Worth £14bn each year (before tax), the tobacco category continues to hold a significant amount of value for wholesalers (ITUK).

There is nearly a 50/50 market share split between Factory Made Cigarettes (FMC) and Roll Your Own (RYO) categories, at 54% and 46% (ITUK) respectively, and with more consumers looking for ways to reduce spending amid soaring household costs, we’re seeing a shift towards value products across the entire tobacco category.

We’ve seen shopper demand for value gain momentum as a result of the cost-of-living crisis and we’re now seeing the lower priced products account for the largest proportion of tobacco sales. For example, the sub-economy segment now makes up for 63% of FMC sales, while the economy segment accounts for just over a half (56%) of RYO, and these segments are showing strong growth at 3% and 5% Year on Year (YOY) respectively (ITUK).

“With household bills and inflation soaring, we expect value to remain the dominant trend shaping sales across the tobacco category,” comments Tom Gully, Head of Consumer Marketing UK & Ireland at Imperial Tobacco. “But it’s really important for wholesalers to remember that value means different things to different people. For some, convenience will remain a priority, with shoppers seeking out tobacco solutions that offer added value such as Embassy Signature’s premium features, or the addition of papers and tips in RYO like we offer through Players JPS Easy Rolling Tobacco and Rizla Combi for accessories. While others will be looking for a leading brand that offers the reassurance of a brand name they know they can trust that also delivers on price. Thanks to our wide portfolio of leading brands that deliver on value across every category, we’re in a strong position to help wholesalers cater for these trends in the months and years ahead.”

With many shoppers looking to cut down their household spending, there has been a significant increase in the number of RYO sales. In fact, the category now accounts for nearly a half (46%) of all tobacco sales (ITUK).

“As the cost-of-living crisis continues, it’s likely that the need for value products is going to continue to be a dominant trend in the category for some time, so wholesalers need to make sure they can cater for this demand by stocking the right product offering,” adds Gully. “With this in mind, we strongly advise that wholesalers check that they stock a wide range of leading roll your own brands, including Riverstone and Players JPS, so that they are fully prepared for this continuing rise in demand for value tobacco products. We’ve also just announced a new rolling tobacco variant for our popular Embassy Signature range to enable wholesalers to further capitalise on the rising demand for value tobacco.”

As demand for Roll Your Own (RYO) tobacco grows in light of the rising consumer appetite for value, the tobacco accessories category provides a substantial sales opportunity for wholesalers.

Recent figures show that filter tips are worth a sizeable £114m of sales, and while regular papers account for £44m, king size papers £29m and combi papers are also proving to be popular at £33m (ITUK).

“With this in mind, we strongly recommend stocking a wide range of products across each of these segments to cater for customer needs and maximise the sales opportunities on offer,” says Gully. “While it’s important that wholesalers have a wide range of different tobacco accessories to cater to different customers, such as filter tips, papers and flavour cards, given the prevalence of brand loyalty in tobacco overall, it’s even more important that they are stocking the most popular brands that consumers will be looking for, like Rizla, in order to avoid missing out on any sales opportunities.”

With over 200 years of heritage, Rizla is the No.1 Rolling Paper in the UK (EPOS data). Rizla King Size Combi Silver, with an RRP of £1.20, offers both papers and tips in one pack.

Looking at the FMC category, as the need for value-focused products continues to increase, many tobacco shoppers are seeking a familiar brand that they know and trust but at a low price point. With this in mind, Imperial recently announced the extension of its popular Players range with the launch of Players Max to enable wholesalers to cater to the ongoing demand for value tobacco.

Available to buy now, Players Max features cigarette sticks that are 12% longer in size and contains a new intense blend, a popular and preferred choice in consumer testing thanks to its full tobacco taste.

The new variant also features a modern and stylish, bevelled-edge pack which feels more robust and firmer in hand. With an RRP of just £10.50, £1.35 less than Players’ standard Kingsize format, the new launch provides an enhanced smoking experience at a low price point, making it a must-stock for wholesalers looking to cater for modern smokers seeking full-strength tobacco taste and great value.

Imperial has also just announced the extension of its popular Embassy Signature range with the launch of a new rolling tobacco variant, which offers a range of premium features at a low price point.

The new Embassy Signature Rolling Tobacco includes Imperial’s fastest selling and finest tobacco blend in a 30g pouch. During consumer testing, the Embassy Signature blend came out as No.1, demonstrating the blend’s appeal amongst adult smokers. The portrait pouch provides a modern look that’s easy to fit into a pocket and features a premium resealable zip lock to keep the freshness in. The new variant will be available to buy at an MRRP of £15.80.

