The total tobacco category in multiple forecourts is worth over £683m a year, with cigarettes accounting for over £572m-worth of sales (Nielsen data). The multiple forecourt sector has a more premium product mix than the total market, with mid-price products and more expensive ones over-indexing in terms of market share. The number one cigarette brand in multiple forecourts is Sterling, with a 16.2% share. But B&H Blue has been the fastest-growing cigarette brand over the past year and is now the number two best-selling brand in multiple forecourts, with a market share of 10.7%.
Trends in this sector mirror those of the total market, with growth in the capsule segment and the continued growth of the value and roll-your-own (RYO) sectors. In fact multiple forecourts, over-index in sales of capsule products with them accounting for 23.2% of cigarette sales compared to 14.7% for the total market. Here the number one capsule brand is Sterling Dual with a 50.8% share of the sector. Over the past 12 months, Sovereign Blue Dual has been the fastest-growing capsule brand but this year JTI’s newly launched Sterling Dual Double Capsule has become the fastest- growing capsule product. This king-size product gives smokers extra value and extra length, allowing retailers to maximise on the profit opportunity presented by the value segment
In multiple forecourts, the RYO sector is worth over £104m and the number one RYO brand is Amber Leaf, with a market share of 41.9%. Amber Leaf 30g is the leading RYO SKU, which currently holds a 28.9% share of the RYO market in multiple forecourts. In fact Amber Leaf is the number one tobacco brand in the UK with a 32.3% share of the RYO market. Such data is important because Mark Yexley, head of communications at JTI, says that in order to maximise sales, forecourt retailers must be knowledgeable about the tobacco category and the different brands they stock making staff education and training a must.
"JTI Advance (www.jtiadvance.co.uk) is continuously updated and can provide regular training to suit the busy schedule of retailers," he explains. "And JTI’s extensive UK sales force is also fully trained to give retailers advice on their tobacco range and is constantly upskilled, enabling them to give retailers the latest support to help them maximise the profit opportunity the category holds."
Andrew Miller, head of field sales at Imperial Tobacco UK, says independent retailers have one big advantage over supermarkets and that’s the personal service and their chance to build a genuine relationship with their tobacco-buying customers through excellent category knowledge.
"In an age where customer and product loyalty is increasingly volatile, a retailer’s tobacco category knowledge may prove the difference between retaining or losing adult smoker customers. By establishing their store as a ’go-to’ destination for local adult smokers, traders gain a competitive advantage over rival retailers and channels hopefully reaping the associated footfall and basket spend adult smokers are proven to contribute," he explains.
With cigarettes and tobacco such a high-value product, the category still attracts the criminal element whether stealing the products from stores or trading in illicit products. According to HMRC, sales of illicit tobacco cost the government £2.5bn in lost taxes in 2016-17. And it has been estimated that the sale of illicit tobacco made criminals more than £1.5bn and cost the small retail sector more than £1.7bn in revenue.
The Tobacco Manufacturers’ Association (TMA) has just launched a major nationwide advertising campaign to help fight the scourge of illicit tobacco. Posters are being displayed on phone boxes in 50 illegal tobacco hot spots across the UK, so those tempted to either buy or sell cheap illegal tobacco are warned of the consequences.
The campaign also encourages those who are aware of illegal tobacco, but don’t buy or sell it themselves, to report any suspicious activity to HMRC who will investigate further.
The advertising is also appearing at the UK’s busiest ports and at various airports to remind adults who bring tobacco back from abroad that it is illegal to sell it on without paying UK taxes. Posters have been put up in 50 locations in Cardiff, Glasgow, Perth, Dundee, London and Manchester. The TMA’s ports campaign has billboards at Dover and at Glasgow, Glasgow Prestwick, East Midlands, Manchester, Cardiff and Belfast airports.
The campaign has been developed following research, which found that many adult smokers are unaware of or simply disregard the law. The activity has been designed to ’nudge’ smokers away from the illicit market by reminding them of what is legal and what is not and raise awareness of the HMRC’s illicit trade reporting hotline.
Giles Roca, director general of the TMA, says: "The tobacco industry is committed to helping fight the illegal tobacco market which impacts communities, public services and retailers. The government needs to commit greater resources to tackling illegal trade and needs to consider innovative solutions post-Brexit to halt the flow of cheap foreign tobacco into the country."
Meanwhile, Imperial continues to focus on educating retailers around the threat of illegal tobacco. This could be in terms of reporting any information regarding local sellers or discussing the topic with their smoker customers who may be tempted by the illicit market and raise the subject with their local retailer.
Miller says HMRC’s ’tax gap’ figures following the outlawing of price-marked packs in the run up to the implementation of EUTPD II and standardised packaging legislation demonstrate that the scale of the illegal tobacco problem hasn’t waned. In fact, it’s getting worse.
"In lieu of the government either repealing standardised packaging or lowering tobacco tax rates, Imperial recognises that the most effective way to tackle the problem is to continue to raise awareness and build AIT (anti-illicit trade) advocacy among retailers, consumers, law enforcement, industry bodies and politicians alike via our dedicated team and Suspect it? Report it! Campaign," he says.
