Roll-your-own (RYO) tobacco sales topped £1bn in the 12 months ending July 2010, according to AC Nielsen’s Market Track report, which is an increase of over 19% compared to the previous year.
"For those who have been watching the market closely, this comes as no surprise," says Iain Watkins, Imperial Tobacco’s UK communications manager. "RYO sales have been increasing at a steady rate for the past decade. The volume of duty-paid sales rose 16.5% last year. And the recent economic downturn has seen more and more adult smokers moving down through the cigarette price sectors and into RYO."
Of course, the increase in sales of RYO tobacco means sales of rolling papers and other accessories are on the rise too.
Watkins says smoking accessories such as rolling papers, filter tips and rolling machines allow adult smokers to perfect their own cigarette with a choice of different papers and filters. "Each of these product categories has seen growth in the past year as roll-your-own (RYO) volumes have increased. This trend is set to continue as adult smokers continue to look for the value and craftsmanship that RYO offers.
Rolling papers, lighters, filter tips, rolling and tubing machines, and tubes, offer high margins of around 50%, as such smoking accessories have remained a stable profit generator for forecourt operators."
Smokers spent more than £100m on rolling papers last year (Nielsen data) and over £93m of this was generated by the Rizla range which continues to lead the UK rolling papers market.
Rolling papers are available in three sizes: regular, king size and doubles, with regular being the most popular with adult smokers. Rizla regular green is the UK’s best-selling papers brand, accounting for almost 50% of total sales.
Mark Alldred is marketing manager at Republic Technologies, whose brands include Swan, Bryant & May, Poppell and the recently-acquired Zig Zag.
He says: "A combination of factors including the economic turndown, higher taxation and, increasingly, lifestyle choices has led many adult smokers to roll their own, a trend forecast to continue. Down-trading from value cigarette brands into the RYO category is now common place. Research has demonstrated a large proportion of these adult smokers are ’dualists’ who switch between tailor made and RYO, dependent on cash flow and social circumstances.
"Swan green rolling papers are also a must-stock," says Alldred. "Available in single and multipacks, they are in the top four selling rolling papers in the UK. King-size papers now represent 16.1% of all rolling paper sales and we have found that convenience channels over-index on king size in some cases they represent up to 30% of all paper sales."
The Swan brand also has rolling papers in regular and king size in blue, red, green, liquorice and silver varieties.
Alldred says the multipack category is showing strong signs of growth, up 5.4% in volume year on year, making it the fastest growth segment in the rolling paper market.
"Swan has added ultra fine silver and blue lightweight multipacks to the popular 5+1 multipack range, making it easy for loyal RYO customers to bulk-buy six packs of their favourite rolling papers for the price of five."
In 2009, according to Nielsen figures, the filter tip market was worth £36.3m, tubes was worth £1.1m and rolling machines £0.9m.
Swan claims a 86.8% share of the filter market (Nielsen). Alldred says Swan is "at the forefront of filter innovation" with products such as smooth, the UK’s first carbon Pop-A-Tip filter, which is now in triple digit growth. He says another essential product for forecourts is the menthol filter, as menthols now account for over 10% of all filter sales.
He recommends that retailers merchandise filters and papers next to each other as over 50% of RYO smokers choose to use a filter.
He adds that Swan Combi, the pocket-sized pack containing 50 papers and 50 filters, is popular because of its value and convenience. According to Nielsen data, Combi sales are up 62.9% year-on-year. Alldred says the product over-indexes in the convenience/impulse channel. The Swan brand remains high profile thanks to its support for the British Superbikes (BSB) Championships this year it became the new title sponsor of the Honda Team. More than 5.2 million viewers watch the Championships and 350,000 spectators attend the 12 rounds.
Finally, valued at over £58m, the lighter market is trading flat.
But Alldred says retailers should still stock them particularly Poppell, which is now the UK’s favourite lighter with a 29% market share.
He recommends retailers stock gas, fluid and flints too.
Top 10 rolling papers
1.Rizla regular green
2.Rizla regular red
3.Rizla regular blue
4.Swan green regular
5.Rizla king size slim silver
6.Rizla regular liquorice
7.Zig Zag green regular
8.Rizla regular silver
9.Rizla king size slim blue
10.Rizla king size red
Source: Nielsen Market Track 2009
Facts and figures
l According to BMRB/TGI figures, there are still 12.7 million adult smokers in the UK. Of those, five million are RYO smokers 3.1 million men and 1.9 million women
l The majority of rolling papers are sold in the south east but other areas with strong sales are Greater London, the South West, Scotland, the North West and the West Midlands
l In 2009, regular papers accounted for 88.8% of sales; king size 11% and doubles 0.2%
l Multiple forecourts accounted for 3.2% of paper sales in 2009. C-stores accounted for over 50% of sales
Source: Imperial Tobacco category report