They’re here: the first plain packs of cigarettes have arrived at wholesale depots and made their way into the hands of smokers.
But the market as a whole doesn’t know what’s about to hit it, with most retailers and smokers unaware of the changes that are filtering through the supply chain.
According to research commissioned by wholesalers Palmer & Harvey, a third of retailers don’t know about the new regulations for tobacco and e-cigarettes, and they estimate that 75% of their customers don’t know about the changes.
That puts wholesalers in a key position to create a smooth transition to May 2017, when all cigarettes and loose tobacco must be sold in plain packaging, and packs of fewer than 20 cigarettes or 30g of rolling tobacco will be banned.
Chris Street, head of route to market at Imperial Tobacco, says wholesalers have done a good job of communicating the changes to their customers, and just need to keep pushing the message. “It’s clear that change is not just coming, it’s already here,” he says. “Our wholesaler partners have done an exceptional job in terms of collaborating with Imperial in preparation for EUTPDII [the EU Tobacco Products Directive II] and standardised packaging. Now we just need to keep doing what we’ve been doing to ensure the full transition.”
Street says the main messages for the months ahead have been drawn from the experience in Australia, which introduced plain packaging in December 2012. Make sure you plan for change, he urges, and focus on maintaining the prices that customers are used to.
Don’t be lax about PMPs
The ban on price-marked packs (PMPs), which make up about three-quarters of current tobacco sales in convenience stores but which have begun to disappear from shelves, has led some retailers to wonder if they can increase their margin without customers noticing the difference.
Imperial has teamed up with wholesalers Bestway and Booker to push the message to retailers that keeping prices at RRP is important to protecting sales.
“We’re in agreement with Imperial Tobacco that despite the inevitable loss of PMPs between now and 20 May next year, retailers should ensure they’re communicating to customers that their transparent tobacco pricing policy continues to offer great value,” says Martin Race, group trading director at Bestway.
“We’re therefore asking all Bestway and Batleys depot staff to encourage retailers to consider their customers and avoid pricing above RRP.”
Evidence suggests that retailers in Australia saw no drop in sales after plain packs were introduced if they kept prices at RRP and below: “Our experiences in Australia, where standardised packaging was introduced in 2012, have demonstrated that retailers who have planned and prepared for change, as well as adopting clear and sensible pricing strategies before and after the introduction of standardised packaging, have only seen a minimal impact on tobacco sales,” says Imperial’s Chris Street.
JTI, the largest tobacco supplier in the UK, agrees that price sensitivity will be crucial as plain packaging takes over, and wholesalers will see that reflected in the purchases of their customers.
Jeremy Blackburn, JTI’s head of communications, says: “It is likely that existing adult smokers will become more price-conscious in the future, so retailers will similarly be driven to search for the best price on tobacco in wholesale.”
JTI has also been working to inform smokers about the changes, producing leaflets for consumers explaining the legislation and what to expect, as well as guides for the trade. “As compliant stock comes through, now is the time to get ready,” Blackburn says. “As an industry leader we have listened to retailers who asked for help in informing their customers of the changes.”