Discover the new trends igniting this key c-store category
1. UK sales of disposable vapes are booming, driven by Elf Bar
2. Retailers can help recycle disposable vapes and boost loyalty
3. Tesco wants a piece of the vape action
4. Heated tobacco is growing at over twice the speed of e-cigs
5. Ultra Value RYO is now the fastest growing sector in share terms
6. Cigarillos are helping lift the £291m cigar market
1. UK sales of disposable vapes are booming, driven by Elf Bar
Online retailer Vape Club reports that some retailers saw disposable vapes grow 883% YOY. The group claimed that Elf Bar was spearheading this growth with sales doubling in Q2 2022 compared with Q1.
RELX has also observed the success of disposables. “As we enter Q4 this year, we expect disposable devices to continue growing in popularity due to their sleek, ultra-compact properties, affordability and convenience,” says Aky Hojeij, associate marketing director at RELX International. “[We find] tangy fruit flavoured disposables and pods are most popular amongst adult consumers in the UK at present.”
Disposable vapes, and in particular ElfBar, are a must stock, according to Premier Retailer Serge Notay. “Elf Bars are just a given in vaping – we sell them in every flavour we can get our hands on.”
Southampton retailer Richard Inglis is new to the vape game, but quickly latched on to Elf Bars. “We’ve only recently got into the vape category but we were finding that after good sales brands would just gather dust because they were available cheaper online,” he says. “Basically people told me that Elf Bars were now around 90% of their vape business. So we decided to get them in and do a good range of flavours. And it’s gone ballistic ever since.”
2. Retailers can help recycle disposable vapes and boost loyalty
This success isn’t without drawbacks. There’s the suspicion that a product often popular with younger vapers might quickly draw the ire of UK regulators. Plus, questions around sustainability still have to be answered.
“Basically part of their appeal is that they’re disposable,” says Richard. “But they come with a battery which makes them hard to recycle. We’ve asked around about this but it’s hard to get a clear answer on what people can do to dispose of them. And we’re starting to see them with rubbish out on the streets.”
However, in Llanidloes, Wales, Trudy Davies of Woosnam & Davies News offers a vape recycling collection service for her customers, which not only helps the environment, but also encourages customers to return to her store.
Nisa Local Halesowen is also encouraging customers to recycle their disposables in store, with the added bonus of 10p off your next vape purchase when you bring a disposable back.
3. Tesco wants a piece of the vape action
More challenging for c-store sales might be the sudden appearance of Elf Bars at Tesco this October. There’s concern that with c-stores helping break the product, the mults might now snatch away the sales.
But Serge isn’t concerned, citing his staff’s expertise in the category and ability to move fast around new flavours.
“I’m really not worried about Tesco,” he says. “We’re a community store and people know what we do – they’d rather come to us because we’re local and know what we’re talking about.”
Serge also does well with KlikKlak vapes – which could provide a c-store standby if Elf Bars fully migrate to the mults.
“With KlikKlak you can mix and match to get different flavour combinations, which people really like,” he says. “They’re a good alternative to illegal vapes that you can get online which do a similar thing.”
4. Heated tobacco is growing at over twice the speed of e-cigs
[Nielsen IQ 2022]
As far as cigarette alternatives go, heated tobacco has more in common with traditional gaspers than next-gen vapes. Rather than pivoting away from tobacco, systems like Philip Morris-backed IQOS offer a different way to heat it.
“If we look at heat-not-burn – a relative newcomer to the UK market – we see a category growing at over twice the speed of the e-cigarette category [Nielsen IQ 2022], which launched at least a decade earlier,” says Kate O’Dowd, head of commercial planning at Philip Morris Limited.
Just as in vapes, flavour can be a major driver for heated tobacco.
“Sales of tobacco flavoured Heated Tobacco variants account for 50% of all refill sales in traditional retail [IRI Market Place] with Menthol flavoured accounting for 44%,” says Gemma Bateson, sales director at JTI UK
“JTI always looks to keep on top of the trend and listens to what consumers want when it comes to meeting demand for new flavours. As a result, JTI has established itself as a destination for flavoured tobaccos and flavoured capsules within the sector. “
The brand has launched two new heated tobacco variants with capsules, Green Option and Purple Option. Both offer smokers tobacco flavours, with a mint infusion that activates when the capsule is crushed.
5. Ultra Value RYO is now the fastest growing sector in share terms
IRI Market Place
It’s no surprise that as heating bills and mortgage rates climb, customers are looking for added value from their smokes. That means brands are renewing focus on low-price RYO.
“Over the last two years we have worked hard to bring out products that tap into the growing demand for value tobacco – from Sterling Rolling Tobacco Essential through to the new Benson & Hedges Blue Rolling and new RMC range – Mayfair Silver,” says Bateson.
“Now more than ever, value tobacco is a key trend, with Ultra Value RYO the fastest growing price sector in share terms, now at 6.4% of the combined tobacco market [source as above]”
Despite this trend, it’s important to remember that value means different things to different people.
“Some customers might be focused on the lowest price point, while others may be looking for added value formats like Players JPS Easy Rolling Tobacco which offers filters and papers in one pack,” says Tom Gully, head of consumer marketing at Imperial Tobacco.
“Therefore ensuring retailers stock a range that caters for these different value needs is vital in order to effectively cater for their customer base.”
“Despite the cost, some customers still seem dedicated to smoking,” says Richard.
“Roll-ups will always be a good seller for people who want tobacco. But I can also see how the cost might see more people switching to vapes. Their point of view is: if you’re going to spend that much on tobacco, why not give vaping a go?”
6. Cigarillos are helping lift the £291m cigar market
[IRI MarketPlace]
Over in cigars, the market has been puffed up by 7.6% to £291m by the rising cigarillo segment, which now makes up just under 47% of all cigars in volume terms. It’s a key sector for c-stores, with 40% of sales going through independents and symbol groups.
However, when the countdown to Christmas starts, Alastair Williams, country director at Scandinavian Tobacco Group UK says that it’s time to think big.
“Retailers should think about their cigar and cigarillo offer all year round because it’s a high margin category and driver of footfall in-store. However, certainly in the run-up to Christmas we know that cigar sales go up, so it’s really important for retailers to get their range right so they can enjoy those extra sales and rewarding profit margins which are typically three times those of cigarettes,” he says.
“It tends to be larger cigars that people will gravitate towards as a bit of a Christmas treat when they are in celebratory mood and typically have more time to enjoy it. Make sure you have brands like our Henri Wintermans Half Corona in stock as it is the UK’s best-selling medium / large cigar, and a real festive favourite.”
No comments yet