Imperial Tobacco has set its sights on making Lambert & Butler the first £2bn fmcg brand - and a predicted £300m rise in sales this year could make it happen. As part of its bid, the company has added two new variants to the range: Lambert & Butler Superkings and Lambert & Butler Smooth.
With L&B Superkings, Imperial hopes to garner profits and market share from the above-Kingsize sector, which has been stable at about 27% for the past three years. Imperial believes the launch will go some way to curb the trend of Superkings smokers who trade down to value lines, by providing them with a standard price offer in above-Kingsize between the £4.28 and £4.88 mark. L&B Superkings will be priced at £4.68, offering a profit per pack of 26p or 6.6%.
Imperial expects that 60% of buyers will come from the mid-price sector who would otherwise trade into value; 20% will come from existing L&B smokers; 10% will trade up from the value sector; and 10% will come from other cigarettes.
The second launch is an 8mg smooth cigarette that retails at £4.59, and delivers 26p profit per pack. Imperial UK trade communications manager Iain Watkins says the trend for downtrading is losing the trade money and exposing gaps in the market: "The trade is losing 12p per pack as consumers jump down too many packs because there is a gap for a lower-tar variant and a gap in the L&B range for a smooth variant."
L&B Kingsize is the best-selling cigarette and leading fmcg brand in the UK (RAL/Imperial). In independent c-stores the brand accounted for 13.6% of cigarette sales in 2005, up 0.7% on 2004, with annual sales of £589m. Imperial says the L&B range generated £1.7bn in retail revenue and at rrp gave the trade £115m in profit in 2005.
Going for gold
Imperial has also announced plans to reinvigorate the roll your own (RYO) category with a new packaging concept for the Golden Virginia brand. New 14g cigarette-style boxes hold two 7g tobacco bricks with enough room to hold one brick plus rolling papers, filter tips and lighter. The Golden Virginia packs will be pricemarked at £2.99 and Watkins says they will provide 39.2p profit when purchased alongside Rizla rolling papers.
The RYO market has grown 16% in the past two years with five million adult smokers currently rolling their own cigarettes, spending about £600m on RYO tobacco. The sector has been boosted by tax hikes on cigarettes which have prompted an increasing number of smokers to switch to the cheaper RYO alternative.
About 28% of RYO sales were made through the independent convenience channel in 2005, down by 2.8% on 2004. Golden Virginia currently has about 47% market share of the RYO market overall, up 0.4% on 2004, generating around £303m sales value.
Watkins says: "It is important that we continue to innovate and develop the brand appropriately. The new packs provide adult RYO smokers with many benefits and we are extremely confident that they will be a positive addition to the highly successful Golden Virginia brand portfolio."