Focus on tobacco: As the deadline looms

tobacco sales

There can be no half measures from tobacco wholesalers from 20 May, writes Chris Dillon.

From the moment most factory lines ceased production of branded packs of tobacco 12 months ago, in line with legislation making plain packs mandatory from 20 May, 2017, uncertainty set in across the trade. Tobacco was heading into uncharted waters, and no one knew for sure what the next year would hold. Let’s recap.

For retailers and wholesalers, it marked the start of a delicate balancing act. Keeping branded, smaller packs in stock for longer could result in winning new tobacco consumers and driving footfall.

But they weren’t the only ones keen on bringing in new custom; manufacturers also saw opportunity. A tobacco price war on value brands raged on, with one industry insider from a major tobacco company claiming value brands were being sold at a loss. “This price war will get so dirty in the next year,” he said.

The last runs of pricemarked packs (PMPs) appeared to have been marked intentionally low, and retailers speculated that some wholesalers had been offered bigger margins to buy these packs. “Independent retailers cannot afford loss-leading,” said retailer Amit Patel, owner of Belvedere News, Food and Wine in Kent. “The situation is catastrophic.”

Meanwhile, retailers were urged by wholesalers and suppliers to stick to the RRPs or face losing customers – a challenging task for retailers against a deluge of business cost increases. “Retailers are being taken in by low, pricemarked RRPs and buying in bulk. Come 20 May, they’ll nd themselves lumbered with packs of cigarettes they can no longer sell,” Patel said.

Then there were the supermarket-style multipacks that began appearing in cash & carries. Retailers spotted the 5×17 packs in big-name wholesalers, with signs saying that the multipacks can be sold separately – despite the packs themselves being marked otherwise. Maqsood Akhtar, of Blackthorn News and Food in Rotherham, said: “I’ve had a couple of customers asking why I’m selling them. Thankfully, most of my shoppers are regulars, but I’m worried that I’ll get one of them that kicks off and reports me.”

No one knew for sure when smaller packs and PMPs would disappear. Ahead of the display ban, tobacco suppliers had all been singing from the same hymn sheet, but now there was discord when it came to how best to arrange a gantry of plain packs.

Manufacturers had done a good job communicating supporting the trade about the changes in law, such as JTI’s Your Guide rough Change and Imperial’s Partnering For Success initiative, but retailers were having to act on their feet to keep the category managed well. Simon Lunn, of Simply Fresh Weare in Somerset, said: “I’m finding that planograms aren’t available. We’re trying to do our own thing and cut down on products because we’ve not been able to stock certain lines.”

The $64,000 question – what action can wholesalers take? From 20 May, stability is expected to return to the tobacco market. And, as the months progress and consumer trends develop, retailers hope to see more concrete advice being made available. You can be the trusted source that your customers turn to for advice. Use the expertise you have to help retailers succeed in this key category, and win their loyalty for months to come.

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Martyn Fisher
Martyn Fisher is the Editor of Better Wholesaling. Martyn can be found on Twitter on @BW_Martyn, or can be contacted via martyn.fisher@newtrade.co.uk and 020 3871 6490.

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