Another year and yet more legislation for the tobacco industry. In 2007 we had the ban on smoking in public places plus the rise in the age at which people could buy tobacco - from 16 to 18. This year we have new laws for lighters plus the introduction of pictorial health warnings. When will it ever end is the obvious question and the answer is probably when every last smoker has given up. However that’s a long way off as there are still 13.7 million adult smokers in the UK - yes the numbers fall every year but not as much as one might think given all the anti-smoking activity.
Back to the legislation, and the first new law on the calendar is child resistant lighters. This means that from March, it will be illegal for retailers to sell lighters that are not fitted with a child resistant (CR) mechanism.
Andrew Hardie, marketing manager at Swedish Match, comments: "When we began manufacturing CR lighters in 1993, it was a world first. Several countries have been conforming to this legislation for years, so it’s a hugely positive step in safety to see this launched as an EU directive.
"Our team has been working hard to assist retailers during this transition phase. Some of our customers have been retailing CR lighters for a year and our complete stock transition to CR lighters was finalised some months ago. Safety-first is our main focus and as market leaders we have a responsibility to retailers and consumers to lead product innovation and quality in this area."
Hardie adds that all Swan, Cricket and Poppell brands meet ISO 9994 safety standards and each one features a CR mechanism. "These brands accounted for over a fifth of all lighters sold in the UK in the past year. And our market share has increased such that in the past three months, one in every four lighters sold in the UK was from our portfolio."
Retailers wanting to find out more can visit Swedish Match’s new website - [http://www.safetyfirstlighters.com] - described as the first ever site solely dedicated to safety-first lighters. It features comprehensive information about the new legislation as well as practical advice for retailers.
Then there are those pictorial health warnings showing images that are meant to dissuade people from smoking. Iain Watkins, UK trade communications manager at Imperial Tobacco, reckons they will have very little effect: "Of course there will be the initial shock value but elsewhere in the world where they have been using these types of warnings for some time - in Australia, Brazil and Canada - there has been no overall decline in consumption so they haven’t had the desired effect. We feel they are unnecessary but we do recognise the government has a job to do."
Watkins says this latest move has cost the tobacco industry millions to invest in the equipment needed to produce the new warnings.
By October 1, 2008 tobacco manufacturers have to start producing cigarette packs with pictures on the reverse. Retailers then have a year - until October 1, 2009 - to sell through their old stock.
The rules apply to RYO and pipe tobacco, and cigars a year later.
Shoppers will not see the warnings until they buy the cigarettes as the front of packs remain the same with the bold black written warnings and the pictures are on the reverse.
Meanwhile, reviewing the legislation that was brought in last year, both Gallaher and Imperial say it is too early to judge whether the ban on smoking in public places has had any real effect on sales.
Says Watkins: "If we look at Scotland, which has had the ban since March 2006, sales initially dipped by 3-4% but they have crept back up and are now down by 2%, which is in line with trends and could be accounted for by the effect of duty increases or by people giving up. It is estimated that people are smoking between half and one cigarette less per day."
Interestingly BAT, Gallaher and Imperial have launched a website called smokerswelcome.co.uk. People log on and have to confirm that they are over 18 by keying in their date of birth. Once they enter the site, they put in their postcode and are then given a list of pubs and clubs that provide outdoor areas where adult smokers can socialise.
The other big change in 2007 was the increase in age at which people could buy tobacco - from 16 to 18. Says Watkins: "We were very concerned that retailers would be subject to abuse but it doesn’t seem to have been too big a problem."
Looking forward, other ideas to deter smokers have included charging them £200 a year for a ’licence to smoke’ and the introduction of a licensing system for the sale of tobacco.
Although the licence to smoke idea has been dismissed, the licence to sell tobacco scheme is still up for discussion. It was Christine Grahame, member of Scottish Parliament (MSP), who put forward a Members Bill proposing a licensing system for the sale of tobacco.
This calls for positive licensing to be introduced in Scotland, meaning that retailers would have to apply for a licence to sell tobacco, just like they do for alcohol. The Bill also looks at increasing the penalties on retailers who sell to under-18s.
