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Catman: tabaco y vapeo

Catman: tabaco y vapeo

Author: Liz Wells

Source: talkingretail.com 

Tobacco is a massive category for convenience retailers and remains a valuable earner – despite a challenging period when retailers have had to cope with a growing range of restrictions on the way they sell and display brands.

Suppliers and retailers are still coming to terms with the latest category change, the new ‘track and trace’ system, which was introduced in May. There is still more category upheaval to come with the ban on menthol cigarettes being introduced next May, but that should be the last such change for some time. Retailers who have faced a never-ending series of new regulations may feel inclined to breathe a sigh of relief.

Despite all the upheavals, the sales performance of cigarettes, the most important tobacco category, has remained remarkably resilient. The business was worth £5.5bn to convenience retailers in the year to April 2019, which was slightly down on the previous year. Impulse retailers accounted for more than half of total cigarette business in that period, according to figures from analyst Nielsen. Meanwhile, the success of roll-your-own (RYO) tobacco is growing as more smokers trade down from cigarettes in favour of something cheaper. Impulse operators accounted for a significant share of this business in the year to April, with annual sales of more than £1.3bn.

Vaping growth
The rise in vaping has added a new dimension, although it remains a small category. Sales through impulse outlets were worth £70m-plus in the year to April – 11.6% up on the previous year. Impulse retailers have been quick to exploit the sales potential of this category, but they are now facing heightened competition from specialist vape shops, which have more space to display their range, and online retailers.

The growth of vaping has been welcomed by many as a way of weaning smokers off tobacco. This is largely because vape users can decrease nicotine levels, or remove nicotine completely if they wish. In fact, vape shops have recently been opened in two NHS hospitalsin the Midlands to reduce smoking among patients, staff and visitors. However, some worry that vaping is now being adopted by teenagers, who may convert to traditional smoking in later years. The rise of vaping is helping to make up for some of the lost cigarette revenue as more shoppers switch into RYO tobacco to save money. It is also offsetting losses to the illegal tobacco trade, which is now well established in many parts of the UK and is undermining the level of retail business.

Capsule trend
Ross Hennessy, head of sales at tobacco manufacturer JTI UK, says: “In terms of cigarettes, there are two clear trends – the growth of the capsule segment and the growing value segment – as consumers seek out value-for- money products.” In January, the company strengthened its capsule offering with the launch of two products, Sterling Dual Triple Green and Benson & Hedges Blue Dual Double Capsule. “The innovations reflect our commitment to meeting consumer demands and will enable those involved in the tobacco market to maximise sales,” Hennessy says. “Smokers want value for money, so price is a key factor when choosing where to shop for tobacco products. Retailers should look to remain competitive by selling at RRP or below. Research has shown that nearly a third of smokers will choose to buy elsewhere if their preferred brand is unavailable. It is therefore crucial for retailers to maintain good availability across their range. If they don’t, they could be in danger of losing sales. To maximise sales, retailers should ensure they monitor EPoS data and stock the best sellers. They should also take advantage of our UK sales force, who are trained to help retailers make the most of the category.”

Duncan Cunningham, head of corporate and legal affairs at Imperial Tobacco UK&I, says: “Downtrading is one notable current trend.” To cater for this consumer shift, Imperial recently moved Embassy from its premium positioning to the more-popular economy sector. The repositioning means it is available in King Size 20s, with an RRP of £9.35 for Embassy Red and Bright Blue. “In the UK, RYO has been consistently growing its share of the overall tobacco category. However, since the introduction of the EU Tobacco Products Directive (EUTPD II) in May 2017, the speed of the shift from cigarettes to RYO has increased significantly. The crushball (capsule) sector also continues to flourish, currently standing at more than 15% of the overall cigarette market.

Customer needs
“We know independent retailers are best placed to understand and engage with their customers’ needs. Imperial is dedicated to ensuring independent retailers are well equipped to meet this demand and to help them understand their customers further. Continued focus on new product development is critical, but in a challenging post-EUTPD II environment it is also vital to communicate that innovation to retailers. Our salesforce spends significant time with our customers explaining the importance of new products. Imperial suggests organising tobacco products by brand, range and price segment: sub-economy to premium ensures availability is consistently maintained. Retailers can also take note of their best-selling cigarette and RYO SKUs and always ensure stockrooms contain enough back-up to replenish gantries.”

Chris Street, head of trade marketing at vape brand Blu UK, outlines the scale of the vaping opportunity for retailers. “There are now 3.2 million vapers in the UK, a figure that is expected to continue to rise, which is no surprise when you consider the significant lifestyle and cost benefits compared with traditional tobacco. However, only a minority of vape sales stem from traditional retail outlets, suggesting a real growth opportunity for retailers prepared to invest in upskilling their staff and educating them. The continuous evolution of vaping technology, allied to changing consumer trends, makes this an incredibly fast-moving and exciting category. As the vaping market matures, championing innovation and product quality is essential for brands to maintain relevance with consumers.”

Unlike with tobacco, retailers can display, advertise and promote vaping products, which presents a unique opportunity to create in-store theatre. “By grabbing the attention of customers as soon as they step through the door, it signals to them that the store is a destination for vapers. This may encourage them to engage with staff and ask questions about the range of products, leading to increased sales.”

Educating staff
Brett Horth, chief executive of Vapouriz, says: “It is important to learn as much as possible about the vaping category in order to become an integral resource for your customers. By fully educating your staff, you have the chance to become a local vaping destination through the level of service you offer.

“Independent retailers must stock recognisable, sought-after products in order to be seen as a trusted place for customers to visit regularly for their vaping products, not just as a stop-gap distress purchase.”



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