RYO grows as smokers seek value

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young beautiful korean asian woman sitting on bench with view over city of London smoking a roll up cigarette

As smokers continue to look for value, roll your own (RYO) tobacco is in growth. Asian Trader finds out more.

Tobacco continues to be the biggest FMCG category, worth £14.9 billion in the last year, according to Nielsen.
As part of the growing value trend, the RYO category has also increased 8.2% year on year, now generating sales of £2.8 billion a year, Nielsen data reveals.
RYO is the leading combined price sector, with a market share of 41.4% (Nielsen).
Communicating with customers is an area where independent retailers have an advantage over nearby supermarkets.
Showcasing their knowledge in frequent conversations with regular existing adult RYO customers will help retailers maximise sales and compete with multiples.
“Our advice would be: continue to invest in the tobacco category to take advantage of the profit opportunity it presents. Ultimately, those retailers who are focused on stocking a full range, and who are competitively priced, will reap the rewards,” comments Ross Hennessey, Head of Sales at JTI UK.
In order to maximise sales, retailers must also be knowledgeable about the tobacco category and the different brands they stock – making staff education and training a must.
JTI Advance (www.jtiadvance.co.uk) is continuously updated and can provide regular training to suit the busy schedule of retailers.
The company’s UK sales force members are kept up-to-date on the latest trends, legislation and sales data so they are full trained to give retailers advice on their tobacco range.
Amber Leaf (RRP – £14.00 for 30g Pouch/£23.20 for 50g Pouch) is the No. 1 tobacco brand in the UK with a 31.6% share of the RYO market and is the best-selling RYO brand in all but one region within the UK with the top selling tobacco SKU in its portfolio (Nielsen).
Sterling Rolling Tobacco (RRP – £11.00 for 30g Pouch/£18.10 for 50g Pouch), is JTI’s No.1 Value RYO offering (Nielsen).
Holborn Yellow has an RRP of £11.00 for a 30g pouch and £18.10 for a 50g pouch.
“With 6.9 million kilograms of rolling tobacco sold in the UK each yearxv, the RYO category offers significant opportunity for retailers to maximise sales by stocking up on Value RYO products, such as JTI’s Sterling Rolling Tobacco, which has seen its sales volume increase by approximately 76.8% year on year and is the UK’s fastest growing tobacco brand,” adds Hennessey.
Market
“The tobacco category remained bullish last year,” comments Duncan Cunningham, Head of Corporate & Legal Affairs at Imperial Tobacco UK&I. “The European Tobacco Products Directive II (EUTPDII) and standardised packaging regulations have brought challenges, but numerous opportunities still exist to bring products to the market that meet evolving consumer demand. This ensures that adult smokers continue to enjoy innovative new tobacco experiences.”
Continuing tax hikes have contributed to the ever-rising cost of tobacco products and pushed growing numbers of UK adult smokers towards the illegal market. Latest HMRC figures (16/17) estimate that this is costing the Exchequer £1.8 billion in cigarette revenues and £0.7 billion in hand-rolling tobacco revenues – a combined all-time high.
Implementing Track and Trace has been a significant project for tobacco manufacturers. Regulations state that all factory-made cigarettes (FMC) and roll your own (RYO) products must be compliant from 20 May 2019. FMC and RYO products already on the market before this date can remain on sale until 20 May 2020, however.
In the UK, RYO has been consistently growing its share of the overall tobacco category. However, since the introduction of EUTPD II in May 2017, the speed of the shift from FMC to RYO has increased significantly. Between 2014 and 2016 RYO saw an average monthly gain in White Stick Equivalent (WSE) share of 0.07%, ITUK estimates. However, through 2017, RYO’s share of WSE grew by an average of 0.18% per month – almost triple the rate of overall category growth. UK RYO market share in relation to FMC stood at almost 39% in November 2018. Current trends suggest this pattern is set to continue.
“We know that independent retailers are best placed to understand and engage with their customers’ needs,” adds Cunningham. “Imperial is dedicated to ensuring that independent retailers are well equipped to meet this demand and to help them understand their customers further.
