Whether it’s in top-notch customer service, flexibility or innovative ranging, it’s always satisfying when the independent retail trade manages to trump the multiples.

And it would seem that cigars can now be added to that list. While the supermarkets’ volume share of the UK cigar category continued to dwindle in 2012/13, down 1.9% to 43.8%, sales through convenience retailers continued to rise and shine.

Big sellers

Share of sales volumes by cigar size through independents and symbol stores

Large cigars: 0.1% Large whiffs: 33.4% (small cigars)

Panatellas: 1.9%

Small whiffs: 64.6% (miniatures

Source: Symphony IRI Total Market (14 September, 2013

Unaffiliated independents’ share of the cigar market grew by 1.2% in the 52 weeks to 14 September, 2013, to 13%, according to IRI data. The symbol groups, meanwhile, managed to hold their own, with a stable 18.2% share of the market, which is now worth £414.6m.

And the dynamic has become even more pronounced in the past four weeks, with unaffiliated independent retailers seeing cigar volumes grow by 1.5% to 4.4 million cigars, while the supermarkets saw their volumes decline by 1%.

Independent retailer David Worlsford of Farrants in Cobham, Surrey, is one independent retailer happily benefiting from the shift. David’s tobacco sales, including cigars, are up year on year. He believes that the increase is down to a couple of key factors, not least of which is the tobacco display ban in large stores and supermarkets. The ban is preventing adult smokers from browsing the cigar category - leaving them quite literally in the dark.

Adult smokers who visit David’s store, however, are able to view an impressive array of cigar brands from both the major and specialist manufacturers, not only on its independently-owned gantry, but also in its very own humidor.

But it’s not all about display. David’s unmatchable knowledge and understanding of the cigar market also has a major role to play.

“Cigars are a bit like wine,” explains David. “There are so many different shapes, sizes, varieties and ways of smoking them. Being able to talk to adult smokers about these things is vitally important when it comes to driving cigar sales especially when you consider their cost, and the huge amount of time and effort that goes into the making of them,” he explains.

This ability to talk confidently about the category will certainly stand David in good stead when small stores are forced to implement their own display bans in a little under 18 months’ time. A deep-rooted understanding of his own unique customer base also helps.

And it’s certainly not too late for others to take a leaf out of David’s book. So says Alan Graham, head of marketing at the Scandinavian Tobacco Group (STG).

Capsule technology

While their days may be numbered if new laws on flavourings recently announced in the EU Tobacco Products Directive are given the green light, there’s no denying the impact that capsule technology has had on the UK cigarette market.

Capsule cigarettes now represent 1.8% of the total factory-made cigarette market, according to BAT.

“Capsule technology gives adult smokers the flexibility to try something new,” BAT group brand manager FMC, UK & Ireland Anna Petrova says. Following in the footsteps of Lucky Strike, BAT recently launched capsule technology across all its Pall Mall cigarettes.

“We think that there is still more that small stores can do to make the most of the cigar market opportunity,” he says. “While miniature brands sell well through convenience stores they could do more on large cigars whose distribution remains low within the independent trade,” he says.

And with the festive season now well and truly upon us, there’s no time like the present to trial a few larger lines.

Last year, cigar sales in December grew by 6.2% versus the previous month, with 40 million sold in one month alone and generating £25m in retail sales value (Nielsen Market Track December 2012).

Today’s Local Stokenchurch owner Rishi Madhani always benefits from the seasonal sales rush. “My cigar sales tend to go in peaks and troughs throughout the year with significant rises during the summer wedding season and up again in the weeks before Christmas and New Year, when adult smokers are looking to celebrate and treat themselves and others.

“The fact that we are close to a large hotel and wedding venue definitely helps keep sales buoyant. These rises tend to be driven by the purchase of larger ‘celebration’ cigars,” he says.

David also witnesses a spike in demand for larger cigars about this time of year. “In the run up to Christmas sales of large specialist Cuban products will more than double as people buy them as gifts, but also for personal consumption. Last year, for example, sales of these types of products were 80% higher in December than they were in November,” he says.

