The countdown begins…

This information is for tobacco traders only

As the countdown to the implementation of May 2017’s EUTPD2 deadline begins in earnest, there’s a lot going on in the tobacco category as retailers prepare for the new rules while manufacturers jostle for position – and everyone unites against the anti-illicit trade.

by Antony Begley

Next month the countdown to the implementation of the most important chunk of the EUTPD2 legislation (from a retailer’s point of view) kicks off in earnest. May 20th 2017 sees The European Union Tobacco Products Directive (EUTPD II) and Standardised Packaging legislation come into full force in convenience retailing and marks possibly the most significant set of changes to hit the category yet.

Unsurprisingly, that countdown has seen a flurry of activity from the major manufacturers as they jostle for position before the draconian changes place and it becomes considerably more difficult for them to market their perfectly legal products and differentiate themselves from their competitors.

EUTPD II / Standardised Packaging

With confusion reigning around what EUTPD2 does and doesn’t mean for retailers, the main suppliers have worked hard to clarify the picture for retailers. Imperial Tobacco has launched its ‘Partnering for Success’ initiative which has been designed to offer retailers guidance around the legislation.

As part of that initiative, the company has released a video offering easy-to-follow guidance on the legislation. Retailers are able to view the video at the trade website or on SLR’s site.

The video explains to the trade how the impending legislation is likely to affect the tobacco category – from the key differences between current and standardised packs to significant dates. It also addresses issues around potential retailer and customer confusion in the run up to May 2017.

Melvin Ruigrok, General Manager of Imperial Tobacco UK and Ireland, comments: “Partnering for Success reflects our continuing commitment to working together with the trade to secure the ongoing success of the category in a highly regulated environment. It will also ensure our sales force becomes the go-to source of expertise, authority and reassurance around the EUTPD II and Standardised Packaging legislation.

“Down the years the tobacco industry and the trade have a long history of working together through changing tobacco legislation, ensuring the category remains both a key footfall driver and profit generator.”

Dates you need to know…
  • May 2016: Start of manufacturing ban
  • Jul 2016: PMPs start to run out
  • Jan 2017: 10s, 18s, 19s start to run out
  • May 2017: Start of retail ban
  • 2020: Menthols banned

Imperial Tobacco has not yet given up hope of over-turning the legislation however, or at least having it softened. Duncan Cunningham, Imperial Tobacco UK&I’s Head of Corporate and Legal Affairs, adds: “We have recently put our case forward in the courts on behalf of our employees, our retailers and our investors. We now await the results of these challenges, which are due soon. In the meantime, as a responsible business we also recognise the need to help prepare our partners for compliance.”

In a similar vein, BAT UK has launched MOR£, its Trade Engagement programme. Covering 20,000 Independents & Symbol outlets, the programme is the largest of its kind for any tobacco company in the UK.

The positive news is that 20th May 2017 is still some way off, so there is still plenty of time for retailers to familiarise themselves with what the changes will mean for them and their customers.

One thing all of the major manufacturers have in common is a desire to reassure retailers that the massive tobacco category – now worth around £15bn – remains a hugely resilient and important category.

Andrew Miller, Head of Field Sales at Imperial Tobacco UK, outlines just how important the category is: “Tobacco continues to be a key offering in convenience stores, with 82% of retailers recognising its importance to the overall success of their businesses. Some 39% of adult smokers say tobacco is their main driver to visit, with tobacco shoppers making an average of 4.5 store visits per week. Meanwhile, the average spend by a tobacco shopper is £10.57, almost double that of a non-tobacco shopper (£5.45).”

New number one

As that competition heats up, JTI has just laid claim to taking over the number one UK manufacturer spot, according to the latest statistics from Nielsen to December 2015. The company says that sales momentum and effective partnerships have been responsible for it securing a 42.4% share of the £15bn UK tobacco market.

JTI’s portfolio of best-selling brands now represents an ever increasing contribution to retailer tobacco sales. The Nielsen stats reveal JTI as having the No. 1 cigarette brand in Sterling and the No. 1 RYO brand in Amber Leaf.

