Untapped potential for cigars in the convenience retail channel
CONVENIENCE retailers could be losing out when it comes to their cigar range, leaving
supermarkets to the lion’s share of category sales.
Alastair Williams, country director at STG UK, said that the search for value has been a key trend within cigars for some time, as shown in sales figures for the firm’s Moments Blue brand.
Despite this, the bulk of Moments Blue sales are in the grocery channel – a fact that Williams reckons c-store retailers should consider when building their range.
“It is now the sixth best-selling cigar brand in the UK in value terms but, interestingly, most of its sales go through the multiple grocery channel, so I wonder if it’s one area where independent retailers might be missing a trick by not stocking it?
“And with the current cost-of-living crisis only likely to get worse in the coming 12 months or so, it’s sensible to assume that value products will only increase in importance across the store, and that will certainly include cigars. So retailers who don’t currently stock Moments should absolutely consider doing so,” he said.
Stocking up for the festive period
Now looks like an ideal time for retailers to take another look at their cigar range, as the festive period presents a seasonal opportunity according to Williams.
The STG UK director said that while retailers should think about their cigar and cigarillo offer all year round, Christmas is a particularly strong period for the category.
“Certainly in the run-up to Christmas, we know that cigar sales go up, so it’s really important for retailers to get their range right so they can enjoy those extra sales and rewarding profit margins, which are typically three times those of cigarettes.
“It tends to be larger cigars that people will gravitate towards as a bit of a Christmas treat when they are in a celebratory mood and typically have more time to enjoy it.
“Make sure you have brands like our Henri Wintermans Half Corona in stock as it is the UK’s best-selling medium/large cigar, and a real festive favourite,” he said.
Reviewing the range isn’t just an opportunity to extract more margin, Williams also said a strong range can act as a footfall driver, attracting cigar smokers to a store.
Growth in the cigarillo sales category
And that’s not an insignificant demographic in Scotland. Value sales in the category grew by 7.6% in the last year to hit £291 million, in the year to 12 July.
Williams said this growth has been driven by the cigarillo segment, which is now worth more than £99m and accounts for over 46% of all cigar volume sales.
“The more traditional cigar segments are all in decline of around 3-4% which is likely to be due to a combination of factors such as some smokers moving into vaping or pouches and/or people cutting down due to the on-going cost-of-living crisis.
“It’s miniatures which remain the engine room of the cigar category, so it is important retailers get this segment right,” – Alastair Williams, country director at STG UK
Getting it right doesn’t need to mean stocking a huge range of cigars either. Williams said the cigar category is one with a seriously strong core, with top sellers accounting for nearly all of the sales.
“It’s certainly more important to stock the right range rather than a broad range, as the top 10 cigar brands account for over 90% of sales,” he said.