Cigars remain a vital money-spinner for the convenience sector. With more than 260 million cigars sold in the UK annually and the market worth just shy of £200m in annual sales, cigars can also generate about three times as much margin as traditional cigarettes.
And with Christmas and New Year’s Eve just around the corner, the industry is fast approaching one of the busiest times of the year for the category when consumers are far more likely to enjoy a cigar as part of their festive celebrations
Which is why Convenience Store recently joined Scandinavian Tobacco Group (STG) on a visit to a Nisa Local store in Luton to find out what advice the tobacco industry heavyweight had for owner Barry Patel.
The message from STG could not be clearer: retailers need to prioritise quality over quantity.
Today, the top 10 cigar brands make up nearly 90% of total sales. According to STG, which accounts for just under 55% of all cigars sold in the UK and five of the top 10 best-performing brands, the holiday season is when many customers are looking to purchase cigars on a one-off basis and are thus most likely to seek a more premium product.
“Seasonality is very important, particularly Christmas, as people see it as a time for celebration and as such I think retailers need to be aware of that and have a cigar offering that consumers can relate to in terms of their upsell and upgrade,” Alastair Williams, STG’s UK country director, says.
“So something like Henri Wintermans Half Corona, the UK’s number one medium-to-large cigar, ticks that box as consumers aspire to a larger and perhaps slightly more expensive offering over the celebratory period.”
Top tips: What advice did Scandinavian Tobacco Group have for Barry?
“He’s [Barry] a retailer that services the local community, so he knows his customers better than we do. So it wasn’t about having a vast range, it was about having the right range for the consumers. It was about having the UK’s number one cigar, which is Signature Blue, it was about offering a value-for-money proposition to his customers, and I recommended Moments Blue for that.
“I also looked at what potential there was on his offering for those adults that were looking for a flavoured smoke and introduced him to our Signature Filter Cigarillo, which has a peppermint click capsule. And then for those looking to celebrate and leading up now to Christmas, I talked about Henri Wintermans Half Corona, which is the UK’s number one medium-to-large cigar.”
Barry Patel, who owns two Nisa Local store in the Luton area, echoes this and urges his fellow retailers to stock accordingly. “Christmas is a very important time for singles and our sales normally see a 200% increase. So a packet of premium cigars is a key thing to have in your stores,” he adds.
Top tips: What advice did Barry have for fellow retailers?
“I find the best way to maximise sales is to actually teach staff to upsell, especially with cigarettes [and cigars] being behind closed doors. So if someone is coming in asking for cheap cigarettes, they will always get an alternative and we say ’look we sell tens cigars under £5’ and the upselling is there.”
But there are many other opportunities in the cigar category beyond Christmas for convenience retailers to be tapping into, not least the growing popularity of miniatures.
Indeed, this sub-segment of the cigar market now accounts for a whopping 70% of the overall category and as a trend shows little sign of slowing down any time soon.
“[Minitatures] are still driving the category and, again, I’m very pleased to say that STG’s portfolio products represent four of the top six brands within the miniature segment and Signature Blue is the number one cigar in the UK,” Williams says.
In light of this strong growth, STG recently launched its Signature Filter cigarillos, featuring a peppermint click filter which may appeal to those customers seeking a more aromatic smoke. Crucially, they also come as a pack of 10 - a broader trend Patel says has led to a significant boost to his cigar sales.
“The best sellers have been the introduction of the tens cigarillos. Being in a predominantly middle to lower class area, customers are actually changing brands and going for the price point where it’s below £5,” Patel says.
“They are [also] changing from cigarettes to cigars as a cheaper alternative,” he continues.
With little end in sight for the Covid-19 pandemic, it seems the tough economic times are here to stay for the foreseeable future. So, with the exception of splashing out at Christmas, it is likely customers will continue to seek out a bargain.
And those retailers stocking packs of 10 miniatures like Moments Blue are in a strong position to capitalise.
“Given the economic times at the moment, that’s [value for money] certainly a trend that we see continuing and I see no reason why that won’t develop further in the future,” Williams concludes.
