SLR catches up with Alastair Williams of cigar category leader STG to find out how the market is performing and hear what the company is doing help drive the category forward in tough times.
by Antony Begley
These are curious times for every category in local retailing and Cigars is no exception. The category has been in slow decline for a long time now, but it’s nonetheless proving remarkably resilient.
“The total cigar market in Scotland is down 9.9% on an MAT basis to February this year [IRI],” says Alastair Williams, UK Country Director at Scandinavian Tobacco Group (STG) UK, the dominant player in the cigar market in Scotland with a 64.3% share. “But certain segments of the market continue to perform well. Medium and large cigars are actually in growth by value, up 3.5% MAT. That means they have slightly grown their share of the total market and well worth paying attention to, particularly Henry Wintermans Half Corona. Miniature cigars continue to drive and dominate the market, as they have done for some time and the Miniatures share of the market has grown by 0.5% MAT. Miniature cigars now account for 73% of the total cigar market in Scotland so they remain the key lines to focus on for Scotland’s local retailers.”
With STG owning three of the four bestselling products in Scotland – Signature Blue, Signature and Signature Finos Blue – Williams’ comments are worth noting, particularly as the company continues to grow its share in Scotland, up 4.2% until February 2020.
That share is set to increase further with the recent launch of the innovative new Signature Dual Filter Cigarillos range. Launched in February, the new cigarillos come in a convenient and stylish pack of 10, with an RSP of just £4.95.
The key product feature of Signature Dual is that it has an acetate filter containing a peppermint capsule under a lasered marker to give a smooth smoking experience which may appeal to cigarette smokers looking for something new. In addition to the capsule, it’s made with Virginia leaf tobacco and has a natural leaf wrapper.
The big question is how the market will hold up amidst the current new world order. “At this stage it’s star far too early to say how coronavirus is affecting the category,” comments Williams. “So far, our sales out of the factory have held up remarkably well but we’re receiving a little anecdotal evidence that sales in stores may be softening a little. What we’ve seen in recent times is a big increase in sales of multipacks, which makes sense, as it appears that consumers are shopping less often but buying more when they do.”
Williams also believes there is a marked shift away from supermarkets and into convenience retail. “The independent channel is seeing its share grow as shoppers presumably don’t want to have to cope with the queuing that’s become prevalent in supermarkets,” he says. “Value for money continues to be a major trend but the premium end of the market is holding up better in Scotland than across the rest of the UK, which is an interesting point for retailers to note.”
As the category leader, STG continues to take its role seriously, says Williams. “With over 64% of the market it’s really incumbent upon us to lead from the front and continue to help driving the category. That’s why the launch of Signature Dual Filter Cigarillos is so exciting for us. It extends our offering to the Scottish tobacco market and it feels like a natural extension to the range. We’re confident it will prove a very welcome addition to the UK’s biggest cigar brand portfolio.”
The way ahead
“As for the future, no one can predict anything with any confidence,” concludes Williams. “All we can do is keep focusing on doing what we do well and that’s the same advice I’d give retailers. Focus on the brands that are driving the biggest sales and always ensure you have both premium and value for money options available for your shoppers.”