“Continued focus on new product development is critical, but in a challenging post-EUTPD II environment it’s also vital to communicate that innovation to independent retailers. Our salesforce spends significant time with our customers explaining the importance of new products.”
NPD
Riverstone, Imperial Tobacco’s new RYO tobacco brand, offers a high quality, easy-to-roll blend at an affordable price, and is cut using an innovative, bespoke manufacturing technique. Designed to appeal to FMC smokers moving over to the RYO sector as well as dualists, Riverstone offers a smooth taste at a great value price point. It’s available now in both 30g and 50g packs, at RRPs of £11 and £18.15.
Rizla Polar Blast is the first ever RYO filter tip to contain a Crushball. The squeezable filter tip means adult smokers will be able to ‘click’ to enjoy the taste of mint whenever they roll their own. Rizla Polar Blast is available in pack sizes of 60 tips with an RRP of 99p.
Our Mid-Price RYO brand GV Smooth Bright Yellow is to be renamed Golden Virginia Yellow, capitalising on the strong brand equity the latter enjoys as a premium RYO brand. “This transition is now in its final phase, so we’d advise retailers to keep their eyes peeled and contact their designated Imperial representative if they have any queries,” suggests Cunningham.
Imperial has also recently reimagined its Rizla papers packaging, with each pack now featuring a ‘tuck in’ closing mechanism designed to reduce wastage plus a ‘soft touch’ finish designed to make the packaging feel more tactile. There are a wide range of Rizla papers available, with best-selling Medium Thin Green and Rizla Medium Thin Red variants available in packs of 100 (Regular) and 50 (King Size) at RRPs of 27p and 67p respectively.
Rizla tips are available in several variants, from Slim (RRP 72p per pack), Ultra Slim, Natura Ultra Slim and Menthol Ultra Slim (all with RRPs of 79p per pack).
Accessories
New product development and an increased focus on merchandising is driving growth in the UK tobacco accessories market.
“The tobacco accessories category is now worth over £283.5m (IRI) in the UK – with increasing pressure on suppliers to innovate to make their mark,” says Gavin Anderson, General Sales Manager at Republic Technologies.
The market has seen YOY growth of 8.9%, with papers and filters being the most buoyant areas of the category; with papers worth £99.4m and growing at 8.0%, and filters worth £85.9m and growing at 10.8% (IRI).
“It’s crucial that suppliers maximise this opportunity by working with retail partners to understand shoppers’ needs and, in turn, to enable them to drive sales of tobacco accessories in-store, adds Anderson.”
Republic Technologies has recognised the need for greater choice with NPD that taps into consumer trends including OCB Virgin Slim and Slim & Tips, for consumers looking for an unbleached paper and a softer smoke; Swan Ultra Slim, the thinnest ever Swan filter and a premium quality product aimed at discerning smokers, and Swan ‘Eco’ filters, the most environmentally friendly Swan product ever.
Featuring an unbleached paper with a natural brown colour, OCB Virgin Paper offers the highest level of rolling paper quality. Manufactured to the highest standards to offer a silky touch, lightweight feel, and premium quality, OCB Virgin provides consumers with the best possible rolling experience.
“Our OCB Virgin Papers offer a unique proposition, providing real appeal for consumers who are looking for an all-natural rolling paper for a smoother smoke,” says Anderson.
“Each leaf is gummed with OCB natural acacia gum, sustainably sourced from African acacia trees, which is 100% natural, vegetarian, and GM free.”
OCB Virgin Slim and Slim & Tips are now also available in a slim vertical box, helping retailers to manage shelf space.
In 2018, the company also announced a major overhaul of its matches’ range including new packaging, and a category-boosting extension for its iconic Swan brand.
The relaunch included a new pocket-sized Swan match with a vibrant new colour scheme for additional shelf standout, a new pack design for Bryant and May ‘Extra Long’ and a simplified but striking new design for Ship matches. The move reflected the growing appeal of sustainability and increased demand for eco-friendly matches, following the removal of all Strike Anywhere match formats in the UK market.
“It’s vital that convenience retailers stock the right range of tobacco accessories and merchandise them accordingly to see the best results,” Anderson continues.
“Our sales team offers expertise and cross-channel category insight to our trading partners, and we’re committed to working with our customers to drive growth within the tobacco accessories category.”