Big trends

The over-riding trend in tobacco remains the drive to value with lower priced cigarettes continuing to rule the roost. Imperial Tobacco’s Miller comments: “The value for money increasingly demanded by price-conscious adult smokers means over 30% of all cigarette packs sold in the UK now stem from the sub economy price sector. That’s up 23% year-over-year (YOY).”

At the same time, the importance of capsule variants continues to grow with Miller stating that one in 10 cigarettes purchased in the UK is now a capsule variant, up 23% YOY.

There has been no shortage of product launches from the main UK manufacturers in recent times, despite the difficulties in bringing products to consumers in a dark market, and that trend shows no sign of waning. In fact, it looks likely that 2016 will see many more launches as the manufacturers attempt to recruit new adult smokers into their brands before the arrival of plain packaging in May 2017.

All manufacturers have continued to react to developments in the market with a raft of new launches and range refreshes across factory made cigarettes and RYO tobacco.

What will be banned in May 2017?
  • All 10 packs – the new minimum will be 20s
  • All 17/18/19 packs – the new minimum will be 20s
  • All 8g / 9g / 12.5g / 20g / 25g packs of RYO tobacco – the new minimum will be 30g
  • All price-marked packs
  • All branded packs

Among the most recent launches was JPS Triple Flow in December, featuring unique ‘easy draw’ channels, with the new, high quality smooth blend enhanced by an innovative filter. Each cigarette is also wrapped in a special paper, designed to actively reduce the amount of smoke emitted – which may result in less smell. JPS Triple Flow is available in King Size 19s with an RRP of £7.49. PMPs are also available at £7.35.

Despite increasing excise duty rates coupled with adult smokers seeking greater value from their tobacco purchases, around 1 in 4 packs of cigarettes sold today still come from the premium and sub-premium price sectors. The enhanced margins provided by these brands means they continue to be ‘must-stocks’ for retailers in 2016 and beyond.

Alan Graham, General Manager at Santa Fe Natural Tobacco Company UK says: “The largest brands in each sub-category, the cheapest and truly niche products stand out. Natural American Spirit is indeed truly niche as the UK’s largest additive free tobacco brand and will continue to be asked for by consumers.” Graham believes that “stores need to organise themselves and their staff so they can continue to offer best service” and that product knowledge, 100% availability and stocking the right range should see retailers manage the new restrictions effectively.


In the RYO category, trends over the past few years have seen a marked increase in the number of adult smokers who are shopping ‘little and often’, and who are also seeking a quality product with a lower out of pocket spend. For instance, currently more than 44% of RYO retail sales in the UK are 12.5g or below – a rise of around 15% YOY. It is expected this trend to continue.

Imperial Tobacco’s GV Smooth family continues to be the UK’s fastest growing RYO brand and was enhanced in January with the launch of GV Midnight and GV Sunrise in 10g formats. Since March they have also been available in 30g packs, including papers at at RRPs of £3.75 and £10.75 respectively. PMPs are also available at the same price. BAT have added an additional product upgrade to the Cutters Choice range: making the pack re-sealable and adding papers. Harry Barnes, Brand Executive for OTP said the change will give smokers “more value.”

“We’re responding to the adult smoker’s expectation that manufacturers will help them keep their tobacco fresher for longer with the re-seal packs,” he adds.

Barnes advises retailers to stock the full Cutters Choice range. He says: “It comes in a number of tastes and sizes that will allow a retailer to serve any adult RYO customer. If the adult smoker is looking for a richer taste then the Exquisite Blend will work for them; if their priority is out of pocket price – then the 10g offers great value; or, if they are part of the fastest growing group of adult tobacco consumers then they are likely looking for a 20g pack.”

While smaller packs tend to be more prevalent in independent stores it’s important for retailers not to discount stocking larger sizes either. With more than one in five packs of RYO tobacco sold being the 50g variant, larger offerings are becoming increasingly relevant as they offer adult smokers excellent value for money.

Another trend among adult smokers remains ‘dualing’; smoking RYO during the week but switching to cigarettes at the weekend – and this also looks set to continue.