Duncan Cunningham, External Affairs Director, PML, comments: “In recent years, the decline of combustible cigarettes in the United Kingdom has been accompanied by significant areas of growth in smoking alternatives, such as vaping and heated tobacco.”

While use of smoke-free products has increased, the progress of some products in helping smokers to transition away from cigarettes for good has stalled. Though vaping has made some headway into helping legal age smokers to move away from cigarettes, the data shows that it isn’t completely effective; between a third and half of all vapers in the UK are still dual-using with combustible tobacco products. Further to this, whilst 83% of current adult smokers in the UK have tried vaping, more than four in ten (43%) have returned to smoking cigarettes (ASH).

“It’s therefore important to ensure smokers are aware of all the credible, scientifically substantiated options available to them beyond vaping – including next generation products like heated tobacco. More and more legal age smokers are recognising this technology as a viable option and as a result the category has grown by 400% in the last three years (Nielsen), adds Cunningham.

Where wholesalers are concerned, PML has extensive commercial programs to create IQOS users in different channels, with a winning strategy for the convenience sector. Independent retailers are turning to wholesalers to fulfil demand for smoke-free products, who then reap the benefits in the form of increased footfall and boosted sales.

“It’s important to us that we work with wholesalers and their customers on the various options we offer in our smoke free portfolio, to help them make an informed choice in what products to list to support the changing needs of the consumer,” says Cunningham. “We also actively monitor our customers’ volumes and share market trends to support them with tactical and value-adding activities to keep them competitive in the market.”

PML also recommends cash and carries and wholesalers educate their retailer customers on the heated tobacco opportunity, and how it can unlock growth for their business. With increasing numbers of IQOS users in the UK and the launch of IQOS ILUMA, ensuring retailers can stock up on the full range of TEREA variants in one visit to your depot is also key.

The blade-less innovation at ILUMA’s core delivers an impeccable product experience, providing the user with an enhanced draw and a real tobacco taste. It’s also effortless, as there’s no need to clean the device, and it emits on average 95% lower levels of harmful chemicals compared to cigarettes.

There are three devices in the IQOS ILUMA range: ILUMA PRIME, IQOS ILUMA and ILUMA ONE, each device featuring new bladeless induction technology, which heats the tobacco within the stick instead of burning it. With no blade, there’s no tobacco residue left behind or inside the holder, meaning less smell and absolutely no need to clean the device.

TEREA sticks are specifically designed for use with bladeless IQOS ILUMA products and are key to offering improved draw and improved taste and overall offering a superior IQOS experience. There are nine different variants to choose from, and they’re available in a wide range of real tobacco blends including classic, menthol or more aromatic tobacco variants.

IQOS ILUMA with TEREA meet the needs of legal-age smokers seeking alternatives who have decided to not quit nicotine and tobacco altogether but want to maintain a real tobacco experience, and is a better choice than continued smoking, and with a significant cost benefit – by switching away from cigarettes in favour of IQOS ILUMA, a smoker could save up to £3,000 a year.

Nataly Scarpetta, Marketing Manager at Scandinavian Tobacco Group UK (STG UK), comments: “Tobacco is without doubt one of the most important categories for a wholesaler to get right. Whilst traditional tobacco sales have been in decline for some time now, what’s left is still huge and of course many consumers have been transitioning over to next gen products such as vapes or nicotine pouches, which have become an important part of the mix.”

When it comes to cigars specifically, IRI latest data shows the total category to be pretty static, worth just under £288m, which is down slightly by 0.5% in value terms compared to last year.

“With these challenging financial times the country is going through, price is always going to be high on many shopper’s agenda, so we always advise retailers to make sure they are highlighting their value brands to customers to help them save money, and the same goes for wholesalers,” adds Scarpetta. “Having said that, this trend for value has been prevalent in the cigar category for some time now, which is evidenced by the success of our Moments Blue brand. In fact, our Moments 10’s packs are the biggest brand in the VFM segment and are well-known amongst tobacco-selling retailers as a popular choice amongst those customers who are looking to save money.”

Flavoured cigars are growing steadily in popularity in the UK. Within the cigarillos segment, STG’s Signature Action brand with the peppermint click filter is currently experiencing sales growth of 41% versus the same time last year, and the Signature Red Filter brand is currently the UK’s best-selling aromatic filter cigar, with a smooth taste and vanilla flavour which proves consistently popular with those adult smokers who enjoy an aromatic cigar.

