Pricewatch: 8 October 2018 - Premium cigarettes

Analysis

Independent stores are seizing the opportunity that comes with premium cigarettes, taking advantage of the extra money that can be made by pricing above RRP. 

This is evident with Mayfair Kingsize, which, as the graph above shows, is stocked above RRP by more than 60% of independents. 

Meanwhile, take the top 12 lines together, and Sainsbury’s and Morrisons are 11% cheaper than the average independent store and Tesco only beats indies by £4. Shoppers are often happy to pay extra for the convenience of having their preferred brand available on their doorstep. 

You can also justify this extra price to your customers by learning their brand of choice and being able to talk about the range and recommend new products. 

This research shows that, while prices are continually being squeezed down at the value end of the market, there are still margins to be had at the top end. 

Profit checker

Price Price distribution %

Price checker

Product Average UK retail price Booker RRP TOWN CENTRE STORE IN NORTH YORKSHIRE MARKET TOWN NEIGHBOURHOOD C -TORE IN SOUTH MANCHESTER SUBURB SMALL NEWSAGENT AND OFF LICENCE IN WEST END OF LONDON HIGH STREET C-STORE IN CORNISH HOLIDAY RESORT SMALL C-STORE IN OUTER GLASGOW SUBURBAN HIGH STREET SERVICE STATION ON MAIN ROAD IN SOUTH WALES
STERLING KINGSIZE DUAL 20 £9.30 £9.10 £8.65 £9.10 £11.00 £9.25 £9.00 £9.20
L&B KINGSIZE ORIGINAL SILVER 20 £9.85 £9.65 £9.65 £9.65 - £9.90 £9.79 £9.75
MARLBORO KINGSIZE GOLD 20 £11.17 £10.80 £10.80 - £12.50 £10.95 £10.70 £10.80
MAYFAIR KINGSIZE 20 £9.91 £9.75 £9.65 £9.75 £11.50 £9.80 £9.65 £9.75
B&H KINGSIZE GOLD 20 £11.40 £11.24 £11.15 £11.25 £12.50 £11.40 £11.15 £11.20
SILK CUT KINGSIZE PURPLE 20 £11.40 £11.24 £11.15 £11.25 £12.50 £11.40 £11.15 £11.34
B&H KINGSIZE SILVER 20 £10.50 £10.25 £10.15 £10.20 £12.30 £10.40 £10.15 £10.35
MAYFAIR KINGSIZE SKY BLUE 20 £9.92 £9.75 £9.30 £9.75 £11.50 £9.80 £9.65 £9.85
RICHMOND KINGSIZE REAL BLUE 20 £9.84 £9.65 £9.65 £9.65 - £9.80 £9.79 £9.75
RICHMOND SUPERKINGS GREEN 20 £9.86 £9.65 £9.65 £9.65 £11.50 £9.90 £9.79 £9.75
RICHMOND SUPERKINGS REAL BLUE 20 £9.83 £9.65 £9.65 £9.65 £11.50 £9.90 £9.65 £9.75
STERLING KINGSIZE DOUBLE CAPSULE 20 £9.29 £9.10 £8.65 £9.10 £11.00 - £9.00 £9.20

Supermarkets 

Premium Cigarrettes - supermarkets.png

Drive your profits

Salim Patel Avatar

Salim Patel

Crown Service Station

Location: Brighouse, Huddersfield

Size: 2,000sq ft

Type: village

Top Tip
Don’t forgo premium cigarettes, because there is still a huge demand for them
Sales of cigarettes have declined because more people are turning to e-cigarettes and vaping. However, we find that there are still a considerable number of shoppers who buy into the premium cigarette category. We have transient shoppers; we are the first station off the motorway, so shoppers aren’t looking at the prices too much and don’t mind paying extra. This enables us to set our prices above RRP. B&H, Silk Cut and Marlboro Gold are very popular. We sell five outers of Marlboro Gold a week, and we set the price at around £12.
Chris Herring Avatar

Chris Herring

Londis Shiphay Post Office

Location: Torquay

Size: 2,800sq ft

Type: neighbourhood

Top Tip
Invest in the category – if you have multiple shops, spread your premium range out
We sell premium cigarettes around 10p above RRP. It’s such an important category, and is where all the margin is, but a lot of retailers still aren’t investing in it. If you have one customer who buys a packet a day costing around £10, that’s more than £3,500 per year. I sell a range of premium brands, such as B&H Gold, Marlboro Gold, Marlboro Red and L&B Silver. People who are looking for a premium range are willing to spend a little more, so it’s all about making sure you have the best availability to cater to them to make sure they visit your store again.
Peter Robinson Avatar

Peter Robinson

Robinson Retail

Location: Pembroke

Size: 1,000sq ft

Type: town

Top Tip
Take control of the margins and find a way to manage the decline profitably
Over the years, we have reduced our range of premium tobacco. However, the category is still important because it brings in good margins. We tend to price our premium tobacco just above the RRP. We have a good range that includes B&H, Regal and Marlboro. I think the main reason for the decline in tobacco sales has been because more shoppers are now turning to value brands, and a lot of people have stopped smoking amid health concerns. What we have to do is make sure we are managing the falling sales as profitably as possible.
Ramsey Hasaballa Avatar

Ramsey Hasaballa

Premier Speke

Location: Liverpool

Size: 2,000sq ft

Type: neighbourhood

Top Tip
Don’t overprice too much because you will be left with stock that isn’t selling
Premium cigarettes already come with a high price tag, so we stick to the RRP. We don’t like to go under because margins are already tight in this category. We sell a wide range, with Regal as a bestseller, followed by Silk Cut and then Embassy. Over the past year, the category has changed massively, and I think it’s more the price than brand that sells. People will now come in and ask what the cheapest brand is that we sell, whereas before I had shoppers who would stick to a specific brand and refuse to buy anything else.

Find out more about RN’s definitive guide to the best-selling products that you need to have on your shelves.

Read more

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