Find out what’s sparking sales in traditional and smoke-free areas
1. Just over 80% of tobacco sales volume comes from the ultra-value sector
2. Nearly two-thirds (65%) of c-retailers say adult smokers are switching to smoke-free
3. Disposables represent 83% of total vape sales
4. Responsible disposable vape suppliers are stepping up
5. Cigar sales have stalled – but cigarillos are up 9.7%
6. Nicotine pouches are making a mint
7. Growth in RYO means more opportunities for tobacco accessories
1. Just over 80% of tobacco sales volume comes from the ultra-value sector
IRI
UK smokers already know the cost of the habit to their health. And now the cost to their bank balance is clear too, with smoking products set to rise by a lung-scouring 12.7% from March 2023 in line with the Retail Price Index, according to recent newspaper reports.
Such swingeing rises are designed to convince more smokers to give up (and swell the government’s coffers). They’re also driving smokers’ hunt for value in the convenience store tobacco cabinet.
Gemma Bateson, sales director at JTI UK, confirms that more than eight in ten (80.4%) of all sales volumes are currently in the ultra-value ready-made cigarette (RMC) and roll-your-own (RYO) segments (IRI).
“Retailers should focus on stocking ultra-value tobacco brands as now more than ever, customers are looking for more affordable options in the market,” she says. “From B&H Blue RYO to Mayfair Silver, we are dedicated to innovating in this sector to help retailers answer the current demand.”
This includes reformatting Sterling Essential Rolling to include rolling papers – giving smokers everything they need to roll-up in one pouch.
Hazel Ridge from Bassett’s Londis in Weymouth says that though older smokers are often brand-loyal, price is becoming more prominent in their choices.
“When it’s the smokers who have been coming in for forty years they will buy [their brand] however much money they have in their pocket,” she says.
“But we’ve definitely seen a rise in people asking: ‘so what’s the cheapest you have?’. Those people don’t necessarily care what they get as long as it’s the cheapest on the market.”
As an ex-smoker herself, Hazel doesn’t think price concerns mean ‘straight’ smokers are switching to RYO, at least at her store.
“I think if you smoke ‘straights’ you smoke ‘straights’ and people aren’t changing to roll-your-own because they might not like it,” she adds.
“People that are diehard smokers are going to stay diehard smokers,” adds Atul Sodha from Londis Harefield, Middlesex.
“Tobacco justifies its space instore but is a declining market without a doubt – when you factor inflation in it’s massively declining.”
2. Nearly two-thirds (65%) of c-retailers say adult smokers are switching to smoke-free
For price-conscious consumers, quitting tobacco entirely would save the most cash. But until they do, ciggie alternatives make sense for savings.
“With the cost-of-living crisis soaring, consumers are looking to make savings wherever possible,” says Kate O’Dowd, head of commercial planning at Philip Morris Limited (PML).
“It’s only natural that many may consider ‘trading down’ to battle inflationary costs of everyday items – forgoing their usual brand selection for more affordable options.”
“While the best choice anyone can make is to quit completely, convenience retailers agree that many adult smokers are looking to offset the rising cost-of-living by choosing smoke-free alternatives that are a better, and more affordable choice to cigarettes – which are now priced at £12.77 (on average) per pack.”
This change in consumer spending was reflected in a recent PML-commissioned survey, looking at emerging trends in the smoke-free category in 2023. Retailers agreed that smokers would prioritise affordability above all else when choosing a smoke-free alternative.
With price also in mind, the right deals can lure shoppers into the smoking alternatives segment.
“To cater to cost-cutting adult consumers, retailers can offer multi-buy deals that help customers try new devices while saving money,” says Chris Aikens, external affairs manager at RELX International.
“Promotions such as two-for-£10 and three-for-£15 on disposable devices will help secure favour and repeat custom from adult consumers, who are more likely to return and repurchase their favourite products at a reasonable price.”
3. Disposables represent 83% of total vape sales
As tobacco sales fade, vaping has gone from strength to strength driven by disposables.
Imperial Tobacco highlights the phenomenal success of disposables. “In 2021 disposables, were by far the smallest category in vape,” says head of consumer marketing UK&I Tom Gully. “Now … disposables have absolutely overtaken any other subcategory, representing 83% of all sales. Most of that is incremental volume and incremental sales.”
“You very rarely see young people smoking cigarettes but you do see them with disposable vapes,” says Hazel.
“Vaping is very popular and it’s driven by the flavours,” adds Atul.
Within disposables, Elf Bar has been by far and away the best seller, accounting for 73.5% of disposable vape bars, according to the latest data from Epos provider Shopmate, followed by Elux, Crystal, Geek and IVG.
However, things took an unexpected turn earlier this year when a Daily Mail sting revealed some Elf Bars contained tank capacities above the legal limit for the UK market. As a result all Elf Bar 600 disposable pods were removed from sale by Booker and the multiples in February.
This had a direct impact on Londis Harefield. “We did get hit when Booker delisted the Elf Bars,” says Atul. “Ultimately, it’s the retailer that needs to be responsible with vapes and to get the right information to customers about them.
