Pricewatch December 29 2017 - Budget cigarettes

Analysis

Since the arrival of EUTPD II and plain packaging legislation in May, the budget cigarette market has become a bear pit for independent retailers. With pricemarked packs gone, supermarket giants such as Asda have adopted loss-leading strategies which allow them to set prices which are all but impossible to

match. Which isn’t to say retailers don’t try: as our data shows, most are setting their prices below RRP, with average prices often falling at between 10p and 20p below RRP. With RRP itself already keeping margins tight, it is clear retailers are accepting a real squeeze in order to keep customers coming through the door.

Profit checker

PRICE Price distribution %

Price checker

Average RRP NEIGHBOURHOOD SHOP ON PARADE IN SOUTH LONDON SUBURB LARGE SHOP ON EAST MANCHESTER SUBURBAN ESTATE OFF-LICENCE AND SHOP IN NEWCASTLE SUBURB LARGE C-STORE IN MODERN GLASGOW SUBURB SMALL C-STORE CLOSE TO STATION IN ESSEX COASTAL TOWN SHOP ON PARADE ON EDGE OF CARDIFF CITY CENTRE
STERLING KINGSIZE DUAL 20 £8.62 £8.75 £8.45 £9.25 £8.65 £8.45 £8.74 £8.45
PLAYERS SUPERKINGS REAL RED 20 £7.44 £7.65 £7.35 £8.10 £7.35 £7.50 £7.35 £7.35
PLAYERS KINGSIZE REAL RED 20 £7.44 £7.65 £7.35 £8.10 £7.35 £7.50 £7.35 £7.35
CARLTON SUPERKINGS RED 20 £7.59 £7.75 £7.40 £8.40 £7.45 £7.45 £7.85 £7.45
B&H KINGSIZE BLUE 20 £7.58 £7.75 £7.49 £8.35 £7.75 £7.60 £7.99 £7.45
L&B KINGSIZE REAL BLUE 20 £7.92 £8.00 - £8.30 - £8.05 £7.75 £7.75
CARLTON KINGSIZE RED 20 £7.59 £7.75 £7.40 £8.35 £7.55 £7.45 £7.75 £7.45
JPS KINGSIZE REAL BLUE 20 £8.18 £8.30 £8.19 £8.60 £8.00 £8.00 £8.00 £8.00
SOVEREIGN KINGSIZE BLUE 20 £7.57 £7.74 £7.49 - £7.65 £7.69 £7.69 £7.44
STERLING KINGSIZE 20 £8.26 £8.40 £8.15 £8.90 £8.40 £8.10 £8.10 £8.10
PLAYERS CRUSHBALL 20 £7.47 £7.65 £7.35 £8.10 £7.35 £7.35 £7.35 £7.35
B&H BLUE SUPERKINGS 20 £7.57 £7.75 £7.50 £8.40 £7.75 £7.60 £7.99 £7.45

Drive your profits

Nainesh Shah Avatar

Nainesh Shah

Mayhew’s Newsagent

Location: Belgravia, London

Size: 1,000sq ft

Type: residential

Top Tip
Cigarettes can be a great footfall driver, so don’t obsess over all small margins
We’re in Belgravia, which is basically a construction site at the minute, so there’s a lot of workers around. They’re often wary of buying cigarettes in Belgravia because they think they’ll be really expensive, so I make a point of keeping our budget cigarettes, such as Players Kingsize Red, at or near RRP. It definitely works – word gets around the construction site during breaks, people tell each they can get cheap cigarettes in our shop, and more and more workers come to get their cigarettes here. It drives footfall and we sell lots of other things to the workers too.
Adeil Hussain Avatar

Adeil Hussain

One Stop Motherwell

Location: Motherwell

Size: 2,500sq ft

Type: residential

Top Tip
Take into consideration the prices being charged by your competitors
Our biggest sellers by a long way are Superking Players. After that it’s Mayfair and then B&H Blue. We’re a One Stop now, which is a great help with cigarette sales – it means we can get our cigarettes much cheaper and compete with the supermarkets on price, while still getting a near-10% margin overall on the category. For example, we have a small shop next door and his prices on budget brands are 10p more expensive than mine. So plain packaging and the loss of pricemarks has maybe ended up working in our favour after all.
Ben Dyer Avatar

Ben Dyer

Waterloo News

Location: Waterlooville, Hampshire

Size: 1,000sq ft

Type: neighbourhood

Top Tip
You can’t expect to compete with the supermarkets on price - stick to RRP and keep your range as tight as you can
Ever since the law changed and we had to let go of pricemarked packs and go over to plain packaging, budget cigarette sales in our shop have nosedived. We used to be more competitive because the supermarkets didn’t used to do pricemarking, but they are now doing cigarettes as loss-leaders – they’re priced much cheaper than we can ever compete with. A lot of people who used to come in for cigarettes aren’t coming in at all now. We’re already at RRP, not making much more than a 2% or 3% margin, and we still get beaten on price.
Ferhan Ashiq Avatar

Ferhan Ashiq

Day-Today Ashiqs

Location: Prestonpans, East Lothian

Size: 550sq ft

Type: neighbourhood

Top Tip
Pay attention to the brands that sell in your area and tailor your range accordingly
My range of budget cigarettes has consolidated since the new legislation came in, with most people transferring onto Players Superkings. It’s a location thing – in east Scotland people smoke Players, in west Scotland they smoke Sterling, while Chesterfield and Pall Mall are almost non-existent these days. We sell Players at £7.65, just under a 6% margin, and go through 18 or 19 outers a week at that price. I’m in a very competitive position for pricing, right next door to a Scotmid, which has become very competitive in the pricing of its cigarettes since the new legislation came in.

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