A smoke-free future? PMI weighs in

Peter Nixon tells Martyn Fisher that wholesalers need to embrace a multi-category approach.

BW: How has Philip Morris International (PMI) helped wholesalers grow sales in the past 12 months?

PN: We listened to our trade partners and acted on what they told us. As such, we have implemented long-term retail margin support through our wholesale partners.
We have also supported targeted trade days across the national and regional wholesale sector, and we have supported multiple trade events, where we have had the opportunity to engage with our wholesale partners’ concerns and shared our knowledge of and insight into how to operate a successful category.

BW: What is the greatest challenge the tobacco industry faces?

Channel shift caused by the latest wave of legislation. Consumers are shopping around to identify the best value, and this often leads them to the multiples where they think that they receive better value, as they have greater trust in the pricing. This has been driven by the loss of pricemarked packs, which were traditionally sold more by wholesalers’ customers.

BW: What trends and opportunities are emerging that customers can take advantage of?

The UK adult consumer wants and needs alternatives to conventional tobacco products. It’s up to the manufacturers to provide these. ‘Heat not burn’ is proving to be a viable and desirable alternative to the traditional cigarette, and we were the first to market in the UK with a heat not burn product, IQOS, which we launched in December.

The willingness and ability of retailers to use online/digital should be a focus of the channel. It allows wholesalers to compete in new areas and regions where they have had no access before.

BW: What challenges have you had to overcome in the past year?

There have been two distinct challenges. The first is reacting to and transitioning our products to be in line with the updated EU Tobacco Products Directive. Working closely with our wholesale partners to provide relevant information and advice in a time of change has been crucial for both them and us to ensure a smooth transition.

The second was realigning our business to become multi-category, so that we can offer our portfolio of smoke-free products from a coordinated business base. It’s been complicated, but hugely exciting.

Over the coming months, we will continue to add trade partners to our network in line with our rollout plan.

BW: What’s been PMI’s greatest achievement over the past year?

We have committed to moving to a smoke-free future, and we are investing considerable time and resources into making smoke-free products available to adult consumers.

BW:What advice would you give wholesalers looking to grow sales in tobacco?

Don’t just look at the past, look at the future. Invest time to really understand adult consumers’ needs. Look at innovation, what is coming to market and how you can be involved in making the category sustainable in the future.

For cigarettes, communicate the need for competitive retail pricing. Shoppers continue to increase in purchase promiscuity and always want the best price. Tobacco drives footfall to retail – and thus wholesale – so don’t encourage retailers’ customers to move away from local independent stores, by not reinforcing competitive pricing messages.

BW:What would you like to see happening in wholesale in the next 12 months?

Wholesalers embracing the change to a multi-category approach. Move with the requirements of your retail customers and adult consumers and ensure that your offering is in line with the needs of the market.

BW: Are you planning any activities of which wholesalers should be aware?

Wholesale can play a major role in the development of IQOS and its associated brand of tobacco sticks, Heet. We will continue to work with wholesale partners on long- and short-term activities to drive footfall and basket spend.

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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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