Devon Premier retailer Dan Cock of Whitstone Stores in Holsworthy is hoping to grab a larger slice of the festive cigar market this year, but he also has an appeal for the UK’s major tobacco manufacturers.

“Although we do tend to see a bit of an increase in our cigar sales in the run up to the festive season cigars can be a risky category for convenience stores. I don’t want to invest too heavily in stocking up on extra brands and ranges which might not sell that’s entering dangerous territory.

“Cigars cost a lot more money to buy in. Manufacturers could help to change that, though, by perhaps offering the independent trade the option of smaller cases sizes which would offer us a reduced outlay. For example, a drum of 50 Hamlet singles costs me about £60 to buy in.

“Cigars do generate much beefier margins so I do think that more of us retailers, myself included, would give the category an even bigger chance than they currently do if the manufacturers helped them out on this front,” he says.

Away from the festive season there are a few key sales trends worth noting, with the first being miniature tipped cigars. These small cigars, which have a filter on the end, are proving increasingly popular, David points out.

“A growing number of adult smokers are looking to kick the 20 cigarette-a-day habit and are moving into cigars where they will perhaps just have one or two a day. As a result, tipped cigars are growing in popularity because they allow a smoker to enjoy the taste credentials of a cigar with the characteristics of a cigarette.

“I predict that sales of tipped cigars will grow, and we will see more investment from the mainstream manufacturers and specialists here.”

STG’s Graham thinks David has certainly “hit on something” with his prediction. “The fact that well over 80% of cigar smokers also smoke cigarettes is making these types of products increasingly popular,” he says. “We are also noticing that some adult smokers are smoking cigarettes during the week, before trading up to miniature tipped cigars on evenings and weekends.”

As such, stocking up on cigars is particularly important towards the end of the week, as this is when ‘dualists’ are more likely to be making a purchase, Graham adds. STG has two key tipped cigar varieties Café Crème Filter Arome and Café Crème Silver.

C-stores’ top-selling cigar brands

Cafe Creme Blue: 22.5%

Hamlet Miniatures: 13.7%

Hamlet: 13.7%

Cafe Creme: 11.9%

Castella Classic: 8.8%

RD Miniatures: 4.7%

Cafe Creme Filter Arome: 3.8%

Other: 12.8%

Source: Symphony IRI Total Market 14 September, 2013

Rishi has also taken note of the trend and says that in his store he is also seeing more women entering the category. “While men aged from 30 upwards remain the core group of people buying into the cigars category I am noticing more and more women entering the market. For them it’s all about miniatures and they tend to prefer the more aromatic, sweeter varieties, as well as tipped products,” he explains.

Small whiff cigars, also known as miniatures, are by far the biggest seller in independent and symbol group stores, accounting for 64.6% of sales, according to new data from JTI. In the 12 months to August 2013, the small whiffs category, which includes brands such as Hamlet Miniatures, racked up £44.5m-worth of sales through independent and symbol group stores.

“Miniature cigars continue to grow share within the cigar market as a result of growing demand from adult smokers for greater choice and convenience,” says JTI head of communications Jeremy Blackburn. In a recent JTI survey of 500 independent and convenience retailers, 62% said miniature cigars were their top-selling cigar size.

Carl Edwards of John Hollingsworth and Son in Birmingham reveals he now sells more than 25 different miniature cigar variants and that sales are increasing year on year as premium cigarette smokers continue to enter the segment, and smokers of small and large cigars look for products that still offer all the taste and flavour characteristics of a cigar, but without the drain on time.

“Six years on, the repercussions of the ban on smoking in public places are still making themselves felt, especially in the colder winter months,” Carl explains. “People don’t want to stand outside for 30 minutes to an hour smoking a cigar, so they’ll choose a smaller format which allows them to enjoy the experience in half the time.”

New product development within the segment has been buoyant of late, but as Carl explains it’s not all been down to the major mainstream manufacturers. Some of the best-known Dominican and Cuban cigar brands have jumped at the opportunity to extend their ranges and, provided that retailers are able to give smokers the correct advice and insight, they are becoming increasingly open to sampling these more premium options.

