Sales of key tobacco brands in cash and carries are down by up to 50% as the illicit trade hits the convenience channel harder than ever.
But retailers are shying away from the problem, rather than looking to their wholesalers for help, according to depot managers and tobacco reps.
Alan McCarten, depot manager at Batley’s in Gillingham, told Retail Express that although tobacco sales were falling generally all over the country, it was easy to see the local impact on his customers caused by the black market. “My total cigarette sales are down this year by 2.8%,” he said.
“But some of my customers’ tobacco spends are down by 20% – and they are bringing all their spend to us. There must be a growing illicit trade in their area for them to not be selling a similar amount of cigarettes. Otherwise, my sales would match that decline.”
He asked his customers why their trade had dropped and said they responded by saying people were giving up smoking. “They don’t recognise there’s a problem [with the illicit trade] in their area,” he said.
“They really believe that more and more people are giving up smoking, but my spend here doesn’t show that,” he added.
Imperial Tobacco route to market executive Eamonn Dillon said key brands were suffering.
“There are a lot of retailers not buying 50g anymore,” he said.
“Sales of 50g in this depot [Batleys Gillingham] are half of what they should be for the postcode. Golden Virginia Classic should have a 7% share of sales in this area but this depot is tracking under 3.5%. Sales of 12.5g packs are nearly even but 50g sales should be much more than they are across all manufacturers.”
But most retailers were shying away from the problem, said Alan – and we need them to shout louder.
Alan said one of his retail customers told him he had been asked by a shopper where “the store that sold the cheap tobacco” was. They said to him they’d heard it was 50% cheaper there, and that he was too expensive. Everybody knew about the place that sold the cheap tobacco, even the retailer himself, but when Alan asked him for the address, he told him he didn’t want to get involved.
He said: “You hit a brick wall when you ask retailers where the problems are.”