With the smoking ban, new on-pack legislation and further proposed restrictions it could be said that the tobacco industry is under pressure. However, the figures published by Gallaher state 385 billion cigarettes have been sold worldwide in 2007, and in the UK the tobacco industry sold 47 billion cigarettes in 2007 and Gallaher’s share of the market is 39%.
Andy Stevens, distributive director of Gallaher, says: “The tobacco category is extremely important within the wholesale channel, representing a massive 59%, by value, of cash and carry sales to retailers. This is an increase of 1% from the previous year. Many retailers rely on tobacco to drive footfall in-store.”
Stevens does agree that there are challenges. “The government control on tobacco has had an impact. The proposed banning of 10s may have the effect of pushing adult smokers towards rogue traders and fake products.
“The planned movement of packs to under the counter is also an issue, as people may not want to wait in a long queue when they cannot see the product they are after This may also push consumers towards rogue traders.”
In the current climate consumers are looking for value for money and Gallaher has developed this by launching price-marked packs of Sterling at decreased prices for a limited time, moving the brand into the super value sector. King Size is down from pound;4.50 to pound;4.20 and the Super King is down from pound;4.59 to pound;4.25.
Sterling is the number one brand in the value segment and accounts for nearly 5% of the total cigarette market. Stevens says: “The price-marked packs have been very well received by the trade and are doing extremely well, flying off the shelves.”
Gallaher has been working on promotions in depot to support wholesalers and cash and carries.
Last year Gallaher launched a gold fever promotion for Benson Hedges Gold and complemented the activity with a Visible Vault that visited 40 cash and carries across the UK. Tobacco buyers visiting the cash and carries hosting the vault had a chance to enter a code to try and open the vault and win the pound;1m gold bar inside it.
Gallaher is currently running a Silk Cut Squares promotion offering the opportunity to win over pound;80,000 in prizes, such as cameras, plasma TVs and MP3 players. The Silk Cut Squares kiosk visited 40 cash and carries and a further 20 winners have been invited to an event on December 15 in London.
Stevens says: “The premium sector is an important part of the market, representing 30% of the cigarette market, and has stable sales. There is a niche market for Silk Cut and it is the dominant brand in the premium sector.”
Stevens adds that supporting the trade sector is vital and Gallaher has a strong team of sales people visiting UK retailers on a four week cycle. It has also been responsible for helping wholesalers and cash and carries with their tobacco rooms. Getting them fitted, merchandised and developing planograms for the display of products.