STG’s best-selling products are Signature Blue, Henri Wintermans Half Corona, Moments Blue and Signature Original. Sales of the Signature Action cigarillo brand have grown by over 41% in the last twelve months. STG recently revealed a range re-design across the Signature portfolio, the best-selling miniature cigar in the UK.

“To boost cigar sales, it’s important that wholesalers stock the right range rather than a big range, as the top ten brands account for over 90% of sales,” suggests Scarpetta. “I also believe it is very important to ensure our products are merchandised in-depot in a way that it makes it easier for the retailers to navigate, find them and purchase them. Of course, consistent availability and competitive cost prices are essential, but keeping the range in sight for the retailer to buy, will ensure we have our products at the ‘risk of sale’ within their outlets. Brand blocking is an effective tool to merchandising, along with a clear category versus market trend approach to stocking products.”

“I believe it is very important to ensure our products are merchandised in-depot in a way that it makes it easier for the retailers to navigate, find them and purchase them,” continues Scarpetta. ”Of course, consistent availability and competitive cost prices are essential, but keeping the range in sight for the retailer to buy, will ensure we have our products at the ‘risk of sale’ within their outlets. Brand blocking is an effective tool to merchandising, along with a clear category versus market trend approach to stocking products.”

As the economic climate continues to impact on consumer confidence and shopping habits, the UK’s tobacco accessories category is maintaining its strong performance.

The tobacco accessories category enabled retailers and wholesalers to meet growing consumer demand by offering products which not only provide value for money, but also quality and choice.

The category’s robust performance has resulted in year-on-year growth of 6.8% (Circana), with annual sales of accessories now valued at a massive £352m (Circana).

The category’s fastest growing sector is rolling papers, which is also the highest value, growing at +13.3% and worth over £72m in convenience alone (Circana).

Leading the charge is Republic Technologies’ premium quality papers brand, OCB, currently the UK’s fastest-growing Slim & Tips brand in the tracked market (Circana), underlining its importance to all tobacco accessories’ stockists.

The Slim & Tips subcategory is also recording impressive growth with value sales upwards of £30m (Circana) as more consumers opt for premium formats. This growth reinforces the role that brands such as OCB can play, not only in retaining existing consumers but also in attracting new shoppers to the fixture.

Roll-your-own products are becoming even more synonymous with value, and look set to appeal to even more consumers who want to cut costs without having to make major lifestyle changes or compromise on quality.

Effective merchandising and display can play an important role in boosting category sales. Republic Technologies provides various space-efficient counter display units (CDUs) for its ranges to support retailers.

Gavin Anderson, Sales & Marketing Director at Republic Technologies (UK) Ltd, comments: “As demand for factory-made cigarettes continues to decrease, tobacco accessories are very well placed to offer consumers a quality and value alternative, but they must be effectively displayed.

“Retailers who create an eye-catching display off-gantry while stocking brands such as Swan, ZIG-ZAG and OCB, stand to benefit most. Our latest branded display units not only enable retailers to showcase the very latest NPD, creating awareness and driving impulse purchase, they also enable retailers to signpost the wider tobacco category.

“Our brands have a proven track record of delivering quality, affordability and, in relation to new products, all-important innovation, and shopper loyalty is high. The added bonus for stockists of the most popular brands is that tobacco accessories’ consumers are creatures of habit, with strong levels of repeat purchase.

“By offering tobacco accessories brands which consumers know and trust, including filters, papers and lighters, retailers can make the most of a category which is performing well in the face of a challenging economic headwind. Sales can also be enhanced by the effective use of eye-catching POS.”

Swan Fresh Burst Crushball continues to be the best performing menthol capsule filter in the market (Circana), giving retailers great sales and margin. The crush capsule delivers a strong peppermint flavour and comes in a 2-part sliding pack containing 54 filters (RRP: £1.43).

Sustainable products remain high on the agenda for shoppers across all categories, including more natural ingredients, and reduced single-use packaging.

Swan Eco Loose, the most environmentally friendly filter in the UK market, is 100% biodegradable and made from unbleached paper (RRP: £1.45, 200 per box).

OCB Virgin Slim (RRP £1.10) and OCB Virgin Slim & Tips (RRP £1.73) are unbleached papers manufactured using OCB natural gum, which is sustainably sourced, vegan and GM free.

“Shoppers are more demanding than ever, looking for quality and value in every purchase. Top quality products, displays and innovation are important, complemented by broad availability and distribution, but the importance of a competitive price point should not be under-estimated,” concludes Anderson.



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