Sales of cigars shot up by 10% last December highlighting a festive opportunity for retailers ready and able to capitalise on that seasonal spike in demand.
Cigars may not strike you as the most obvious of festive lines but IRI data from last year quite clearly shows a marked spike in the run-up to Christmas. Total sales of cigars in December last year increased by a significant 10% compared to the previous month while sales of larger cigars from the Medium/Large segment, such as such as Henri Wintermans Half Corona, reported a huge 20% increase.
Jens Christiansen, Head of Marketing & Public Affairs at Scandinavian Tobacco Group UK (STG UK), comments: “To capitalise on this peak in celebratory sales around the festive period, retailers should ensure they are stocking larger cigars such as Henri Wintermans Half Corona, which holds the position of the No.1 selling cigar in the Medium/Large segment and is also the sixth best-selling cigar overall in terms of value sales.
“We also recommend stocking a selection of smaller cigars such as the category-leading cigar brand, Café Crème, as well as Moments, to make the most of the growing Miniatures segment.
“As we move closer towards the festive season, the Cigars category presents a great opportunity for retailers to increase their sales. By ensuring they are fully stocked with the right cigar offering at all times, retailers will be well placed to take advantage of the seasonal sales on offer.”
Worth £198.5m, the Cigars category clearly presents a significant sales opportunity for retailers during the festive period.
In the category, many consumers remain far more loyal to well-known brands than they do in the cigarette category, preferring a brand they can trust as they provide reassurance in terms of the quality and perceived value of the product.
As a result, it’s important for retailers to include a range of top-sellers from each segment in their range so that they don’t miss out on sales.
Christiansen comments: “As the No.1 cigar brand in the UK, Café Crème Blue accounts for 22.2% of cigar sales single-handedly, making it a valuable asset for any tobacco retailer. STG UK is leading the way in the category, accounting for seven of the top 16 brands and over half of the entire category with a 51.9% market share [IRI, Aug 2017]. With a portfolio benefitting from many category-leading cigars, including most notably Café Crème which is the No.1 cigar brand in the UK, our brands should be considered must stocks for any tobacco retailer this Christmas.”
Similarly, JTI recommends that retailers take a fresh look at their cigar offering in time for the festive period. A JTI spokesperson said: “Cigar sales typically increase over the festive period, so retailers are encouraged to stock up in the run up to Christmas to profit from the sales opportunities brought by the seasonal holiday. We recommend stocking the full Hamlet house to cater to a range of existing adult cigar smokers and their preferences in order to maximise sales opportunities.”
To cater to the niche market of cigar users, JTI urges retailers stock up with a variety of pack sizes and formats including miniature cigars to demonstrate to existing adult smokers that they are getting the best possible choice and value.
Value for money
As in all tobacco categories, price continues to be a major focus for shoppers, and the key manufacturers fully expect the value for money trend to gain even further momentum now that EUTPD2 restrictions are in place.
With the Small Cigar segment worth £77.5m, there is a significant opportunity for retailers to capitalise on this demand for value and drive growth back into the category.
To tap into this demand for value, STG launched Moments Panatella earlier this year which is available to buy in packs of five with an RSP of £4.20, making it the cheapest product on shelf within the Small Cigar segment. Thanks to its exemption from the plain packaging restrictions, the range also benefits from an eye-catching yellow design to help stand out on-shelf.
The Miniatures segment is now dominating the value for money category as consumers continue to seek out quicker-smoking cigars. Priced at just £3.83 for a pack of 10, stocking Moments Blue allows retailers to take advantage of the sales afforded by this leading segment, whilst also responding to two of the major trends we’re seeing in the category: trusted brands and value for money.
Hamlet Miniatures have almost 18% share of sector [Nielsen, Jun 2017] so Hamlet is also a must stock for any retailer wanting to benefit from this profit opportunity.
While the desire for celebratory cigars around Christmas presents a great opportunity to grow cigar sales, in order to fully make the most of this opportunity retailers should make sure they are offering a strong range of cigars from all segments, at all times throughout the year.
Top performing cigar brands
|Café Crème Blue||22.2%||£34.4|
|Royal Dutch Miniatures||6.6%||£7.4|
|Café Crème Arome Filter||4.5%||£6.9|
|Royal Dutch Miniature Blue||3.5%||£3.9|
|HW Half Corona||2.4%||£13.3|
|Mehari’s Sweet Orient||1.1%||£1.9|
|Royal Dutch Elites||0.7%||£1.9|
|Café Crème Finos Blue||0.7%||£1.0|