Forecourt Trader
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The fag trade

01 June, 2004
Tobacco products account for 33 per cent of non-fuel turnover in forecourts and as such needs to be taken seriously
Page 51 
If forecourt retailers want to improve their cigarette sales they must make sure their gantries are fully stocked at all times, especially in the evenings and at weekends. So says Tom Fender, managing director of Harris International Marketing (HIM).
He says forecourts also need to have enough 20s packs stocked so smokers don’t have to downtrade to 10s and they need their tobacco products to be well merchandised and displayed to cash in on impulse purchases.“Findings from the latest Convenience Tracking Programme (CTP) report show that slippage occurs mostly in the evenings when cigarette penetrations almost double,” continues Fender. “It begs the question as to why retailers are missing out on these sales and the answer could be as simple as having fewer staff on duty so there’s no-one available to fill shelves or that managers lock up the office or cigarette bond so that staff do not have access to more supplies.”CTP data confirms that smokers are loyal to their favourite brand and if they can’t buy a 20s pack they will go for a 10s pack of the same brand instead. Says Fender: “Looking at pack size penetrations by time of day, we see that morning is the time when downtrading occurs most so retailers need to make sure that staff are stocking the gantries as soon as the store opens or the night before. Similarly at weekends, CTP shows that shoppers are not getting the 20s they need so are having to buy 10s instead.”When it comes to facts and figures, CTP data reveals that shoppers in Scotland are the biggest smokers followed by those in the North of England, East Anglia, the Midlands and the South East. Shoppers in the South West are least likely to purchase cigarettes. As to age groups, cigarettes are most popular with those aged between 16 and 24, and 45-54, and least popular with the over 55s. The 45-54 age group is important as HIM data shows c-stores and forecourts are missing a trick and could be selling more cigarettes to these people, particularly as an impulse purchase.Those in the CDE demographic group buy more cigarettes (16 per cent) in c-stores as opposed to 14 per cent of ABC1s. Says Fender: “One must ask why ABC1s are failing to buy cigarettes in c-stores – does it have anything to do with merchandising, as price seems an unlikely reason?”Men are more likely to buy cigarettes at c-stores and certainly at forecourts which is no doubt why CTP data shows that forecourts come top of the cigarette penetrations league. Fuelforce is right at the top with 26 per cent actual cigarette penetrations plus an excellent conversion rate from an intended purchase level of 21 per cent. Next comes Esso with 25 per cent actual cigarette penetration.PROFITABILITYThere’s no doubt that tobacco products are footfall drivers but they need to be profitable too. Gallaher’s trade communications manager Jeremy Blackburn comments: “Given the often limited outlet sizes within the forecourt sector, an extensive range of products cannot always be offered. But as a forecourt retailer there are still ways to really make a difference to your tobacco profitability. Tobacco is key to the product offering, generating 33 per cent of turnover and 12.5 per cent of profit on average.“We all know that increasing cigarette prices mean the consumer is looking for a more affordable option and this can affect your profitability. The great news is that forecourt consumers buck the trends seen in other trade sectors, and smokers still buy more top quality cigarettes, like Benson & Hedges and Silk Cut, which means more profit. An average of 40 per cent of ‘top quality’ cigarette smokers will go to another store if they can’t buy their brand at your site taking their cash with them.” Onto cigars, and Hamlet remains the UK’s most popular cigar brand, accounting for more than half of all standard cigars sold in the UK (55 per cent). However, the key trend within the overall UK cigar market is the growth of the small cigar sector. Hamlet Miniatures remains the UK’s best selling small cigar with a 32.3 per cent share of sales.Blackburn says that growth in the roll-your-own category is being driven by larger pack sizes, continental blends and innovative new brands. “Larger packings are becoming increasingly popular across all sectors. In forecourts, 25g volume has grown by 26 per cent (Aug 02 versus Aug 03).According to Imperial’s UK Tobacco Category Overview for 2004, Golden Virginia is the number one hand rolling tobacco, and in forecourts the brand is worth £30.5m, making up almost 60 per cent of roll-your-own tobacco sales. Drum is the fastest growing brand in the top five – at number four. Old Holborn, Amber Leaf and Cutters Choice are also must-stocks.LEGISLATIONRange and availability are important but if retailers don’t keep up with all the new legislation surrounding tobacco then it could cost them dearly.The latest news is that the draft regulations for point of sale advertising have been made public and these will restrict advertising at point of sale to one ad per retail outlet. This one ad must not exceed the size of an A5 sheet of paper, of which 30 per cent must be a health warning surrounded by a black border of between 3mm and 4mm. The ad would have to be attached to a gantry or other fixed display unit. Needless to say the Tobacco Manufacturers’ Association (TMA) is disappointed with the restrictions which it says ‘prevent any form of meaningful or effective communication with customers’. The TMA also says the regulations don’t take account of the big differences between the various types of retail outlets that sell tobacco and the way in which the products are displayed.Six tobacco companies, including Imperial Tobacco and Gallaher, are challenging the regulations, and have applied to the High Court for a judicial review saying the restrictions will not allow smokers to receive a reasonable level of information about the products before they buy them.While the point of sale rules have yet to come into force, what is certain is that the next round of new health warning and new product descriptor rules come into effect in the autumn. From September 30, all roll-your-own tobacco, cigars, pipe tobacco and make-your-own tobacco displayed for sale must have the new-style big, black health warnings on them. It will be an offence to sell any non-compliant stock and retailers could be fined up to £5,000. The new product descriptions mean terms such as ‘mild’ are banned so for instance Café Creme mild will become Café Creme blue. The tobacco manufacturers have been selling in the new stock for some time now but retailers are advised to check their gantries, stockrooms and any other areas where old packs, particularly of slower sellers, might still be hanging around. It might be an inconvenience to do this but nowhere near as inconvenient as a hefty fine.