alternatives is fundamental, says PML’s Kate O’Dowd, who recommends its Digital Trade Engagement platform as a resource for retailers signed up to PML’s trade programme, looking to fi nd ways to communicate effectively with customers about the product.
“Do not be limited by a ‘stock and sell’ mentality,” adds O’Dowd. “Build connections with customers to understand their preferences, so you can offer a smoke-free alternative that meets their needs.” To push sales, Singh Pahal is having a special Iqos display unit built into his vape store, which will launch this month. “PML are fi tting a unit for us with the full range, and it will look dapper and plush, like the duty-free areas in airports. This eye-catching display will hopefully attract more customers,” he says.
Already housing a special Iqos display with PML, Sidhu raises awareness further through in-store activations, posters inside and outside the shop, and by being listed on PML’s website as one of its authorised sellers. Sidhu says the listing means people come from far and wide, and out of their way, to his store because it is one of few convenience stores hosting the full Iqos range.
Gemma Bateson, sales director, JTI UK: In February, JTI UK launched an apple & menthol flavoured variety called Ruby to cater to a growing consumer demand for flavours in heated tobacco.This comes on the back of two new alternative variants with capsules, Green Option and Purple Option. These new flavours for the Ploom device allow the consumer to discover a new taste with fl avoured capsules. Both are well-balanced and smooth tobacco flavours, with a mint infusion that releases when the capsule is crushed.
These are the seven Evo tobacco flavours available:
Bronze – a well-balanced and full-flavoured tobacco with a robust taste and toasted undertones.
Amber – a smooth and rounded tobacco flavour withsubtle aromatic undertones.
Green – a classic tobacco infused with crisp menthol for a cooling taste sensation.
Purple – a delicate and well-balanced berry & menthol for a cooling sensation with fruity aromatic notes.
Ruby – a crisp apple & mint fl avour with fruity aromatic notes.
Green Option – a well-balanced and smooth tobacco flavour, with a subtle mint infusion. Crushing the capsule releases a refreshing peppermint taste sensation.
Purple Option – a well-balanced and smooth tobacco flavour, with a subtle mint infusion. Crushing the capsule releases a refreshing berry taste sensation.”