“But to be fair that hasn’t always been clear!”
Hazel says: “Funnily enough, I don’t think that customers and the general public will be worrying about buying them [Elf Bars] – but I think it’s the wholesalers who have some worries.”
Retailers also have their doubts, according to Shopmate findings, which show that prior to the Elf refill issue, the brand was viewed in a positive light by over three quarters of retailers, whereas following the debacle barely over a quarter of retailers have a positive impression of the brand.
4. Responsible disposable vape suppliers are stepping up
With vape compliance now in the spotlight, and ongoing concerns over the appeal and accessability of disposable vapes to children, a number of firms have been quick to step forward and highlight their credentials as responsible suppliers.
Blu manufacturer, Imperial Tobacco, has gone into overdrive to show suppliers that it is a responsible manufacturer. “We’ve done a lot in the last couple of weeks to reassure our customers that our products are compliant with regulations,” Lindsay Mennell Keating, head of corporate & legal affairs UK&I told attendees at a trade event last month. Imperial claims to be firmly focused on adult-only flavours for Blu and the brand has no dedicated social media content. The firm launched a Blu disposable vape last November.
Another big tobacco firm entering the disposables sub-category is PML with Veeba, which launched last month. Duncan Cunningham, external affairs director, says: “It’s clear that the disposable segment within the e-vapour category is growing exponentially for adult tobacco and nicotine users in the UK. PML is responding to the immediate need for a smoke-free offer to be commercialised responsibly, and that is sustainable, trust-worthy, and reliable.”
Vape brand RELX is also taking steps to clean up the face of vaping. “One of the largest challenges that the vaping market currently faces is the increasing popularity of disposables amongst underage consumers,” says Aikens.
“While it is currently illegal to sell vaping products to anyone under the age of 18, tighter measures are still needed to prevent this.
“RELX is proud to be pioneering a youth prevention initiative, the Guardian Program, which both prevents and discourages the misuse of vape products by minors.”
The company is expanding its line-up of premium vapes with two new disposables. WAKA soPro and WAKA soFit launch with eight colours and ten flavours, including Pink Lemonade, Triple Mango, and Strawberry Burst. The company is also lanching an own-brand disposable called RELX MagicG.
5. Cigar sales have stalled – but cigarillos are up 9.7%
The days of customers regularly coming in for a fat stogie to chew on have drawn to a close. Like the general tobacco market, the segment is in decline.
“The more traditional cigar segments are all in decline of around 4%, which is likely to be due to a combination of factors such as some smokers moving into vaping or pouches, and / or people cutting down due to the on-going cost of living crisis,” says Nataly Scarpetta, marketing manager at Scandinavian Tobacco Group UK (STG UK).
However, there’s still isolated room for growth – Scarpetta points to the cigarillo sector as offering “positive performance”.
“The cigarillo segment continues its positive performance, up 9.7% in the last twelve months, and now makes up over 46% of the total volume and just under £100m in value sales,” she says.
“Our Signature Action brand is not the best-selling cigarillo on the market but it’s growing steadily in popularity and a good option for adult smokers who enjoy the peppermint flavour.“
Cigar-smokers often enjoy the segment’s high-rolling associations. Yet it isn’t immune to the cost-of-living crisis.
“Many consumers are going to be increasingly price conscious, and this will affect cigars and the wider tobacco category purchases just as much as any other category in-store, so retailers should ensure they are highlighting their value brands to customers to help them save money,” says Scarpetta.
This year, STG rebooted its value Moments brand with a new eye-catching re-design to signpost value.
6. Nicotine pouches are making a mint
While vapes pivot towards ever-fruitier flavours, the nicotine pouch category has made a turn towards the minty.
“The demand for mint-flavoured products has soared to new heights within the category, with the market currently split 81.6% mint and 17.6% fruit [IRi Market Place, Volume Share, Nicotine Pouch Category, Total UK, Dec 2022],” says Bruce Terry, portfolio brand manager at JTI UK.
The other micro-trend in pouches is high-strength products. Terry adds that Strong and Extra-Strong now make up 83.1% of nicotine pouch sales, and Extra-Strong is the fastest growing strength [IRi Market Place, Volume Share, Nicotine Pouch Category, Total UK, Q4 2022].
To help retailers tap into these trends, Nordic Spirit has recently expanded its portfolio with a new Spearmint strong nicotine strength. This follows the launch of Spearmint and Bergamot Wildberry Extra-Strong last year too.
7. Growth in RYO means more opportunities for tobacco accessories
It isn’t just tobacco that smokers are seeking from c-stores. They also regularly need lighters, papers and the like. These can all add extra sales in a shrinking category.
“With more consumers now moving towards roll your own (RYO) products, retailers are presented with new sales opportunities within tobacco accessories,” says Gully.
“It is therefore essential that retailers cate for this rising demand by ensuring they are fully stocked up with filters, papers, lighters and other flavour-related innovations, for example, Rizla Xtreme Flavour Cards.”
The flavour cards are helping fill the gap left by the menthol ban, and Gully says that they’re selling around 400,000 packs a week (ITUK) as snokers look to recreate the menthol experience.
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