Forget wood for trees, when it comes to tobacco gantries, it’s hard to see the brand for the pricemark these days, or at least it is in small stores which still have another 13 months before the shutters come down.

According to JTI, pricemarks currently account for 59.6% volume share of the tobacco market in independents and symbols, with volume growing 6% year on year.

At her Essential Convenience Store in Horsham, West Sussex, pricemarks appear across more than 70% of Anjali Karpal’s gantry and she’s expecting that figure to grow as we head deeper into 2014.

“I sell pricemarked products wherever I can, which means that my prices are some of the lowest in the high street. Adult smokers have become incredibly savvy about which shops have the best prices and they come to my store over others because of that,” Anjali explains. “As a result, my cigarette sales are up on this time last year.”

Dos and don’ts of the tobacco display ban

Tobacco display restrictions will be enforced for all retailers in April 2015. The display ban rules state that all tobacco products must be covered, but there are no restrictions on how you lay out products behind the covers.

In England, Wales and Northern Ireland, electronic cigarettes and tobacco accessories can continue to be kept in public view. However, in Scotland all tobacco products and smoking-related products must be covered.

The rules also state that it will be an offence to open the tobacco unit and display tobacco products when serving a customer who has requested a non-tobacco product.

In Wales, all headings must be in both English and Welsh.

Stores will still be allowed to display prices. However, only three types of displays are allowed: poster-style, price labels, and a picture price list. The picture price list can only be shown once you have verified that a customer is over 18.

Once you are satisfied that a tobacco customer is over 18, you can also show your tobacco products if they request it.

Tobacco units can be opened during stock-taking, staff training, cleaning and stock replenishment. You can continue to carry out these activities during normal opening hours as long as the area on display does not exceed 1.5sq m.

Tobacco products must be covered up while being transported around the store, for example when moving stock from the store room.

Unbranded generic signs, such as ‘Tobacco sold here’ are allowed, but all branded signage must be removed.

Notices stating that “It is illegal to sell tobacco products to anyone under the age of 18” must continue to be displayed by law.

In Scotland the maximum area you can reveal to the customer is 1,000sq cm, an area roughly the size of 12 packets.

According to Nielsen Market Track data to December 2013, value cigarettes continue to grow and currently account for 44% volume share of the market, equivalent to more than 14 billion cigarette stick sales a year.

Anjali has also noticed some interesting changes in buying behaviour, with adult smokers now routinely bulk-buying packs of cheaper cigarette brands. “Rather than visiting every day, quite a few adult smokers are starting to bulk buy cigarettes in batches of 200 at a time. It does make maintaining availability more of a challenge, however, as I’m never sure exactly when these bulk purchases are going to be made! I’m seeing a similar trend with RYO tobacco, where there has been a move to the larger 50g packs.”

Des Barr of Sinclair Barr newsagents in Paisley, Renfrewshire, is another retailer who is having to work harder to maintain availability in the face of price-conscious shoppers.

“My tobacco sales are very strong, but we are noticing quite a change in purchasing habits,” Des explains. “There are now two very distinct schools of smoker: the price-driven ones and the premium ones. But it’s the value brands that are really driving sales.

“Brand loyalty doesn’t count for much in this growing segment of the market; people simply come in and ask me for my cheapest pack. They are so price-savvy, even something as small as a 6p increase on a pricemark will drive them to switch to another brand. It can make managing availability quite difficult as you’re not always sure what people are going to buy. As a result, I find I’m spending a bit more time at the cash and carry replenishing my range as being out of stock isn’t an option in this market.”

The pricepoint frenzy prompted many of the major tobacco manufacturers to launch 19-pack formats in 2013, a trend which is likely to continue in the year ahead, despite the EU’s plans to ban the sale of cigarettes in packs of less than 20 from the middle of 2016.

As Hiral Patel of Londis Claygate in Surrey explains: “They are selling well for now so it’s just a question of carrying on making hay while the sun shines.”

Imperial Tobacco head of independent retail Andrew Miller adds: “The value-seeking trend has led to an increase in sales of 19s. Shopper research shows that 19s are growing in popularity, especially in the fiercely competitive sub-economy priced sector where about 35% of shoppers are buying 19s, more than twice as many as 10s.”

