How much is the tobacco market worth?
Within the Tobacco market, which is currently worth £14bn (before tax) per year, there is almost a 50/50 market share split across Factory Made Cigarettes (FMC) and Roll Your Own (RYO) categories – at 53% and 47% respectivelyi.
Overall, we’re seeing continued movement towards low priced propositions across the entire category as consumer demand for value continues to drive tobacco purchasing patterns. As part of this shift, the lower price tiers now account for the majority of sales, with the sub-economy segment making up 63% share of FMC, and the economy segment accounting for 51% of RYO, with both value segments growing at 4% YOYii. This transition towards lower priced tobacco offerings is a key trend that wholesalers should be prepared to cater for to help their customers take advantage of the sales on offer.
What are the latest trends driving the tobacco category?
Looking at the RYO category in particular, we can see that the consumer drive for value remains a big factor, with the economy segment accounting for 51% of sales, and mid-price and premium products comprising 35% and 14% share respectivelyiii. Imperial is well placed to help wholesalers tap into this trend with more brands in the economy RYO segment than any other tobacco manufacturer.
Our new JPS Players Easy Rolling Tobacco is a great example of what wholesalers should be stocking to allow their retail customers to cater for these increasingly value savvy shoppers. JPS Players Easy Rolling Tobacco is an exciting new blend of fine cut tobacco that offers an easier rolling experience and benefits from the brand recognition of one of the UK’s best-selling cigarette brandsiv. JPS Players Easy Rolling Tobacco features a more vibrant colour and lower levels of moisture, making the blend easier to handle and to roll. The range is available to buy in 30g and 50g and priced at £12.95* and £21.20*, and each pouch includes a set of quality rolling papers.
As more value-conscious consumers shift towards RYO products, this presents new sales opportunities for tobacco-related accessories. In order to tap into this trend and take advantage of the incremental sales on offer, wholesalers should make sure they’re fully stocked at all times of filters, papers, lighters and other flavour-related innovations like Rizla Flavour Cards and Rizla Polar Blast Crushball filters, to help retailers respond to the rising number of consumers buying into the RYO segment.
Another area of the accessories market that’s proving popular with these value focused shoppers is combi packs such as Rizla Silver Kingsize Combi which, priced at just £1.20* offers papers and tips together in one pack for the ultimate in convenience.
From an FMC perspective, as demand for value tobacco continues to grow, many consumers are looking for a familiar brand that they know will deliver satisfaction at a low price. With this in mind, we recently unveiled a new look for our best-known brandv, Richmond. As part of the revamp, Richmond now features a bold new look with prominent outer branding to deliver a coherent design across the range. The entire Richmond portfolio is positioned within the new Value tier and is available to buy in packs of 20 at an MRRP of just £9.75* per pack to deliver great value to hard working shoppers looking for a well-known brand at the lowest price*.
Is there a shift towards lower price cigarettes, RYO and dualling between RYO and factory made cigarettes?
A trend that we’ve seen developing in recent years is a move towards more of a nicotine portfolio with adult smokers buying different RYO and FMC products to suit different occasions. While many smokers may be experimenting with the nicotine products available across segments, shopper demand for value continues to drive buying habits in tobacco overall. This is a trend we expect to continue in 2022 and beyond. In order to effectively harness the sales opportunities this presents, wholesalers must be equipped with the right products and importantly, the right knowledge, to help their customers navigate the Tobacco category.
What are the biggest sellers in your range?
The biggest sellers for Imperial are L&B Blue (7.3%) and Players (14.5%) in FMC and Gold Leaf (14.2%) for RYOvi. However, since launching Riverstone in 2019, we are seeing the brand grow month on month as more consumers find the easy rolling blend that originated in New Zealand, with the brand now surpassing 5% market sharevii.
How has Richmond been performing since it was revamped?
Since revamping Richmond, the brand has performed far better than expectations, hitting 3% market share recentlyviii. We’ve exciting plans in the pipeline for the brand and expect it to go from strength to strength in the years ahead.
What NPD does Imperial Tobacco have coming up?
To deliver added convenience to adult smokers, we have just announced the launch of a bigger box format with limited edition 21s packs across some of our leading products exclusively for the independent channel. Rolling out into independent stores from April, the limited-edition range of 21s packs will be available across a number of Imperial’s most popular cigarette brands including Players JPS, Richmond, L&B Blue and Lambert & Butler. The blends used are exactly the same as comparable products already on offer from each brand.
The new bigger box range of 21s will be available to buy with a MRRP* of £9.75 for Richmond, £10 for Players JPS and L&B Blue, and £10.80 for Lambert & Butler.
What advice do you have for wholesalers to grow sales?
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.
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.
There is a huge variety of different tobacco products available on the market today, so deciding what to stock can be a daunting task. Wholesalers are therefore in an excellent position to provide advice to retailers on what products they should be stocking, as well as insights into the latest trends shaping the category, such as the rising demand for value.
How do you work with wholesalers to help them grow the category?
We work closely with our wholesale customers through a range of tactics, including promotions, to help them maximise their tobacco sales and ensure they are offering the right products to cater for their retail customers.
Where do you see your brands going from here?
We are aiming to focus on fewer, bigger brands and put the consumer at the centre of all new initiatives. This focus will enable us to develop consumer relevant propositions for both combustible and NGP categories, ensuring our trade partners are stocking up on products they know will sell to their shoppers, supported by great trade marketing packages.
How is Imperial Tobacco committed to social and environmental responsibility?
Across our portfolio in both combustibles and NGP we are investigating ways to limit our impact on the environment, this is not only the responsible thing to do but is also important for our consumers and customers. We’ve ambitious aims ahead to reduce our environmental impact and developments are being investigated for roll out in the future.
* Based on ITUK RRP as at February 2022. For the avoidance of doubt, customers are free at all times to determine the selling price of their products.