Tobacco continues to be one of the biggest FMCG categories, worth £14.5 billion last year, with the RMC market accounting for £10.9 billion (IRI).
As part of the growing value trend, the RYO category has increased 5.5% year on year, now generating sales of £2.8 billion, with 6.5 million kilograms of rolling tobacco sold in the UK each year.
RYO is the leading combined price sector, with a market share of 42.1% (IRI).
Miniature cigars are the leading cigar category and growing in share terms, with a current market share of 73.9% (IRI).
Ross Hennessy, Sales Vice President at JTI UK, comments: “Value has become a clear trend in the current tobacco market and wholesalers can maximise on this by stocking Value brands, such as JTI’s Sterling Tobacco – which is now the UK’s fastest growing tobacco brand and Amber Leaf, the UK’s No.1 tobacco brand in the UK with a 30% share of the RYO market. However, there is still a significant demand for premium and mid-priced brands, so wholesalers should ensure they stock a full range that reflect the needs of retailers who visit their depot to avoid losing out on sales.”
Existing adult smokers are looking for convenience, and 3-in-1 formats are the perfect solution. JTI’s recently launched Holborn Yellow and Kensitas Club 3-in-1 variants which provide 30g of tobacco, 100 papers and 77 filter tips all in one pouch for a fuss-free experience. This variant has the same RRP (£11.70) as the 2-in-1 version, offering adult smokers even more value for money.
The total value of the cigar market in the UK is approximately £195 million (IRI) with the category continuing to be a big seasonal sales driver. Every year, sales of cigars, such as Hamlet, follow a very similar pattern with a spike in volume during the summer months.
”In March 2019, for example, cigar sales volume increased by 13.9% versus the prior month, so wholesalers should take full advantage of this profit opportunity and stock up ahead of the summer season,” adds Hennessy.
Mark Yexley, Communications Director at JTI UK, comments: “Now that the menthol ban is in effect, wholesalers should look to stock a range of alternative products. JTI expects most adult smokers to stay within the cigarette category and remain brand loyal. That’s why we have launched the New Dual range, a distinctive tobacco blend in a unique dual pack, with two sections of ten cigarettes.”
The launches include Sterling New Dual, Benson & Hedges New Blue Dual, Sovereign New Dual and Benson & Hedges New Dual. The same distinctive blend is also available across Sterling New Superkings Green, Benson & Hedges New Superkings Green, Berkeley New Superkings Green and Mayfair New Green. In addition, Sovereign New Dual’s Flow Tech centre hole filter offers further product differentiation within the market by providing a firmer filter, quality smoking experience.
“Of course, others will make choices based on their preferences and may seek alternatives. JTI is determined to provide those smokers with innovative new products that meet their needs,” adds Yexley. “We launched Sterling Dual Capsule Leaf Wrapped cigarillos earlier this year which contain a peppermint capsule that smokers can click to release a menthol flavour. Whatever adult smokers do now the ban is in effect, JTI has the alternatives covered.”
Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco, comments: “The continued consumer demand for value is shaping the tobacco category. As adult smokers increasingly shift their purchasing habits between segments, they are expanding the range of nicotine products they buy to cater for different occasions. This has led to a rise in the number of dual users buying both factory made cigarettes (FMC) and roll your own (RYO) products, as well as moving into emerging nicotine segments such as vaping.”
As consumers move towards more of a nicotine portfolio approach, shopper purchasing decisions remain heavily influenced by this constant drive for value and we expect an acceleration of this trend to follow in the years to come.
Factory made cigarettes (FMC) remain the largest segment within the tobacco category, accounting for approximately 60% of total volume sales. As part of this sustained shopper demand for value, sub-economy brands are proving particularly popular.
Imperial Tobacco continually monitors the latest market trends and adjusts its portfolio to ensure it meets the needs of shoppers, while also providing retailers with the right products to grow their sales. Over the last few years the company has repositioned a number of its FMC products to help retailers cater for this down trading trend. This includes shifting L&B Blue into the sub-economy sector in 2018 and, more recently, repositioning Embassy from the premium price sector to the more popular economy sector, both with competitive price points that will appeal to adult smokers looking for premium quality, at an affordable price.
Demand for value for money is a dominant trend within the tobacco category. As more consumers seek out the lowest out of pocket spend, there is an increasing shift away from factory made cigarettes (FMC) and into roll your own (RYO). As a result, the segment continues to grow its share of the market as value seeking shoppers move into RYO or become dual users, smoking both cigarettes and RYO products across different occasions.
As value for money continues to be a focus for many adult smokers, the economy RYO segment continues to go from strength to strength and now accounts for 45% share of Fine Cut Tobacco sales, vs 38.3% last year, with further growth expected to come. Since its launch, Riverstone has become one of the fastest growing tobacco brands in the market, (ITUK estimates) as it taps into this trend with its high quality, easy-to-roll blend and affordable price.
“While offering great value for money is crucial, many consumers making the move into RYO are looking for reassurance on quality by buying products from well-known brands they can trust,” adds Cunningham. “With its strong tobacco heritage and brand recognition, Lambert & Butler is well placed to respond to this trend with its new RYO variant.”
Available to buy in both 30g and 50g formats and priced at just £11.00 RRP and £18.15 RRP respectively, the new Lambert & Butler RYO blend offers premium quality at an economy price point. The unique blend benefits from reduced moisture levels to make it easier to roll which has proved exceptionally popular with consumers during testing.
Imperial Tobacco has announced product enhancements across five of its brands, as part of its new Green Filter range, plus the launch of a brand-new product, JPS Bright, to help wholesalers and their retail customers, maintain menthol customers and grow their sales.
