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Eighty-six per cent of packs bought in 2016 were in formats that are no longer for sale due to the introduction of plain packaging and EUTPD II, which banned packs smaller than 20 cigarettes or 30g of rolling tobacco.
Offering great value is more important than ever, which can be done by introducing larger packs to your range.
Mark Yexley, JTI head of communications, says: “The current trend towards value is set to continue. Larger packs of rolling tobacco are expected to become increasingly popular. Pack sizes, such as 50g, can provide smokers with the option of improved valuefor money.”
Price remains an important factor for consumers. Sub-economy brands make up 44% of cigarette sales and rolling tobacco customers are more likely to choose mid-price brands, which have a 54% share of the market.
The removal of designs from packaging has meant that offering quality products is crucial to earning loyalty and trust. Andrew Miller, Imperial head of field sales, says: “Smokers have become more brand reliant, either sticking with, or returning to, the tobacco brands they’ve traditionally relied on.”
The £197m cigar market is exempt from plain packaging, but is still struggling. The market is declining year on year by 8.5%, but miniature cigars are thriving and now make up 73% of the market.
Innovation can help products stand out. Imperial’s crushable cigarettes with menthol capsules now make up 13% of cigarette sales.
Become a destination
Shoppers seeking greater value can have a devastating effect on margins, but by becoming a destination for tobacco customers in search of specialist products, you can maintain them.
Imperial’s Andrew Miller says specialist knowledge is more valuable than ever.
“There is now more responsibility on the part of retailers to understand tobacco and become experts, from the broader category to the various sub-sectors and
their pricing,” he explains.
Imperial has been improving its products to differentiate its cigarettes but these developments rely on your expertise to sell the advantages. Recent launches include firmer filters for JPS Real Blue to help the products keep its shape and menthol papers in JPS Green Edge.
“These developments provide retailers with an excellent opportunity to demonstrate their category knowledge and explain to smokers about the innovation in tobacco,” Miller says.
Maintaining high availability of the top brands is critical if you want to become a destinationfor tobacco.
JTI’s Mark Yexley says: “Twenty-seven per cent of smokers choose to buy elsewhere if their brand is unavailable. It’s vital that retailers maintain full availability and range to ensure they do not lose out on sales.”
“People have moved away from the bigger brands and now go for the ones that were cheaper when they were price-marked, such as B&H Blue, JPS Blue, Sovereign Blue and Sterling Dual. People want their packs to cost less than £10.
“We’re contemplating getting rid of the gantry and putting cigarettes underneath. If you’ve got a three-metre gantry and you’re only using half of it, it’s a waste of space.
“We’re also looking at gantries with e-liquids in one half and cigarettes in the other. That’s another route we are considering going down.”
Londis Bexley Park, Kent
“Retailers have a lot more choice today in terms of what they recommend. You can direct customers to the products you want to sell, more so than before when people came in asking for a specific brand.
“If we want to push a product, because we know the price or margin is good, we’ll stock more of it. There are starting to be new players in the market too, which give us more incentives. There is plenty of potential for companies to launch and drive cheaper products in the market.”
Good News, Burton-on-Trent, Staffordshire
“All our shoppers are asking for the cheapest, which for us is Rothmans or B&H Blue, but we’ve also seen a growth of premium brands as well since the packaging changed.
“Maybe nearby shops have stopped stocking a lot of brands now and that’s why our sales have gone up.
“I think a lot of stores have cut down their ranges because it is getting more expensive. This gives our store an opportunity because we’re always well stocked as I get deliveries six days a week. I’m never out of stock of any brands for more than a day.”
St Mary’s Supermarket (Premier), Southampton
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