Just last month JTI extended its Sovereign brand with the launch of a new value cigarette, Sovereign Smooth Flavour, in packs of 19, and Imperial Tobacco launched L&B Blue. Available in packs of King Size 19s and also a smooth variant, L&B Blue will be positioned within the sub-economy price sector with an rrp of £6.40.

 “The 19s trend is really taking off,” adds Richard Williams, owner of Williams Supermarket in Somerton, Somerset. “It doesn’t seem to matter to smokers that they are getting one less cigarette in a pack – all they care about is the lower pricemark, and they just ask the cashier for the cheapest pack. To be honest, the brand itself seems to matter less and less. Brand loyalty really does seem to have gone out of the window in the cheaper segments of the market. Ten years ago L&B was our top-selling cigarette, but now it’s a close call between Windsor Blue and JPS. If we run out of either brand smokers will simply buy the other one.”  

The hype about Vype

Vype, the e-cig brand from BAT-owned Nicoventures, hit national TV screens in an ad campaign last month.

The campaign is designed to inspire adult smokers to view Vype as an alternative to tobacco.  Ads are currently running across terrestrial and satellite TV channels after 9pm until 6 April, using the strapline ‘experience the breakthrough’.

Nicoventures head of UK and Ireland Nigel Hardy, says: “The creative for our advertising targets adult smokers who can decide for themselves what it means to ‘experience the  breakthrough’. It could be choosing Vype over tobacco, switching to Vype as a better quality of e-cig, or the satisfaction of using Vype to reduce dependency on traditional cigarettes.”

Vype contains a pharmaceutical grade nicotine liquid made in the UK to current Good Manufacturing Practice standards. It also has a “realistic soft tip” and is of a  similar size, weight and feel to conventional cigarettes.

Two product types are available – Vype disposable and Vype reload (re-chargeable) – in classic and menthol. Vype disposable has an rrp of £5.99, while Vype reload starter kits retail at £14.99.

So could this apparent erosion of brand loyalty within lower-priced cigarettes signal an opportunity for own label products to shine in the way that they do in the grocery aisles? Landmark Wholesale says its No3 tobacco is currently its best-selling own label product and that 10 packs are currently in double-digit growth. “No3 provides a great value option for retailers to offer their customers at a price that the leading brands simply can’t compete with,” says Landmark business development director Chris Doyle. “Own brand tobacco is in increasing demand as it offers retailers fantastic margins without compromising product quality.”

Premier retailer Dan Cock of Whitstone Stores in Holsworthy, Devon, believes own label cigarette brands could have their chance to shine, but only in the lower priced segments.

“We tried Booker’s new own label Treasurer brand, but it’s been a bit of a flop. The idea of a new cigarette brand that came in cases of five with a 10% margin was a good one, but Booker should have launched a value product, not a premium one. Treasurer cigarettes cost £7.19, which puts them into the higher-priced tier, but smokers aren’t going to pay that much for a brand they’ve never heard of. I’m sure that an ultra-value brand on the other-hand would have worked,” he says.

But back to brands, where ‘slim’ cigarettes such as Marlboro Gold Touch are increasingly being used to keep price points pinned down.

Philip Morris Ltd (PML) recently introduced new-look pricemarked packs of Marlboro Gold Touch cigarettes in a bid to target cash-conscious adult smokers. The sticks, which are thinner than standard Marlboro Gold cigarettes, command a lower price of £6.85 for 20.

“A key trend in tobacco retailing is adult smokers seeking value for money and downtrading,” says PML marketing director Zoe Smith. “However, while the value market is growing, Marlboro is an iconic, best-selling cigarette brand, so it’s vital that we retain our premium credentials while evolving to meet the needs of today’s adult smokers.”

Mital Mohar, manager of Loco’s Ellesmere Street store in Manchester, is a fan, claiming that the range allows consumers to “retain their association with the quality of a Marlboro product at a more accessible price point”.

Click and collect

Another success story of the tobacco market is the phenomenal growth in the capsule cigarette segment. Worth £139.7m in 2013, it’s grown at a breakneck 561% from £21.1m in 2012 (PML). Given the positive feedback C-Store has been getting from retailers, 2014 is shaping up to be equally lucrative, with many stores reporting significant uptake since the start of the year.

