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In the second part of this special investigation, Alex Yau delves deeper into supplier suggestions for growing your tobacco and e-cigarette sales
Supplier strategy #4: Heat not burn products are rolling out
After Andre Calantzopoulos, global chief executive of Philip Morris (PMI), told the BBC at the end of 2016 that he would like to work with governments to “phase out” cigarette sales completely, the company has embarked on a long soft launch of its IQOS system in the UK.
The system has been the talk of many trade events already, but for the uninitiated, IQOS is a heat-not-burn system which promises to be 90% less harmful to smokers than cigarettes. Its sleek design points to the fact that PMI has invested $3bn in the system.
IQOS may have had a soft launch in the UK, but accompanying international releases highlight bigger ambitions PMI has for the product. Within one year of launch in Japan, for example, the company had sold three million units. Other manufacturers have heavily hinted to RN that similar heat-not-burn products will arrive in 2018, too.
Peter Nixon, UK and Ireland managing director, Philip Morris UK
PMI is committed to a smoke-free future. Products like IQOS offer a real alternative to smoking. To date, nearly four million smokers have switched to IQOS including in countries such as Japan, Switzerland, Greece and Italy.
Supplier strategy #5: Take advantage of less restricted sectors
Legislation and budget rises are pushing cigarettes ever closer to the £10 mark, which affects the buying decisions of more frugal customers looking closely at their disposable income. However, retailers can overcome this issue by making shoppers aware of smaller format cigars at a more affordable price point. Importantly, cigars is also a sector where some branding remains on packs.
Ritmeester offers miniature cigars at a price close to those of traditional cigarettes (RRP £7.69). The size of its Royal Dutch range is similar, as well, meaning shoppers can have the experience of a cigar without the long smoking times often associated with the products. Add to this the launch of JTI’s Sterling Dual and the continued advancement of PMI’s Marlboro Touch – which maintains a low £7.99 RRP thanks to its slimmer size – and it is clear that offering great value for money remains one of the most important strategies manufacturers have in this market.
Tony Lyles, Field development manager, Ritmeester Cigars
Miniature cigars are going to be on-trend over the next year as shoppers look for more affordable alternatives in tobacco. They offer a premium product at a price on par with cigarettes, and they can be more attractive to shoppers because they get more quality. Shoppers also don’t have to spend ages outside when smoking miniature cigars because they burn just as fast as regular cigarettes.
Retailers share their top tips for increasing your profits:
Anita Nye, Premier Eldred Drive Stores, Orpington
I operate a small shop and customers buying tobacco can get a little frustrated if they wait in the queue during busy hours. I reduce any likelihood of shoppers walking out by placing all our cigarettes upside down in the gantry. Staff instantly know what brand it is and little things like these to try and reduce waiting times really help
Jason Birks, Moscis Convenience Store, Peterlee
Stocking a range of vaping flavours is essential. I have more than 100 different options in my vaping gantry and I’ve found demand for flavours which you’d describe as fruity or fresh is outgrowing traditional tobacco options. Sales of these e-liquid flavours easily make up more than 60% of my overall vaping sales.
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