Cigar sales by region

London: 14.7%

Southern England: 9.3%

Wales, West and South West: 13.2%

Anglia: 8.5%

Midlands: 17.1%

Yorkshire: 9.6%

Lancashire: 12%

North East: 3.9%

Scotland: 11.6%

Source: Symphony IRI Total Market 14 September, 2013

Carl’s best-selling miniature cigar brand, for example, is the La Paz Mini Wildes 20s which retail for £11.60. “In addition to being more discerning, cigar smokers tend to be much more engaged and interested in the category than cigarette smokers,” he explains.

“You’ll often find that smokers will ask for your advice and be interested to hear your opinion, which is why knowledge is so important. We’ll always try to get people to trade up, and provided you are able to give them the information they need, most of the time they will,” he adds.

However, while miniatures are becoming increasingly important, “the large whiff sector continues to contribute a significant proportion of total cigar sales,” JTI’s Blackburn continues. And he’d be right as the segment is still worth £50m, led by brands such as Hamlet Fine which accounts for 53.2% of sales.

Cigarettes and Roll Your Own

The number of UK adult smokers has remained broadly the same over the past three years at just under 25% of the adult population. A growing proportion of these smokers are choosing to roll their own and the number of dualists, those who smoke factory made cigarettes (FMC) some days and roll your own (RYO) on others, looks set to increase, says Imperial Tobacco UK communications manager Gayatri Barua-Howe. Currently, about one in three smokers are dualists.

Value for money

The increasing number of adult smokers who smoke both cigarettes and cigars means that some of the key trends rocking the UK’s cigarette category are starting to rub off on cigars. Most notable is the growth in demand for value-for-money products.

“The value-for-money miniature segment is continuing to report volume growth, with Scandinavian Tobacco Group brands in this segment such as Moments reporting a 65.3% increase in the past 52 weeks,” says head of marketing Alan Graham.

Value brands account for 12% of the total cigar market.

“The economic slowdown has resulted in many adult smokers seeking a lower spend and greater value for money. In both FMC and RYO, we have found that while shoppers have become slightly more optimistic about the economy, when it comes to day to day spend the overall trend remains cautious,” she adds.

Retailer Colin Woods agrees. “We stock pricemarked packs wherever we can now,” he says. “Even smokers of premium brands want to know they are getting a good deal.”

Looking ahead to 2014, Imperial Tobacco says it will continue to invest in the growing Economy and Sub Economy price sectors where its JPS range and Player’s brand both sit.

Keen to shake things up in the mid-priced section of the market where sales have slowed of late, Booker recently launched Treasurer Executive in Black King Size and Gold King Size.

Both packs are pricemarked at £7.19 and offer 10% profit on return for retailers. The cigarettes are also available in half sleeves, a fact which Booker’s sales director for retail Steve Fox hopes will help to improve retailers’ cash flow.

In brief

Man up

JTI has introduced four limited-edition tins for Hamlet, designed to help retailers grow their cigar profits in the run up to Christmas. The four ‘Manly Knowledge’ designs are printed directly inside the inner lids of Hamlet Miniature 10s which retail for £4.57.

New look for B&H Silver

JTI has introduced a modern new pack design for its mid-priced B&H Silver Roll Your Own. The design runs across B&H Silver RYO 12.5g, 25g and 50g packs. The modern design focuses on the B&H barrel and further emphasises the brand’s British heritage. B&H Silver RYO 25g has an rrp of £8.13, while the 12.5g packs have an rrp of £4.16. Both are available in pricemarked packs.

Amber Leaf combi packs go national

JTI has launched its 10g Amber Leaf combi packs nationally, following trials in Scotland, the South West and Wales. The ‘3 in 1’ pack contains 30 filters, 50 papers and a 10g mini pouch of tobacco in a crush-proof box for an rrp of £3.45. While their days may be numbered under new rules outlined in the EU Tobacco Products Directive, small packs of RYO tobacco have trebled in volume year on year, according to JTI.

Pall Mall range gets capsule technology

BAT has introduced capsule technology across its entire Pall Mall cigarette range. Pall Mall Click On capsules are available in every pack across the range, at existing Pall Mall prices. The move allows smokers to retain the classic taste of Pall Mall cigarettes, or to click the capsule for a fresh taste at any point.