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Retail Newsagent answers some of the most pressing questions posed by retailers in the build up to EUTPD II.
“What are the new prices going to be? We’ve already had to adjust to selling 17s and a lot of our customers just want to know what the price will be if pack sizes change. It’s all about the cost at the end of the day.”
Vip Measuria, Prior Way One Stop, Derbyshire
The best indication of price so far comes from BAT, which has already made its larger Cutters Choice format EUTPD II-compliant at 30g. How much does it cost? It’s currently pricemarked at £10, and although this is a more of a premium RYO brand than others, it gives an indication of the dramatic rise in price smokers are going to have to get used to.
With pricemarking removed from packs and tobacco hidden behind covered gantries there may be a temptation for retailers to boost their margins and raise prices. It’s something the industry is warning store owners against.
“Regarding price, we highly recommend retailers stick to the manufacturer’s RRP, or at least shop around their area to make sure they’re in line with the marketplace,” says Jerry Margolis at Philip Morris. “When we went dark, shoppers immediately assumed that prices had gone up on tobacco, so retailers need to keep this in mind in an even darker market. If they over-price tobacco, they will out-price themselves against their competition,” he says.
Imperial Tobacco’s Andrew Miller agrees with this sentiment. “Indications show that the downgrading trend is set to continue,” he says. The company’s value cigarette brand Carlton recently rose to become the top-selling cigarette in the independent channel and Mr Miller admits that, like other manufacturers, Imperial “needs to continue to offer compelling solutions” to down-trading customers, whatever the legislative environment.
“I feel like as a business we’re ready but our customers are totally ignorant of the upcoming legislation. We’re doing our best to educate them but is there any prospect of some kind of industry or government campaign to prepare people?”
Lorraine & Trish Lettley, EJ Teare Newsagents, Wellington, Somerset
The answer is almost certainly not. The government is not going to run a campaign that tells people how to buy tobacco and manufacturers are not able to communicate with the public because of the long-standing ban on advertising.
So what can you do? JTI’s Jeremy Blackburn urges retailers to make sure they’re ready to answer any EUTPD-related questions. “It is crucial that independent retailers follow Lorraine and Trish’s example and are in a position to answer smokers’ questions,” he says.
If it’s a frustration that once again the trade is put at the frontline of not only implementing new regulation, but also explaining it – one positive is that it doesn’t have to do it alone. JTI is one of a number of manufacturers committed to supporting retailers to educate their customers. Its “Your Guide Through Change” initiative provides, Mr Blackburn says, “a go-to source of industry-leading advice that offers reassurance and clear, practical steps to continue to profit.”
Similarly, Imperial Tobacco describes its educational “Partnering for Success” initiative as offering “guidance around EUTPD II and standardised packaging legislation” – again highlighting that suppliers are beginning to be more open about the likelihood of plain packaging coming into force.
“When during the year will the TPD-compliant stock begin to appear on the market and when will 10-packs and small RYO products disappear?”
Mark Ansell, Liskeard News, Liskeard, Cornwall
Earlier this week, Ritmeester field development manager Andy Swain told RN his company will have non-TPD product available until September, but other industry sources have said they expect this stock to remain in circulation until as far away as February.
To put these predictions in context, Ron Ridderbeekx, head of legal and external affairs at British American Tobacco, told RN how the transition from current tobacco packaging to EUTPD II and plain-packaging compliant packaging, is causing major challenges for manufacturers.
One is the uncertainty caused by late passing of legislation (draft rules will not be sent to parliament until 22 April), is creating difficulty with supply. Another is the requirement that factories stop producing for a period of time as machinery is updated or replaced to produce the newly-mandated packaging.
Backing Mr Swain’s point, Mr Ridderbeekx says the result of these challenges is higher production of existing pack sizes.
“BAT has had to produce higher stocks prior to the 20 May 2016 manufacturing deadline in order to avoid out of stocks,” he says. “The TPD explicitly provides for transitional provisions to allow product manufactured before 20 May 2016 to be sold until 20 May 2017.”
Meanwhile, with the 2017 deadline still 13 months away, Andrew Miller, Imperial Tobacco’s head of field sales, says the company is working to inform and educate retailers about the legislative ins-and-outs and the potential impact EUTPD II and standardised packaging will have on their businesses.
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