The Association of Convenience Stores has said licensing would be too burdensome on the retailer, particularly where there are already sanctions in place, such as fines.
Gallaher’s communications manager, Jeremy Blackburn, agrees: "Current measures are sufficient. I think resources should be increased for the proper enforcement of these measures. However if there has to be licensing then we would support negative licensing so if retailers were caught selling to under-age people then they would lose their right to sell tobacco. However licensing is still in the consultation stage so it’s a case of wait and see."
Another big industry issue is the prevalence of counterfeit products in the UK, however the big manufacturers have taken the matter in hand. Now all cigarette packs manufactured by the Tobacco Manufacturers’ Association’s (TMA) members (BAT, Gallaher and Imperial) include a covert security measure which allows Customs to instantly verify stock on retailers’ shelves. Obviously the exact nature of the ’measure’ cannot be revealed for security reasons but Customs’ officers can instantly see if stock is authentic or not by using readers supplied by the TMA. The industry hopes the measures will deter retailers from dealing in counterfeit tobacco products. However Imperial Tobacco states that instances of counterfeit tobacco products being sold in legitimate retail outlets are rare. The company estimates that two billion counterfeit cigarettes were smuggled into the UK in 2006 with most sold in markets, at car boot sales and on street corners.
Jeremy Blackburn is keen for retailers to report any such activity. "It might be one man selling from a black bin bag, but it’s still important to report it to the authorities. Retailers need to understand the bigger picture; they might think the authorities aren’t doing anything but all the information received is put together and there have been some really large seizures."
One such seizure was made in December when a woman in Northern Ireland was arrested for having 151,726 illegally imported cigarettes. And in November HMRC seized more than 200 kilos of smuggled tobacco and 80,000 smuggled cigarettes from locations in North Wales.
== Forecourts’ fortunes ==
When it comes to forecourts specifically, they continue to be an important outlet for tobacco sales. RAL data puts forecourts’ share of cigarette sales at 12%, worth £1.4bn.
Iain Watkins comments: "Forecourts are seen a lot more as c-stores, just like a local shop. But forecourt retailers must remember that with cigarettes, the local market really is local. They need to understand this and be aware of local variances."
For instance Lambert & Butler King Size is the best selling cigarette across the UK but when you take the UK region by region there are differences. In Northern Ireland, Mayfair King Size is the number one cigarette and in London and the South East, B&H Gold King Size is the top seller.
Down-trading to cheaper brands is a general trend but in forecourts premium brands still sell really well. Across the UK, according to AC Nielsen data for October 2007, premium cigarette brands accounted for 33.7% of sales but in forecourts the figure rises to 41.7%. The forecourt figure is down on 2006 but it’s still well ahead of the total market.
There is also a move towards roll your own cigarettes because smokers can decide how much they want to use in each cigarette.
Iain Watkins points to the practice of ’dualling’ where smokers switch between RYO and factory-made cigarettes. "There are lots of people who smoke roll ups for six days of the week but on Saturdays treat themselves to a pack of cigarettes. There are between four and five million smokers doing this. RYO is so much more accessible nowadays; the fact that 50% of Golden Virginia smokers are aged 18-34 proves this."
RYO was a big victim of smuggling but is fighting back. Not long ago 85% of the RYO being smoked in the UK was duty-free or non-duty paid, now that figure’s down to 65%.
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=== Top 10 cigarette brands in forecourts ===
1. Lambert & Butler
2. Mayfair
3. Richmond
4. Marlboro
5. B&H Gold
6. Silk Cut
7. Regal
8. Embassy
9. JP Superkings
10. Rothmans Royals
Source: AC Nielsen RAL data October 2007
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=== Merchandising Tips ===
? Make sure your requisites are well sited with other tobacco products.
? Use strong brands like Swan to signpost the category.
? Ensure you have a range of lighters to cater for all your customers’ needs.
? Stock Bryant & May extra long matches and Cricket Firepower for people wanting to light candles and fires.
? Consumers are less price sensitive about branded matches than other categories. Introducing quality brands such as Swan Vestas, Cook’s and Bryant & May could put more money through your till.
Source: Swedish Match
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