“Capsule cigarette products do seem to have grown in popularity in the past three months and we now have five regular buyers of capsule cigarettes, while many other adult smokers are starting to trial them,” Dan Cock explains.

Additive-free is one to watch  

The Scandinavian Tobacco Group UK recently extended its additive-free tobacco range, Natural American Spirit (NAS), with the introduction of NAS Orange cigarettes.

The cigarettes are available in packs of 20 with an rrp of £7.99.

 “Consumer interest in additive-free tobacco is continuing to grow,” says Alan Graham, head of marketing at  STG UK. “This launch will offer consumers even greater choice from the market-leading range.”

The new NAS Orange variant features a lively orange-coloured pack and the smoking Indian Chief image used across the rest of the range.

It will also be available in a hardpack format following the range’s recent move from softpack, to give improved product protection and flavour preservation.

However, it is worth noting that new rules set out in the revised EU Tobacco Products Directive will ban manufacturers from using any “promotional elements” on packs from 2016, including references to taste or flavourings, or their absence, such as ‘additive-free’.


“I think the novelty factor has quite a lot to do with it and capsule cigarettes certainly create a talking point at the till. Capsule cigarettes are quite different to menthol cigarettes. They have a much more subtle flavour and, of course, smokers don’t have to click the capsule if they don’t want to. As a result sales of capsule cigarettes haven’t cannibalised sales of menthol; it tends to be smokers of regular cigarettes who are trying them for the novelty factor and then switching over when they realise that they like them.”

Imperial’s Miller adds: “Echoing a wider FMCG trend for increased consumer choice and individualisation, capsule technology has quickly become mainstream, with many of the major brands in different price segments having a capsule cigarette line extension.

“Capsule cigarette brands have achieved a 2.5% share of the market in a little over two years and it is now important for key brands to have a capsule offering to meet consumer expectations.”

Late last year BAT decided to introduce the technology across its entire Pall Mall cigarette range. “Capsule is the biggest innovation in cigarettes since the filter,” BAT UK group brand manager Anna Petrova says. “We’ve already achieved great success with the new Click On range outside of the UK, so we’re confident this launch will deliver a massive impact.”

In Bipin Haria’s Seaford News store in East Sussex, it’s certainly doing that, with sales of Pall Mall Click On Silver having doubled in his store since the new year. “The fact that the price didn’t change when the capsule technology was introduced has been a very strong selling point, and I’ve had quite a few of my regular smoking customers downtrade from more premium brands to Pall Mall Click On Silver. One of my regular customers who smoked Marlboro Silver for years recently switched to Pall Mall Click On Silver, which is priced at £6.25 compared with £8.34.”

However, not all smokers have been thrilled by the move, Bipin adds. “Some customers who smoked the standard Pall Mall cigarettes prior to the addition of capsule technology claimed that it had altered the taste, even if the capsule is not clicked, and a couple have moved to Sovereign Blue Superkings as a result,” he adds.

The other interesting thing about capsule cigarettes, Dan says, is just how different the various brands all taste.  “JTI’s B&H Dual is one of the most popular capsule products that I sell and Imperial Tobacco’s L&B Fresh Burst is also gaining ground. I particularly like Fresh Burst as it has a light, fresh, almost fruity taste. It’s very different from Philip Morris’ Marlboro Ice Blast, which has quite an intense minty taste.”

PML marketing director Zoe Smith explains the difference: “Most capsule cigarettes have a fresh taste, but Ice Blast is a menthol product which is enhanced by clicking the capsule from 1.0 menthol in smoke content to 1.5, generating a quite extreme menthol experience.”

Given their growing success, Dan says he’d like to stock a wider range of capsule cigarettes but “for the moment, the case sizes still remain too large for me to take such a risk”.

He adds: “Unless a rep comes into the store, in which case I could buy a few packs, I’d have to take 200, which is a significant outlay. It would be great if the manufacturers could launch more cartons of five. I’d certainly expand my range if that was the case.”

According to Des Barr, capsule cigarettes mainly appeal to “a much younger customer base of men and women in their mid-twenties who are buying for the novelty factor. They are also really popular with Eastern European customers as I believe the market is much more established over there,” he says.

Encouraging trial will be key to expanding the capsule cigarette customer base yet further, and as such the launch of more 10-pack ‘trial size’ formats is to be expected in 2014.

