Pricewatch 21 December, 2018: Cigars

Analysis

Independent retailers are playing it straight when it comes to cigars, deviating from RRP by just 56p across these 12 lines. 

But why? When we looked at tobacco accessories and rolling tobacco in Pricewatch recently, it was clear that retailers are finding opportunities to increase their margin, so why are they pricing closer to RRP when it comes to cigars, where shoppers might expect to pay more? 

A tighter range of bestsellers, including Mini Moods and Café Crème, puts the pressure on, with the multiples using a core range of brands to drive down the price. 

Retailers might also stock cigars because they know they should, but it is not clear where there are opportunities to drive margin. 

Becoming a destination for cigars can still be an attractive business, so spend some time learning about the premium end of the market and where the demand is for more expensive products.

Profit checker

PRICE Price distribution %

Price checker

Product AVERAGE RRP NEWSAGENT AND SHOP IN CENTRE OF NOTTINGHAMSHIRE COUNTRY TOWN NEWSAGENT CLOSE TO STATION IN DORSET COASTAL RESORT HIGH STREET NEWSAGENT IN LARGE LINCOLNSHIRE TOWN SMALL HIGH STREET NEWSAGENT IN SOUTH MANCHESTER SUBURB NEIGHBOURHOOD IN SWANSEA SUBURB C-STORE IN SHOPPING PRECINCT IN SUBURB OF BIRMINGHAM
CAFE CREME BLUE 10S £5.88 £5.82 £5.85 £5.90 - £5.40 £6.00 -
HAMLET FINE 5S £5.92 £5.85 £5.85 £6.00 £5.95 £5.30 £6.00 £5.85
CASTELLA CLASSIC FINE 5S £6.45 £6.42 £6.52 - £6.50 £5.82 £6.65 £6.42
HAMLET MINIATURE 10S £5.62 £5.50 £5.60 £5.50 £5.60 £5.00 £5.80 £5.50
CAFE CREME ORIGINAL 10S £5.89 £5.82 £5.85 £5.90 £5.69 - - -
HAMLET FINE 10S £11.53 £11.55 - - - - £11.55 -
HENRI WINTERMANS HALF CORONA 5S £10.89 £10.88 - £10.88 £10.59 £9.75 - -
PANAMA THIN PANATELLAS 6S £6.32 £6.25 - £6.20 £6.25 - £6.50 £6.25
HAMLET MINIATURE 5S £2.90 £2.80 - - - - - £2.80
CAFE CREME RED FILTER 10S £5.85 £5.82 £5.85 - £5.69 - - £5.82
MOMENTS BLUE 10S £4.56 £4.64 £4.75 £4.65 - £3.90 - -
KING SIX 6S £5.51 £5.40 - £5.60 £5.50 £5.20 - -

Supermarkets

Pricewatch, Cigars.png

Drive your profits

Duncan McCutcheon  Avatar

Duncan McCutcheon

McCutcheon Newsagents

Location: Tyne & Wear

Size: 1,200sq ft

Type: residential

Top Tip
Be aware of your competition and price competitively so you don’t lose out
We stick to the RRP in the cigar category because the margins we make are quite good. Booker normally has the best deals on cigars, so that’s where we buy from. In terms of the range, we stock Hamlet and Café Crème Blue – Café Crème Blue is popular because of its lower price point. In terms of Hamlet, I’ve had one customer who has been coming in for years to only buy that, so I keep it stocked for him. I find that those who smoke cigars have been smoking them for years – I don’t have many new customers who go for it.
Suraj Agath Avatar

Suraj Agath

Whissendine Village Store & Post Office

Location: Rutland

Size: 1,100sq ft

Type: village

Top Tip
Don’t keep changing the price because you will alienate your customers
We have a few cigar brands, including Henri Wintermans and Café Crème Blue. Overall, we like to stick to the RRP to keep customers coming back to us. There is no point pushing the price up too much, as it puts shoppers off. We typically make a 12% margin in the category. I find those who smoke cigars are normally from an older generation – not many younger consumers are shopping in the category. It’s been quite a stagnant category over the past five years and not much has changed – people know what they like and stick to it.
Danny Wilson Avatar

Danny Wilson

The Sands Store

Location: Scarborough

Size: 2,200sq ft

Type: seafront

Top Tip
Focus on best-sellers, have good availability and keep an eye on trends
We have a few stores and generally tend to stick to RRP, but at our seafront shop we increase the price a little to hit at least a 20% margin. This is because there are a lot of tourists there and, because of the location, they expect a slightly higher price. It’s also more of an expensive location for us to run. In my other stores, the margins average 18%, but this, of course, depends on the brands. Bestsellers at our seafront store include Hamlet, Café Crème and Café Crème Blue. Royal Dutch does well in some other stores.
Robert Kirkwood Avatar

Robert Kirkwood

Premier Mossgreen Convenience

Location: Fife

Size: 800sq ft

Type: residential

Top Tip
Learn who your customers are and stock the bestsellers that appeal to them
We stick to the RRP Booker advises, but sometimes if something is priced £8.44, I’ll round it up to £8.45. We keep a selection of cigars in store from Panama, Café Crème, Café Crème Blue and Hamlet Miniatures. I would say out of all the brands, Café Crème Blue priced at £5.85 is the most popular. Panama is slightly more expensive at £6.25. To make the most out of the category, we keep tight stock control, because even if you lost one packet it can be expensive – especially because we only make 5%-8% margin on some lines.

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