Tobacco: Smokers cut spend as new rules come in

The biggest changes to ever hit the tobacco market in the UK are in full swing, with plain packs already starting to filter through. Despite all the legislative upheaval, the key consumer trend remains unchanged - smokers continue to seek out the cheapest options.

“The key question we get asked in our stores is: what are your cheapest cigarettes?” says Mark Titterton, group chief executive of CTN chain James Retail, which bought the 77-strong Rippleglen business in March. It will come as no surprise, therefore, that it’s the cheapest brands that are in growth.

B&H Blue has in fact delivered grocery’s greatest gain, growing £333.9m, and of the top 10 readymade cigarette brands, just two are in growth: Players, with sales up 61% to £718.9m, and Carlton, with a more modest 5.9% growth to £540.6m. What these two lines have in common, apart from being owned by Imperial Brands, is that they are effectively the cheapest of the leading cigarette lines currently on the market.

Players sells at around £5.99 for a pack of 18, which works out at 33p a stick, while a 19-pack of Carlton for £6.49 equates to 34p each. This compares with a 17-pack of Sterling brand for £6.70 (39p per stick) and Mayfair 19-pack at £7.88 (41p per stick). JTI’s Sterling and Mayfair remain the number one and two brands on the market but both have lost sales in the last year. Sterling is down 4.2% while Mayfair suffered an even bigger drop of 8.6%.

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The same is happening in roll-your-own, with cheaper brands such as Gold Leaf and Golden Virginia Smooth outperforming the market. The downtrading shows little sign of abating, says an Imperial Brands spokesman.

“Recent trends suggest that an increasing number of adult smokers are downtrading to price sectors that offer more value, with almost 37% of all cigarette packs sold in the UK currently stemming from sub-economy, a pattern our research indicates is set to continue,” he says. “In an increasingly competitive market, pricing is key to ensuring the ongoing success of our portfolio.”

From May, all tobacco in the UK will be sold in plain olive green packs, with minimum pack sizes of 20 cigarettes or 30g of tobacco. It seems certain Titterton will be asked what his cheapest cigs are a lot more in 2017.