It’s a route PML took when it added Marlboro Ice Blast in a new small pack size. “At £8.27 the 20-pack format was quite expensive. Seeing that capsule cigarettes are a new product, trial is very important so it was vital to launch a smaller ‘trial size’ format,” Smith continues.

Marlboro Ice Blast 10s (rrp £4.21) were launched in the independent channel in late November, ahead of full rollout across all channels in January.

One company which will certainly be keeping a close eye on its capsule cigarette sales is Imperial Tobacco, which broadened its JPS Silver range with the addition of a capsule variant at the end of last year. Currently only available in 20s, JPS Duo enables adult smokers to introduce a fresh taste to their cigarette by squeezing the ‘crushball’ embedded in the filter. Packs have an rrp of £6.89 – 3p more than the standard JPS King Size range.

However, despite their exponential growth, capsule cigarettes’ days are numbered. As Convenience Store went to press, the European Parliament gave its formal approval to the revised EU Tobacco Products Directive (EUTPD), which included a proposal to ban the sale of capsule cigarettes from 2016.

JTI’s Blackburn says that it’s business as usual until then. “For the moment we urge retailers to continue stocking a full range of tobacco products, including
a wide choice of capsule brands, and ensure availability at all times,” he says.

Helping retailers to capitalise on both the capsule and value trend, JTI launched Sterling Fresh Taste on Demand as a brand extension to its Sterling value offering. According to JTI, the brand is now commanding a 20.1% share of the capsule segment. The product has certainly got retailers’ votes, having been shortlisted for Convenience Store’s coveted Product of The Year award, gaining a significant share of the vote.

Electric avenues

2014 looks set to be a defining year for the UK’s burgeoning electronic cigarette (e-cig) category, which is soon expected to surpass £200m.

The category will also be saddled with some new legislation this year including a ban on the sale of e-cigs to under-18s this autumn. And as part of the EUTPD, e-cigs will have to adhere to strict nicotine content and labelling rules.

It’s also likely to be the year that the UK’s major tobacco players take a bigger part in the sector – a move which the nation’s convenience stores are all too eager to see.

Premier retailer Dan currently sells three different e-cig brands (Njoy,  E-Lites and Nicolites), but is looking forward to the big boys entering the arena in a major way. “Nicolites sell best in my store but for me, as a smoker, Njoy has the most realistic feel as it’s not too heavy.  Personally, I can’t wait for the UK’s big tobacco manufacturers to get properly involved in the sector. That’s when I think things will get really interesting. They will bring greater structure to the industry and will probably buy up some of the many other smaller e-cig companies currently operating,” he adds.

BAT became the first UK tobacco manufacturer to launch its own e-cig product, Vype, to market last summer, and it has been positively received by retailers.

Hiral says: “I’d say that one in five of our regular adult smokers now also smoke e-cigs. We stock E-Lites, Vapestick and Vype, which is doing really well at the moment, probably as a result of the new TV adverts that it’s running and also the fact that Vype e-cigs come in mini cases, which people seem to like.”

Having  bought intellectual property from Chinese e-cigarette maker Dragonite in 2013, this year is also set to be the year that Imperial Tobacco brings out its own e-cig.  

The law and you

The UK tobacco category won’t stray far from the headlines in 2014 with a triple-whammy of legislation to be discussed, debated and disputed.

Plain packaging looks set to be the hottest potato, with the government holding a further review on the issue, despite more than 500,000 responses against the move in a previous consultation.

The review is being headed up by  paediatrician Cyril Chantler, who is expected to fly out to Australia this month, where he will speak to retailers about the impact of plain packaging on their businesses and hear about the reported rise in the illicit tobacco trade since plain packs were introduced in December 2012.

Whether plain packs will come into force here still hangs in the balance, but there have been important decisions made in Europe that have an impact on the tobacco market, with the aforementioned ban on capsule cigarettes just a part of the rulings.

The revised EUTPD should come into force this May and most of the new rules, including a ban on packs of less than 20 cigarettes and 30g of rolling tobacco, should apply by the first half of 2016.

Capsule cigarettes and other 
flavoured tobacco products will  be banned from 2016, but a further phase-out period of four years will apply to menthol cigarettes.

