Rolling tobacco is worth its weight in gold to retailers. Gaelle Walker charts the rise of the category and looks at how to make the most of its success

What goes up must come down, or so the laws of physics say, but that obviously doesn’t take roll your own (RYO) tobacco into account. Still in double digit growth year on year, the RYO tobacco category is now worth £1.3bn more than double the value of the sports and energy drinks segment.

And for the next three years at least, industry experts agree that it’s not likely to show any signs of coming down.

With the UK economy showing little signs of stabilising, unemployment levels expected to remain permanently higher than they were pre-recession (National Institute of Economic and Social Research) and no let-up

Retailer’s view Paul Hudson

“RYO sales at my store are fully reflective of the national trend. Sales have exploded and in the past year we have boosted our range from what was quite a modest one to a full RYO offer with a wide range of brands, sizes and prices as more and more adult smokers, and increasingly, females, buy into it. 

“The lower-priced RYO brands such as Amber Leaf and Golden Virginia are leading growth, while more premium brands aren’t doing as well. Sales of larger packs are increasing, although the bulk of sales still come from smaller packs. I sell about 35 packs of 12.5g Amber Leaf a week and 30 of Golden Virginia. All my RYO is merchandised down the right hand side of the gantry.” 
Paul Hudson, Spar Seasalter, Whitstable, Kent

expected on tobacco taxes, adult smokers’ need for more affordable tobacco products is set to remain considerable. And, when you consider that the average price of a packet of 20 is £6.95 £5.40 of which is tax, it’s easy to see why.

Currently, one in four cigarettes smoked in the UK has been self-rolled, and rates rise further towards the end of the month when bank balances run dry, forcing traditional cigarette smokers to dabble in the RYO market.

However, the phenomenal growth in RYO and the huge opportunity that it represents for the retail trade is still not being exploited quite as keenly as it could be by the independent retail sector which currently accounts for 46% of all RYO sales, according to Amber Leaf manufacturer JTI.

When asked what was the main influence behind which RYO products they bought for sale in their stores, only 40% of retailers responding to an independent survey commissioned by JTI cited customer demand. Instead, the majority of buying decisions were based on whether or not brands were available in pricemarked packs, while 30% said that the wholesale price of products was the key decider.

And while a growing number of independent c-store retailers are moving their RYO brands up from the lower echelons of the gantry to loftier locations that better reflect their heightened status, many more aren’t instead choosing to leave the Amber Leafs and Golden Virginias almost out of view behind the counter or, worse, jumbled up with the sundries.

“When it comes to merchandising, retailers should take their lead from the multiples, which now give RYO much greater prominence and space,” says Republic Technologies marketing manager Mark Alldred.

He points out that retailers shouldn’t forget key RYO accessories such as filter tips and rolling papers, which are also enjoying an associated sales boost. These should be merchandised prominently right next to the RYO tobacco, Alldred says. “You wouldn’t stock toothbrushes away from toothpaste, would you? So it’s the same for RYO tobacco and its accessories,” he explains.

top tips Merchandising hints

Keep a clear and tidy gantry to ensure adult smokers are aware of the choice and range you offer. This will also make restocking easier and quicker 
Availability is key so remember to re-stock each morning and prior to peak traffic times 
RYO presents a great profit driver, so ensure top-selling brands are well stocked and that you provide enough space for them on the gantry. 
It is important that retailers offer customers a wide choice of RYO packs, including 25g and 50g where possible 
Rotate RYO stock regularly so that older stock is sold through first 
Keep sundries near by but not necessarily on the RYO shelf they take up precious space for smaller cash return.

Imperial Tobacco recently designed a new RYO unit to help retailers better recognise the commercial opportunities offered by the segment and give RYO products the space, it says, they deserve.

“The RYO unit is bolted onto the cigarette unit and houses the entire RYO range,” Imperial Tobacco furniture development manager Gary Avery says. “The design allows the best-sellers more space, which reduces re-stocking time and helps to maintain constant availability and reduce out-of-stock situations,” he adds.

It also helps to better distinguish the price sectors, which in the past 12 months have continued to become increasingly distinct. While mid-priced brands still account for 60% of volume, the lower priced sector has recently demonstrated significant growth, so brands in this price sector are also given more shelf space in-store,” Avery adds.

Droitwich independent retailer Sat Sohal saw a significant uplift in sales of his RYO products after installing Imperial’s new RYO solution, with sales across all three pack sizes (12.5g, 25g and 50g) increasing. The largest growth was in sales of 25g packs, where an uplift of 23% was seen in the four months after the unit was installed.

