Tobacco has faced a number of challenges in recent years. More than a year after EUTPD II and plain packs arrived, Joanna Tilley and Tom Gockelen-Kozlowski discover how retailers are fairing

tobacco-stat-1.pngTobacco is a category which has long been at the heart of the convenience store model – even the acronym ‘CTN’ puts it centre stage, with confectionery and news often providing that extra impulse buy when customers come in for their daily tobacco purchase.

That model may look increasingly outmoded as more retailers look to add categories such as fresh & chilled to boost profits, but tobacco remains by far the biggest category for retailers, according to ACS’ Local Shop Report. (20.4%, with alcohol next at 14.9% and chilled foods rising to 13.6%).  

So, RN has decided, 18 months after the arrival of the category’s biggest legislative challenge yet – the arrival of plain packaging and EUTPD II – to discover what stores’ experiences have been and what best practice advice they have developed in response.

Alongside exclusive data on independent retailers’ bestsellers, this is the first, most accurate picture yet of the new tobacco market.

Tobacco must-stocks

From the retailer survey 

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Samantha Coldbeck
Wharfedale Premier, Hull 

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How has the tobacco market changed since May 2017?

Tobacco sales are definitely down as the Government is making it very difficult to carry out a legal act. From May 2017, I would say sales are down by around 5%, but Hull still has a lot of smokers and we support their choices. The NHS is doing some good work to support people who want to quit.     

What is your strategy to maintain tobacco sales in 2019?  

Our strategy is focused on pricing, although we wouldn’t go below the RRP. Vaping is not in the same league as tobacco, but the margins are better and we have a decent vaping selection.

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Surj Khunkhun
One Stop 
Woodcross ,Wolverhampton 

 

How has the tobacco market changed since May 2017?

I don’t think it’s had any impact – we are still selling large quantities of tobacco. B&H Blue and Sovereign Blue – the budget brands – have really taken off. The biggest thing is consolidation, because without an open display, people are more likely to look for the cheapest. 

What is your strategy to maintain tobacco sales in 2019?  

We are trying to work as near to 100% availability as possible – and we stick to RRP. Our tobacco is now exclusively through One Stop – and we follow their recommended prices and don’t premium price. 

What do suppliers think?

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Ben Gun
Imperial Sales 
Represntative,
Nottingham area

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Fully understanding retailers’ needs and their businesses is paramount when building the foundations for a strong trade partnership. When visiting outlets, I like to be clear on what I want to achieve. This can be, for example, sharing industry knowledge regarding the latest category trends – from crushballs in tobacco to the rapid growth of e-vapour – plus ensuring trade incentives are explained and administered. Trade programmes like Imperial’s Ignite are important in focusing discussions, while allowing retailers to take ownership of their category and ensure they meet their customers’ needs.

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Jens Christiansen
Head of marketing and public affairs
at Scandinavian Tobacco Group

 

The relationship between independent retailers and their customers is integral to sales success, especially within the tobacco category. Taking the time to engage with shoppers and forge a stronger connection by proactively offering advice can really pay off in sales. The average profitability for cigars is double that of cigarettes, so it’s really worth investing the time and effort in understanding the category and different products available so you can, in turn, offer well-informed advice to your customers. 

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Retailers are serving ever more
price conscious customers

From the retailer survey

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Bal Ghuman
Premier AK Convenience,
Shrewsbury, Shropshire 

How has the tobacco market changed since May 2017? 

Making all the packaging the same has taken the status out of it and people are just after the cheapest cigarettes you have. I have a one-metre gantry, and since last year, only half of it has had any tobacco in it. Manufacturers are focusing on vaping. 

What is your strategy to maintain tobacco sales in 2019?  

Maintaining tobacco sales is very simple – it’s about availability and tailoring your range. It is important not to tie up money in stock that isn’t moving and there’s a number of premium brands that aren’t relevant to my store any more.   

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Joey Duhra
Jules Convenience
Store, Telford, Shropshire  

 

How has the tobacco market changed since May 2017? 

The tobacco market has grown for us. Previously, people would smoke smaller packs more slowly, but now the same customers are regularly buying packets of 20, so they tend to smoke more because they have more. Plain packaging and no pricemarks have meant we are able to push up our margins.

What is your strategy to maintain tobacco sales in 2019?  

We keep fully stocked; if there’s something new, we will stock it, but the market is being dictated by price at the moment. We have a range of vapes and are seeing an improvement in these sales, too.