Anti-illicit trade

An area where all retailers, manufacturers and wholesalers can work together is in helping to stamp out the anti illicit trade. This task looks set to be made infinitely harder come May 2017 thanks to the introduction of plain packaging, the so called forger’s dream.

Peter Nelson, Imperial Tobacco Anti-Illicit Trade (AIT) Manager, comments: “Organised criminal groups will have identified this legislation as a huge opportunity to increase their ‘market share’. Australia has – according to a KPMG report – witnessed a 3% rise in the illicit tobacco trade since the introduction of Standardised Packaging in December 2012.”

BAT’s Anti-Illicit Trade Team offers the public tips on how to spot a fake:”

  • Print Type: Counterfeits are commonly printed in litho print. Use a magnifying lens to look at the print pattern under magnification.
  • Glue Pattern: Machine-made packs have consistent glue patterns, hand-packed packs have glue patterns that are messy and less uniform. Open the side of the pack to look at the glue pattern.
  • Production Code: A code should always be present on the base or side of the pack.
  • Check the Spelling: Counterfeits often display spelling errors. Carefully read the printed information on the pack.
  • LIP Bands: All cigarettes in Europe should have bands in the cigarette paper. Running a highlighter inside the paper will make the bands visible if they are present.

To raise awareness among shoppers of the damage caused by the illicit trade, Imperial Tobacco’s AIT campaign ‘Suspect it? Report it!’ has launched a dedicated new website and Twitter feed.

The website – – and Twitter feed – @suspect_report – encourage consumers to consider why they should care about illegal tobacco, often wrongly portrayed as a victimless crime.

Peter Nelson, Imperial Tobacco Anti-Illicit Trade Manager, comments: “The manufacture and sale of illegal tobacco is a series of substantial illegal businesses that drain over £40m per week from the Treasury, according to HMRC figures. That puts retail businesses at risk and brings crime into our communities.”

If you have any suspicions around the sale of illegal tobacco in your area, please call either the Customs Hotline on 0800 59 5000, or contact your local Trading Standards or Police.

Imperial Tobacco offers the following advice for retailers looking to optimise their returns from the category
  • Range: Consumers are becoming ever savvier, demanding premium quality at a bargain price. In addition to more traditionally ‘marquee’ brands, retailers should stock a good range of bestselling value-orientated alternatives.
  • Availability: Research suggests the average independent store runs at around 80% availability. Last year’s Display Ban demonstrated that if retailers stock the right range and ensure availability remains consistently high, they’re likely to gain an advantage over less prepared traders and actually grow their tobacco sales. Retailers should use official planograms to improve their tobacco offerings; they’re designed based on the latest product and category performance, and aid customers with the navigation of gantries while also optimising ranging and protecting the availability of retailers’ top-selling SKUs.
  • Pricing: Competitive pricing remains one of the most important tools in retailers’ armouries, with 63% of shoppers considering price when making a purchase. To ensure pricing is competitive, retailers should take advantage of free Imperial Tobacco resources like The site allows retailers to swiftly search through all of the tobacco products available in the market, regardless of manufacturer, before creating their own personalised price lists for instant in-store use.
  • Tobacco as a footfall driver: Despite ongoing legislative challenges, the tobacco category remains a crucial footfall driver in independent retail; more than 1 in 10 potential customers will leave a shop if their brand of choice is not in stock. If retailers ensure they stock a range of products from each sector – from premium through to sub economy, they’re more likely to build the foundations of a loyal customer base.
  • The importance of brand: Having fostered years of trust among customers, the most familiar, well-known brands also consistently rank often among the top selling SKUs. Therefore – while it might seem obvious – retailers should make sure they’re well stocked on this front, too. Retailers should also pay attention to their EPoS system to keep track of what’s selling well, and what isn’t.
  • Use your rep: they are an invaluable source of knowledge: Retailers should take advantage of their sector expertise by asking them about the latest industry news, including any recent product innovations plus what brands and formats are proving popular in their particular region. Retailers can also visit trade websites like and retailer reward programmes like which also provide excellent industry resources.