Their value for money means that the popularity of larger packs has been increasing over the years, with 25g packs now accounting for a 35% volume share of the market and 50g 22%. Responding to the trend, BAT UK launched Cutters Choice in a 50g pricemarked pack at the end of last year, and the format now accounts for 14% of all Cutters Choice sales.

However, once again figures show that the opportunity isn’t being as exploited quite as fully as it could be. According to JTI’s retailer survey, only 34.8% of retailers had increased their range of sizes in the past 12 months despite the growing popularity of larger pack formats.

Availability is also key, although when it comes to RYO getting this right can be tricker than other categories. The key is to truly understand who is buying the stuff and when they want it, but what complicates this is that both these elements have changed dramatically over past years.

retailer views Kash Odedra

“RYO accounts for about 40% of my tobacco sales and growing, so it’s a vital category for me. As such, it is merchandised in a vertical row down the whole right-hand side of the gantry. That way it’s much easier for adult smokers to see what we’ve got.
“Our top-selling RYO brand is Amber Leaf, closely followed by Golden Virginia. We’ve seen quite a bit of downtrading from cigarettes into RYO, but only really among two consumer groups: younger male and female adult smokers who are perhaps more open to change and trying new things; and older adult smokers and retired people who don’t have large disposable incomes.” 
Kash Odedra, Mace, Whissendine, Rutland

Growth is being driven predominantly by younger people who are dualling between RYO and the cigarettes category. Most of these duallists can be found in the 18-24 age bracket, and many of them will smoke cheaper RYO in the week and trade up to ready rolled cigarettes as a “treat” on weekends when they’re also more likely to be out in pubs and bars and have less time to roll a fact which means that perfect availability during the week is just as important as on weekends.

It’s a trend which has spurred all of the UK’s big tobacco manufacturers to introduce RYO variants of their key cigarette brands in the past few years. JTI was first with the launch of Benson & Hedges rolling tobacco in 2009. The brand, which is available in both Gold and Silver variants, doubled its retail sales value from £11.5m in 2009 to £23m in 2010. Not long after, BAT followed with Pall Mall RYO, and in April this year Imperial Tobacco added JPS RYO into the fast-growing value segment of the RYO market.

According to the company’s UK communications manager Iain Watkins, the brand has made a “hugely successful start”, meeting the needs of the value-driven duallist smokers without cannibalising sales of the original JPS cigarettes.

Duallist smokers are also more likely to want a filter, adds Alldred. “Some 80% of the 18-24 age group use a filter, compared with people aged 55 and up where 50% use a filter,” he points out.

Location is also important. According to Imperial Tobacco, roll-your-own consumption is most prevalent in Wales, East Anglia and the South West, but in terms of total sales the South East remains the largest market, where more than 20% of all RYO sales are made.

The number of women who smoke RYO is also continuing to rise. Nationally, 5% of all women now smoke RYO compared with 9% of all adult men, and 35% of all female smokers now smoke RYO either exclusively, or dualling between it and pre-made cigarettes.

fast facts: The vital statistics

The UK RYO market is worth an impressive £1.3bn 
RYO is the second fastest growing sector in the tobacco category 
One in four of all cigarettes smoked in the UK are RYO 
12.5g packs are the most popular, accounting for 65% of all RYO packs bought. 25g packs now account for 35% volume share of the total RYO sector and 50g packs account for 22% volume share 
46% of RYO sales are through independents and symbol groups 
A growing proportion of adult RYO smokers are female 
Mid-price is the largest sector; it accounts for almost 60% of volume.

However, it’s important not to forget the hard-core of exclusive RYO smokers those men and women who chose to do so, not just because of a need for value, but because they enjoy the “ritual” of rolling their cigarettes and the ability to use different papers, filters and tobacco textures to get their smoke exactly how they like it. These are the smokers for whom availability is key, and who are highly likely to leave your store if their preferred brand of choice is not present.

It is exactly these smokers that father-and-son team Jim and Andrew Armstrong, the pair originally behind the Zig-Zag business (which was sold to Republic Technologies last October) are targeting with their new rolling paper and filters brand Karma. It was launched in August to sit alongside their recently launched Rasta and Fosters rolling tobacco.

“There are two types of roll-your-own smoker,” says Fosters managing director Andrew Armstrong. “There are those who express their individuality by choosing to hand-roll, and those who hand-roll to save money because they can’t afford or don’t want to pay the high price of factory-made cigarettes.