"We’ve now launched our unique Suspicious Activity Supporting app (SARA for short). All members of our sales force have the app loaded onto their tablets, allowing them to collect and process information supplied by our retailers (in total anonymity) more quickly and efficiently than ever."
The scale of the problem is also highlighted by the results of an undercover operation conducted for JTI in Staffordshire, which revealed the widespread availability of illegal tobacco, with 17 out of the 48 stores visited in Stoke found to be selling illegal products.
Additional consumer research also conducted for JTI revealed that more than half (55%) of smokers in Staffordshire say they have bought fake cigarettes.
The investigation also found that nearly six in 10 (57%) smokers in Staffordshire had been offered illegal tobacco in the past year, and over half (53%) would not report it if they were offered illegal tobacco, even though it could fund organised crime. In addition, 43% have bought cigarettes with foreign language health warnings on the pack and 24% have bought tobacco from family or friends who had been abroad.
The operation revealed that the typical price for a pack of illegal cigarettes was £3.50 (versus about £8 for genuine products) while a 50g pack of illegal RYO tobacco was either £4 or £4.50 (versus £21).
Other key findings from the survey of 450 adult smokers in Staffordshire included:
The fact that illegal tobacco was readily available was the reason over half of smokers (51%) bought illegal tobacco. This was followed by ’saving money’ (48%) and smaller packs not being available (30%).
Only 47% would worry about getting in trouble with the law, while the biggest concern (52%) for most is that the quality wouldn’t be the same. Only 23% were concerned that they might be funding criminal gangs.
53% would not report the sale of illegal tobacco.
55% said they had bought cigarettes they believed to be fake, 43% had bought cigarettes with foreign language health warnings on the pack and 24% had bought cigarettes from people who had been abroad.
JTI demonstrates its commitment to take action against retailers found to be selling illegal tobacco by publicising the fact that its gantries are removed from their shops. In June the tobacco giant removed its gantry from N&N News in Desborough Road, High Wycombe, following a prosecution at High Wycombe Magistrates’ Court for selling counterfeit tobacco products. The store’s owner, Chandrasegaram Mughaya was given a suspended jail sentence and ordered to pay £1,650 in costs. This is the second time JTI has removed a gantry from a retailer in the town for illegal tobacco sales. In December 2016 the company acted against Micklefield Superstore in Gayhurst Road.
Charlie Cunningham-Reid, UK head of corporate affairs, comments: "Once again, our action, supporting those of law enforcement agencies, serves as a warning to any retailer tempted to sell illegal tobacco."
JTI is also working hard to tackle the problem of retailers selling tobacco products to under-18s. It has just launched an enhanced youth access prevention programme, which is an extension to the previous three-year national Responsible Tobacco Retailing programme that JTI supported between 2015 and 2018. The programme is designed to identify retailers who may be ’at risk’ of selling tobacco products to under-18s, and then offer those retailers free-of-charge professional training provided by fully qualified former Trading Standards officers.
In a change to the previous scheme, any retailers assessed as ’at risk’ of selling to under-18s four times in a row will be reported to the relevant law enforcement agencies for further follow up. he local authority areas selected all have the highest proportion of premises identified as ’at risk’ of selling tobacco products to under-18s in the previous three years’ work and/or the highest teenage smoking prevalence rates.
This enhanced programme has been developed in partnership with Serve Legal, a leading provider in testing compliance on sales of age-restricted products, and Under Age Sales, a training company which offers specialist advice to retailers about how to avoid illegal sales to children and young people.
Cunningham-Reid says: "The aim of the Responsible Tobacco Retailing scheme is to tackle the problem of underage sales by providing training and support for retailers in this area.
"This enhanced programme demonstrates JTI’s continued commitment to playing a full role in youth smoking prevention."
Julian Sargeson, director at Serve Legal, has this message for retailers: "Failure to invest in staff training, performance and processes around age identification checks puts any retailer at risk of selling tobacco to minors and to the penalties of being caught doing so."
"Tobacco is still a massively important category for us in this store. Sales are steady; it’s popular with men and women; and we’ve customers who come in every day for their cigarettes or tobacco.
"Cigarettes way outweigh roll-your-own tobacco in volume sales. Our most popular brands are Sterling and JPS. In tobacco it’s Gold Leaf and customers don’t necessarily want the packs that contain tobacco, papers and filters; they are quite happy to buy them separately.
"People are used to the products being behind doors now and just come in and ask for what they want. Some customers will always stick to one brand while others will go for whatever is cheapest."
"We also do the e-cigs and they are getting more and more popular all the time."
manager Hickson’s Forecourt, Lincoln:
"Availability is one of the most important factors in managing the tobacco category today. Before, if a customer saw a gap where their favoured brand was meant to be they could quickly choose another one but that’s not so now.
"If you haven’t got the brand they want, it’s more awkward to offer another so you need to be in stock all the time.