Imperial Tobacco has launched an innovative new product from the world’s most popular rolling paper brand. Rizla Flavour Infusions offers menthol shoppers a fresh new proposition that will allow them to discover great flavours and help wholesalers protect their sales from the menthol ban.
“Every depot is different so it’s important for wholesalers to consider what products are proving popular with customers, alongside the latest trends, to assess the right range for them,” says Cunningham. “Ultimately, we’d recommend stocking as broad a range as space allows and then fine tuning this in the weeks and months that follow according to customer feedback and sales. The wholesalers who can remain agile, will be in the best position to cater for their customers and grow their nicotine sales as a result.”
Alastair Williams, Country Director at Scandinavian Tobacco Group UK (STG UK), comments: “Obviously wholesalers are working unbelievably hard and doing an incredible job in very difficult circumstances at the moment, and for that we are all very grateful. They have had to be agile and adapt quickly in response to fluctuating demand for products and challenging supply chain issues which is no mean feat. From an STG perspective, we continue to offer them promotional support and although we are not physically visiting depots to alleviate pressure on staff, we remain in regular contact by phone and email to assess inventory levels in order to maintain continuity of supply. We also ensure we provide up to date advice on adult cigar consumers smoking habits during these difficult times.”
STG’s Signature range offers a taste profile to suit all consumer preferences and currently accounts for over one third of total cigar sales in the UK. In addition to this, STG has introduced a new product to the range. Launched in February, the new arrival to join the Signature brand family is a filter cigarillo coming in a pack of ten, with a low out of pocket price of just £4.95. The key product feature is that it has an acetate filter containing a peppermint capsule under a lasered marker. In addition, a carefully selected blend of Virginia tobacco and a light real leaf Ecuadorian wrapper deliver a smooth taste.
“Since the outbreak of Coronavirus, the tobacco category has proved to be pretty resilient so far,” adds Williams. “Many consumers have preferred to visit their local convenience store rather than the larger format supermarket and it is no surprise that this has been reflected accordingly in sales data. Earlier on in the pandemic we also saw some stockpiling or panic buying from consumers and this translated into cigars sales too.”
Whilst most of the usual key cigar trends such as ‘value for money’ have remained, some interesting new ones have also emerged. As people have been at home more, coupled with warm weather recently, STG has seen sales of its larger format cigars being particularly positive. In fact, sales of Henri Wintermans Half Corona were up 20% in April, compared to the same time last year.
“When it comes to cigars, I think wholesalers have sometimes been guilty of stocking too broad a range that doesn’t necessarily match up with current consumer trends. This is probably because they are aiming to provide their retailer customers with the perception of choice, but in reality, the top ten brands are responsible for almost 90% of total volume sales so knowing what those brands are and ensuring they are always in stock should be a key focus,” Williams continues.
“Of course, the first cigar on the list should be Signature which is by far the best-selling cigar in the UK and very much the jewel in our crown. But there is more to the Scandinavian Tobacco Group cigar offer than just Signature. We also have Moments Blue, which is the UK’s fastest growing cigar and second best-selling Miniature cigar, and of course our Henri Wintermans Half Corona holds the position as the UK’s favourite Medium to Large cigar, so if wholesalers stock these as a minimum, they should be able to perfectly meet the needs of each and every one of their customers.”
Republic Technologies (UK) Ltd is backing Swan, the No.1 filter brand in the UK’s £288.3 million (IRI) tobacco accessories market, with a national cash and carry drive supporting its biggest ever NPD campaign. Specially-designed, Swan branded pallet displays and free standing, four-shelf display are rolling out across depots, with the eye-catching units already sited in Dhamecha, Bestway and Batleys.
“Generating standout in cash and carries remains a key priority for us and this underlines the importance of the convenience/independent trade to the tobacco accessories market, including Swan filters,” says Gavin Anderson, General Sales Manager of Republic Technologies (UK) Ltd.
“Currently, more than three quarters of all tobacco accessories sales are in convenience (based on the tracked market), and we remain committed to working closely with, and maintaining high visibility in, cash and carry depots.”
The move comes as the Swan brand is maintaining the strong growth levels it enjoyed following a major relaunch some years ago, which included the introduction of an eye-catching, contemporary design. The brand has the largest value share of the UK filters market, which is currently growing at 5.4% (IRI).
Timely, targeted NPD is contributing to this growth, offering consumers more choice with a range of quality products which complement existing Swan SKUs. This year’s NPD focus has seen the introduction of three new menthol filters as part of a range of six new SKUs which also includes Swan Graphite, Swan Long Extra Slim and Swan Eco Loose, each offering a point of difference in the market.
“With the menthol ban now in place, we know that menthol cigarette smokers are looking for advice and guidance on suitable alternatives. We’ve provided a category-boosting solution which provides all important choice, quality and menthol flavour delivery, enabling smokers of factory made menthol cigarettes to easily transition to Swan menthol filters,” adds Anderson.
The move comes as increasing numbers of smokers are turning to roll your own, with the market outperforming the total tobacco category.
“Most of our customers are people who’ve been smoking for some time and have opted for roll-your-own for a variety of reasons. Better value for money vs. cigarettes remains a key consideration for RYO smokers, and many people like the tactile aspect of rolling which also has the added benefit of reducing consumption, as smoking becomes less instant,” continues Anderson.
“At a time when increasing numbers of smokers are looking at alternatives to factory made cigarettes, and the emerging vaping sector is still under some scrutiny, growing numbers of smokers are opting for a roll-your-own solution. Maintaining a strong branded presence in cash and carries ensures our brands stay front of mind and enables retailers to meet their shoppers’ needs.”
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