Scandinavian Tobacco Group UK (STG UK) supplies Signature, the UK’s number one cigar, plus the fastest growing cigar, Moments Blue and the leading medium to large cigar, Henri Wintermans Half Corona. The company has kept busy this year by introducing a ‘United Kingdom’ themed limited-edition pack for Henri Wintermans Half Corona cigars, featuring a ‘dressed up’ Mr Wintermans, with a top hat, umbrella and bow tie in eye-catching union jack livery.
STG has also signed a distribution agreement with the Mac Baren Tobacco Company for their most prominent pipe tobacco brands in the UK market.
Alastair Williams, Country Director at Scandinavian Tobacco Group UK (STG UK), tells Wholesale Manager what is driving the cigar market and passes on advice for wholesalers to merchandise the category.
What are the key products in your range that wholesalers should be stocking?
Of course, the first cigar on any list should be Signature which is by far the best-selling cigar brand in the UK and very much the jewel in our crown. The reason behind Signature’s success is because it is bang on trend, offering time-poor adult smokers a high quality, smooth and aromatic smoke. The Signature range currently accounts for well over one third of all cigars sold in the UK, led by Signature Blue, which is the UK’s favourite cigar, with a 22% volume share. This is closely followed by Signature Original and Signature Filter Red, which, when combined as one brand portfolio, is worth nearly £55m in annual sales.
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.
What is the value of the UK cigar market?
The UK Cigar category is well established and may not be as dynamic or fast moving as something like Vaping, but it is still worth just under £195m in annual sales, and the products within it typically offer three times better profit margins than cigarettes, so it’s absolutely one that is worth getting right. Scandinavian Tobacco Group is by far the biggest player with just under 55% of all cigars sold in the UK.
What trends are driving the market?
The key trends in the cigar category have remained pretty consistent over the last few years and are unlikely to change significantly in the next 12 months. Firstly, miniature cigars have been growing in popularity for quite a while and now account for over 74% of total UK cigar sales. STG brands account for four of the top six selling miniature cigars, which are worth over £70m in annual retail sales value. Next, we’ve seen a consistent growth in the popularity of good quality value for money cigars amongst adult smokers for a while now, and with the current economic outlook not looking particularly rosy, we only expect this trend to accelerate. Our very own Moments Blue brand is the fastest growing and best-selling value for money brand in the category. Finally, larger cigars are particularly popular in the summer or at key celebratory periods throughout the year such as Christmas or New Year.
What effect has Covid-19 had on the cigar market?
Since the outbreak of Covid-19, the Tobacco category has proved to be pretty resilient so far. Certainly, at the beginning many consumers 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. Probably because people have been at home more, coupled with some nice weather recently, we’ve seen sales of our larger format cigars being particularly strong. In fact, sales out from our warehouse of our Henri Wintermans Half Corona were up 40% in June, compared to the same time last year. Thankfully, it seems like miniature cigars sales have not suffered as a direct consequence, with brands like Signature and Moments continuing to perform very well.
What advice do you have for wholesalers on merchandising tobacco in depot?
I think wholesalers have sometimes been guilty of stocking too broad a range of cigars 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.
How do you work with wholesalers to improve sales?
Obviously wholesalers have been 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 as well as 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.
How are Signature filter cigarillos, launched last February, performing?
The Signature filter cigarillos were a natural extension to the range and perfectly complement the existing Signature Filter Red. 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. They come in a convenient and stylish pack of ten, with a low out of pocket price of just £4.95. It is still relatively early days and consumers are still trialling different products to see which they like best, but early signs are positive and as the product is in good distribution, we expect it to do very well in the long term.
What brand activity do you have planned?
It’s been a busy year for our cigar range so far, with a new addition to the Signature portfolio and we’ve also recently launched a limited-edition pack for our Henri Wintermans Half Corona brand. l also want to briefly reference our pipe tobacco range as we’ve recently signed a distribution agreement with the Mac Baren Tobacco Company for their most prominent pipe tobacco brands in the UK market. Brands such as St. Bruno and Gold Block are welcome additions to our expanding product portfolio, and it is well worth wholesalers spending a bit of time ensuring they have the right pipe tobacco brands on offer. This deal has firmly positioned STG as the leading player, not only in cigars, but now also in traditional pipe tobacco too, and means we can now offer the trade two of the top three significant brands in the category.