The revised EUTPD will also require:

● Picture and text health warnings to be placed at the top of cigarette packs and cover 65% of the front and back of packaging, and 50% of the sides

● Minimum dimensions for cigarette packs – leading to the end of slim ‘lipstick’-style cigarette packs

● No promotional elements on packs. This includes references to taste or flavourings, or their absence (additive free)

● Similar rules will apply to roll-your-own tobacco (RYO) packs, which will also have to carry 65% combined health warnings on the front and back as well as the additional text warnings. RYO products can have a cuboid or cylindrical shape, or be in the form of a pouch, and each pack will contain a minimum of 30g of tobacco

● The new Directive also specifically allows Member States to introduce further measures relating to standardisation of packaging – or plain packaging – where they are justified on grounds of public health, are proportionate and do not lead to hidden barriers to trade between Member States.

As well as the European legislation, home-grown rules will take their toll on the industry. A ban on tobacco displays in small stores (less than 3,000sq ft) is drawing nearer, with the deadline for implementation now little more than a year away on 6 April, 2015.

While many small stores with higher tobacco turnovers will receive funding from the tobacco manufacturers to make necessary changes to their gantries, not all will be so lucky and some stores will be forced to foot the bill for the alterations themselves.

Independent retailer Nigel Dowdney, who owns two stores in Norfolk, is in the peculiar position of having one of his gantries altered by JTI, but not the other.

Over in East Sussex, Bipin has just been informed that Imperial Tobacco will be paying the bill for the changes to his gantry, which are due to be implemented this October. “I’m relieved that Imperial will be funding the changes, but I am anxious about the impact the ban will have on sales,” Bipin says.

“Tobacco might not make me huge margins, but it’s a key footfall driver and helps to boost overall turnover in the shop. From what I understand, Imperial will be quite a lot more rigid about where products should be located on the gantry and how much space the various brands should be given once the doors are in place,” he adds.

Funding or no funding, manufacturers are recommending that now is the time for retailers to start to tell their regular tobacco customers about the forthcoming changes, and to reassure them that range and price will not be affected by the legislation.

The looming deadline on display certainly doesn’t seem to be dampening new product development. Since the start of this year there have been seven significant bouts of activity from four of the UK’s major players, including four new looks and three range extensions. In fact, be prepared for a rush of activity over the coming months as the manufacturers seek to bolster brand awareness before the shutters, doors or curtains are either closed, slid or drawn.

For tips and ideas on how to cover your gantry should you not receive manufacturer funding, why not take a trip to this year’s National Convenience Show where a number of key display ban solution companies will be exhibiting.

For more information on the show, go to



Mascotte looks for organic growth

Mascotte has unveiled Mascotte Extra Thin Organic Papers to capitalise on growing RYO sales and increased interest in green and organic products.

The natural brown-coloured papers are slow burning and made from 100% natural hemp fibres. They have an rrp of 25p for 50 papers.

Café Crème whips up new design

Cigar brand Café Crème is celebrating its 50th anniversary with a new pack design. The new look puts a clearer focus on the brand name in order to stand out better on-shelf. The phrase ‘since 1963’ has also been added.

Portrait pack for JPS RYO

Imperial Tobacco’s JPS RYO has changed to a new portrait pack format as part of a redesign. Available now, the sleek new-look packs allow 
for easier merchandising and increased visibility of the pricemarks.

JPS RYO is available in 12.5g and 25g pouches with rrps of £3.85 and £7.40.

Gold Leaf gets smaller format

Imperial Tobacco has made its Gold Leaf RYO tobacco brand available in a 9g pack. The new small packs also come with papers, enabling adult smokers to make 22 hand-rolled cigarettes for £2.79. Imperial hopes the price will appeal to value-driven adult smokers.

See the light

2014 will see the US lighter brand Zippo attempt to spark sales with a range of new lower-cost entry-level products packaged specifically for the convenience market. The Zippo All in One Kit incorporates a windproof lighter, a tin of premium Zippo lighter fluid and a six flint dispenser in one convenient pack, retailing at £19.60. 
The product comes

in a ready-to-hang blister card pack.  

Slimline choice

JTI has extended 
its Silk Cut cigarette range with a super-slim capsule variant. Available now, Silk Cut SuperSlims Choice replaces the existing Silk Cut SuperSlims range, which consists of the purple and menthol products.