The secret to cigar success

This information is for tobacco traders only

The overall UK cigar market is worth an estimated £230m, with approximately one third of cigars sold through the independent trade, and with peak cigar season fast approaching, retailers are advised to stock up ahead of Christmas.

by Mia Hunt

December is a peak period for cigars, with sales in the week before Christmas increasing by as much as 10-15% vs. the preceding weeks.

“Cigars are an important and profitable category for retailers during the Christmas period when sales typically increase,” says JTI Head of Communications, Jeremy Blackburn. “By stocking the right brands and keeping up with key category trends, retailers can ensure they don’t miss out on their share of profits.”

His advice is simple, but worth listening to: stock the most popular cigar formats, including miniatures, and cater for existing adult smokers’ growing demand for greater choice and convenience.

But as the first Christmas period since the tobacco display ban came into effect, how are cigar sales set to perform and how can retailers ensure their sales don’t suffer?

According to Alastair Williams, Head of Sales at Scandinavian Tobacco Group UK, it is too early to say for certain what impact the retail display ban is having on sales for retailers, but insights from other countries that have been dark for some time highlight that availability has a crucial role to play in maintaining tobacco sales.

“At the end of the day, if it’s not in stock, customers will simply go elsewhere and may not return, so it’s essential to maintain 100% availability of all products at all times,” says Williams. “Now that the market is dark, some consumers may default to well-known brands, value for money or niche products and, as a result, retailers need to stock their range accordingly.”

Staff training and customer service is also essential, he says, and retailers should ensure staff are knowledgeable about the products on offer.

“Retailers need to be extremely well organised and educate their staff on how and where to stock their products,” he adds. “Talking staff through where products are merchandised on the gantry will allow them to get used to where they’re positioned and reduce transaction times at the till as a result. It will also help to educate them on the importance of maintaining stock levels and the impact it may have if they don’t.”

None of this is new advice, but with stores busier than usual at Christmas, it is vital that staff are on the ball when it comes to availability.

The right range

With many retailers undertaking range reviews and responding to market trends, the emphasis is to identify the right range for their store based on the products’ rate of sales and customer base, and to adjust the range accordingly, says Williams. And he recommends that removing any brands that aren’t well-known or top sellers be the first step.

But as Andrew Miller, Head of Field Sales at Imperial Tobacco UK explains, 38% of cigar consumers will choose difference cigars for different occasions, so it is imperative that retailers offer a wide range of brands to ensure they maintain customer loyalty.

Miniature cigars are must-stocks, with the segment making up 68.4% of all cigar sales by volume, and accounting for 60% in independent and symbol stores. Small cigars are the next biggest segment, commanding a third of the market at 28.6% volume, followed by the Medium/Large segment at 2.9%.

JTI’s Hamlet accounts for 26% of the Miniatures segment. As one of the top three cigar houses in the UK, Hamlet holds a 38% share of the cigar category in the independent trade and is the number one fine cigar brand for existing adult smokers in the UK, holding a 45% share of the fine cigar segment.

Williams advises stocking a selection of smaller cigars such as Café Crème and Moments, enabling retailers to make the most of the increasingly popular Miniatures segment, as well as larger cigars such as Henri Wintermans Half Corona and Corona Deluxe to allow them to capitalise on celebratory occasions.

Hamlet celebrates heritage with timeless new look

Earlier this year, JTI introduced new pack designs and formats across the Hamlet range, reinforcing its position as the number one cigar brand in the UK. The modernisation saw a new look celebrating the heritage of the brand with rotational designs on selected SKUs featuring fictional characters from the Freeman business empire – J R Freeman & Son were the original founders of the cigar factory which made Hamlet cigars.

The Hamlet singles 50s drum is now available as a half outer for the first time, providing retailers with a reduced cash outlay and lower stock holding opportunity. And Hamlet miniature 10s are available in a more compact tin format in response to a demand from existing adult smokers.

Value is another consideration: “The display ban means consumers may ask for the cheapest tobacco product, not the second cheapest, so it’s imperative for retailers to stock up accordingly,” advises Williams.

Products such as Break Filter Cigarillos, available in price-marked packs of 17 sticks for £4.59, allow retailers to offer their customers a cheaper, alternative, value for money smoke. While Moments miniatures – now the fastest growing cigar brand in the UK according to SymphonyIRI data – also offers value for money at £3.83 for a tin of 10.

Single cigars are another option. Henri Wintermans Half Corona and Slims are available in outers of 5×5 and the new hygro-foil packaging means the cigars have been individually bar coded, allowing them to be sold as singles where space is limited on a retailer’s tobacco gantry.

Imperial Tobacco’s Classic currently accounts for just under 25% of the small cigar sector and just shy of 10% of the total cigar market as a whole. They are available in 5s packs at £5.58 RRP or as single cigars (in 50s drums) at an RRP of £1.16 each. Panama 6s packs (RRP £5.46) and King Edward Coronets 5s packs (RRP £5.25) are also selling well and, overall, Imperial Tobacco brands account for almost 35% of all small cigar sales in the UK.

Meanwhile, sales of Imperial Tobacco’s large cigar brand, Castella Panatellas 5s (RRP £9.71) and single cigars (in 25s drums) remain strong with a 4.5% share of the large cigar sector.

Even with the display ban in place, PMPs still offer consumers reassurance on price and should be included in any retailers’ tobacco display.

“Knowing that they are buying tobacco products at a price recommended by a tobacco manufacturer will give consumers confidence that they really are getting great value for money,” says Williams.