Back to basics to unlock cigar sales

Signature cigarillos

Cigar sales flourished in local retailing during the pandemic but shoppers now seem to be drifting back to the major multiples, so is it time to go back to basics?

by Antony Begley

The Covid-19 pandemic had a dramatic effect on the cigar category in the convenience channel in Scotland, as it did on so many categories. Sales flourished over the last couple of years as consumers spent more time at home and had more free time to enjoy some affordable luxuries a little more often. By and large, cigar shoppers avoided large, busy supermarkets and turned to their local retailers.

The latest IRI data, however, shows that this trend has very much ground to a halt. In the 12 months to 20 February, volume sales of miniature cigars in independent stores plummeted 17.5% with sales of small cigars down an even more eye-watering 20.6%.

Granted, this is partly down to the fact that sales a year ago were flying high, but the data is clearly a concern.

Alastair Williams, Country Director at Scandinavian Tobacco Group UK, comments: “During lockdown we saw consumers shifting to convenience stores and away from the major multiples but that trend is now reversing significantly and it’s a big concern.

“The drop in sales we’re seeing in independents is much larger than we’d expected. Sales in the category are declining slowly over the years but much more so in the local retailing channel. The supermarkets are trending down at about 7%, a much less steep decline.”

So what’s causing shoppers to abandon their lockdown habits and return to supermarkets?

“It certainly looks like shoppers have just slipped back to their old ways and started buying their cigars from the supermarkets. At this stage we don’t fully understand why but we could guess that it’s to do with choice and availability. Shoppers have confidence in finding what they want in a supermarket.”

Williams suggests that what local retailer need to do now is go back to basics.

“We appreciate that life has been really, really tough for retailers over the last couple of years and they’re being pulled in all sorts of directions and have faced big availability challenges. But if they dedicate a little time to the cigar category, they will be rewarded. The margins remain three and four times the margins on Factory Made Cigarettes and there are still a lot of consumers looking for cigars.”

What does this mean in practical terms? “It means getting your range right,” says Williams. “It doesn’t mean having a big range, it means having the right range. Stock the best sellers and maintain availability and you will see the benefits in the till.”

Value for money is more important than ever in the current economic climate, so the ‘right range’ will include products that offer great value for money without compromising on quality.

“STG remains the UK’s biggest player in the cigar category and our products dominate the best-sellers list in Scotland. Products like Signature Blue, Moments Blue and Signature are must-stocks for retailers. Signature Blue and Moments Blue alone account for well over 30% of cigar sales in Scotland so it’s critical that retailers have these products available,” concludes Williams.