“Karma will appeal to the former as we have taken great care over brand image and used only the highest quality paper and a natural Arabic gum. Additionally, we utilise an innovative six-colour printing process for the booklets to reflect the high quality of the product. We believe the latter, cash-conscious hand-rollers will be attracted by our value multipacks, giving them the ideal combination of quality and value.”

Karma will be available initially in five variants, of which three will have multipack extensions to appeal to both cash-strapped, and image-conscious smokers.

“We made the Zig-Zag rolling paper brand a great success by utilising a twin strategy of edgy, sometimes controversial, marketing executions and high retailer and wholesaler margins. This ethos will continue and be

retailer’s view Raj Dhillon

“Sales of rolling tobacco have increased steadily every year since we opened five years ago, and price is definitely the main driver. 
“Brand loyalty seems to have gone out of the window in these parts. Young adult smokers in particular look at pricemarks and switch brands if they notice a difference. Sales of Golden Virginia have picked up since it became available in pricemarked packs, but Amber Leaf is the biggest seller for us. When I ask customers why this is, they tell me it’s because Amber Leaf comes with free rolling papers. Free papers weren’t such a draw five years ago, but these days value for money is so much more important. I definitely don’t expect to see any slowdown in sales.” 
Raj Dhillon, Dhillon Widnes (Spar), Widnes, Cheshire

enhanced for Karma, as retailers and wholesalers will benefit from the highest margins available,” he adds.

The birth of new brands such as Karma will be key to keeping sales in the RYO segment buoyant and c-store retailers should ready their gantries for more of the same, for the next couple of years at least, before legislation forces them to go under-wraps in 2015.

In the words of Ian Robertson, head of corporate and regulatory affairs at BAT UK: “The initial growth of RYO may have been caused by the economic climate, however, as it’s become increasingly acceptable with male and female adult smokers, we believe that its popularity will remain.

“Value for money, combined with new innovations such as limited- edition tins, filters, papers and rolling machines, mean that RYO offers flexibility and a more ‘personal’ experience. Smokers are able to choose their tobacco, filters and papers which can all be attributed to assisting the growth of the segment.” 

Key dates 
October 1, 2011: Scottish retailers must have signed the Tobacco Register by this date, or face a £20,000 fine or six months’ imprisonment, or both. Register online at 

April 1, 2012: Large stores must comply with the tobacco display ban by this date. Small shops (less than 280 sq m) have until April 1, 2015. Size of requested display: 120 sq cm. 

April 6, 2012: Large shops must comply with a tobacco display ban by this date. Small shops have until April 6, 2015. Size of requested display: 1.5sq m. Awaiting restrictions. 

Wales: No decision on implementation dates yet. Size of requested display: 1.5sq m. 

Northern Ireland: The display ban is still under consideration. Size of requested display: 0.75 sq m. 

November 17 nationwide: Introduction of Lower Ignition Propensity (LIP) cigarettes. These meet new European-wide safety standards and will be introduced to the UK on November 17, 2011 to help reduce the number of fires caused by unattended cigarettes. 

Ones to Watch

Big-name impact Imperial Tobacco introduced JPS RYO into the value segment this April. It is available in two pouch sizes: 12.5g priced at £3.27, and 25g packs at £6.40, in both standard and pricemarked packs. The product was launched to reflect the needs of value-driven smokers and offer them a legitimate alternative to the illicit market.
tel: 0117 963 6636 

In the top spot 
Making its debut in the UK in 1991, Amber Leaf is now JTI’s flagship RYO brand and one of the fastest growing in the segment. According to Nielsen Market Track data, Amber Leaf 12.5g is now the number one RYO product in the UK with a 14.7% volume share of the market. Packs are available in 
rrp 12.5g, 25g and 50g priced at £3.46, £6.74 and £13.34 respectively 
tel: 0800 163503

Crowning glory 
BAT’s Pall Mall RYO was unveiled in December to meet growing demand for a quality value-for-money brand. Contained in a unique red vertical pouch, the Pall Mall Rolling product offers smokers some of the lowest prices on the market. It is available in two sizes: 12.5g with an rrp of £3.27 and 25g for £6.40, in pricemarked and non-pricemarked formats.
tel: 01296 335335 

Spreading its wings 
Earlier this year Republic Technologies revamped its Swan filters, papers and accessories. The move comprised bold new packaging, including a new Swan brand logo, new-look multipacks and an extended range of combi-packs which feature 50 papers and 50 filters in two varieties and in a slimmer, pocket-friendly pack.
tel: 01494 556279