"With RYO tobacco, since the smaller packs haven’t been available we have seen lower volume sales but higher value sales. And a lot of RYO smokers are switching to e-cigs. It’s definitely still a transitional time for the market.
"With cigarettes, I don’t think that market will ever die off completely. We still have lots of people coming in every day for their packet of 20, with Lambert Blue and JPS both being our big sellers."
Retailers missing cigar opportunity
Recent research from Scandinavian Tobacco Group UK Limited (STG UK) reveals that over half (51%) of convenience store retailers aren’t offering customers the all-important guidance they need on which tobacco products to purchase, presenting a huge missed opportunity.
The research of 1,000 consumers, conducted by Censuswide UK, indicates that while nearly half (46%) of retailers are offering customers advice on what products to purchase, less than 2% of these shoppers feel that their recommend-ation would ultimately influence their tobacco purchasing decision. This presents an opportunity for retailers to further educate themselves on the category to provide informed advice to their customers.
Jens Christiansen, head of marketing and public affairs at STG UK, comments: "Since the arrival of the display ban and standardised packaging, shoppers are increasingly looking to retailers for advice on what to buy, especially if their favourite brand is out of stock.
"By taking time to understand the category and different products on offer, retailers will be able to recommend a suitable alternative, and even a different segment within tobacco, to avoid missing out on sales and giving them the opportunity to capitalise on the high profit margins that cigars offer."
The findings highlight that price in terms of out-of-pocket spend has the greatest influence on tobacco purchasing decisions, coming out top of the poll (61%), with perceived value for money coming second (47%). Christiansen says that stocking cigars allows retailers to respond to both of these findings, with well-known brands like Café Crème offering reassurance of quality, as well as smaller pack sizes and even individually wrapped cigars offering low out of pocket spend.
The figures also reveal that of those smokers who haven’t tried cigars before, a quarter (24%) would be encouraged to buy them because of taste and a fifth (19%) would buy them if they thought they were cheaper.
The research was released to coincide with STG UK’s Lock, Stock and Sell campaign, which offers retailers advice to help them make the most of the cigars opportunity.
New from blu: myblu ’pod mod’ system and intense Liquidpods
E-vapour brand blu is launching its latest next-generation ’pod mod’ system, myblu, along with its new Intense Liquidpods, both of which are rolling out into stores from September.
The myblu product combines a high-performance vaporiser, which takes just 20 minutes to charge, with the device’s hassle-free Liquidpods to allow consumers to switch between flavours in seconds via a simple one-step ’click and go’ system. In addition, it is also the first widely available ’pod mod’ device to feature Nicotine Salts, created by introducing a special compound to the ’freebase’ nicotine found within tobacco leaves. Vaping a myblu Intense Liquidpod results in nicotine being absorbed into the body at a significantly more rapid rate than normal e-liquids.
Sophie Hogg, head of next generation products at blu UK, says that by delivering a sensation of satisfaction much closer to smoking a traditional cigarette, myblu Intense will appeal to adult smokers who are either looking to switch to vaping for the first time, or have perhaps tried vaping in the past and not been fully convinced.
"Its unique Nic Salt-infused proposition means it’s the smoothest, most satisfying and intense myblu experience yet," she explains.
The myblu Starter Kit has an rrp of £19.99 and includes a myblu device, USB charger and one tobacco flavoured Liquidpod. The myblu Intense Liquidpods retail at £5.99 for a pack of two 1.5ml Liquidpods and come in four flavours (Tobacco, Menthol, Strawberry Mint and Blueberry). A selection of 11 freebase myblu Liquidpods are also on offer, including zero, 0.8% and 1.6% nicotine strengths, and are sold in packs of two pods with an rrp of £5.99.
The myblu product will be heavily supported in the independent trade through an extensive range of pos material and incentives.
A striking promotional programme
Republic Technologies (UK) has launched its biggest ever programme of consumer PR and marketing activity in support of its matches, including a partnership with celebrity chef, Tom Kerridge and national press advertising.
The news follows the recent relaunch of the matches’ range, which included new packaging and the launch of a pocket-size Swan match. In addition to modernising brands so they appeal to a younger audience, the move marked a commitment to sustainability and the increased demand for eco-friendly matches following the removal of the Strike Anywhere formats from the range.
Gavin Anderson, general sales manager at Republic Technologies, says: "With this latest investment in the range, we’re demonstrating our commitment to supporting our market-leading matches, re-energising a category where sales have been declining and both innovation and creativity had diminished."
The partnership with Tom Kerridge has seen the chef contributing a selection of 12 recipes for the backs of the new Cook’s Matches packs in a bid to appeal to modern ’foodies’. In addition, a heavyweight social media campaign includes culinary competitions and a new website for Cook’s Matches. There is also advertising in leading cookery titles, Olive and Delicious, as well as sponsorship of the food and lifestyle sections of S Magazine a supplement of the Sunday Express including print and digital activity.
Retailers are being encouraged to stock up on the full range Cook’s, Bryant & May Extra Long, Swan and Ship to maximise the sales opportunity.