The Grocer’s 2017 Top Products Survey, THE definitive guide to the current state of the UK’s grocery industry

Tobacco has been a bloodbath this past year as the industry has struggled to come to terms with the upheaval of the biggest legislative changes ever to impact the sector.

In May, the UK government brought in plain packs alongside EU rules that raised the minimum pack size for cigarettes to 20, and 3og for rolling tobacco. The first rule effectively means tobacco brands are a thing of the past, with everything from font to pack colour standarised. The latter has stopped the tobacco houses from cutting pack sizes to limit the impact of tax-led price inflation.

“Cigarettes continues to decline in volume and the trend of more smokers giving up continues, with fewer younger people taking up the habit,” says Nielsen analyst Phil Law. “Brands that were previously sold in 17, 18 and 19s had to make the switch to 20s and also raise their pack prices as a result.”

This is driving those remaining smokers to switch to RYO, sales of which are up 9.5% to £2,440m on volumes down 28.7%. Meanwhile, cigarettes have lost £308.5m (2.6%), the greatest loss of the year, on volumes that have sunk 15%. But not all RYO brands are cashing in. Amber Leaf’s market share has gone from 38.7% to 35.5% in the past year, says Law. “The minimum size required means brands which played heavily in smaller sizes such as 12.5g have been hardest hit in terms of SKU rationalisation. Amber Leaf and Golden Virginia were particularly affected from a facings point of view.”

Only two top 10 cig brands are up in value and volume: Player’s (the greatest gain of 2017, up £399.8m) and B&H Blue (up £164.9m). Both are at the cheaper end of the sector. “The most common question nowadays in stores is: what are your cheapest cigs please?” says the MD of one large independent retail chain.

It’s a pattern JTI head of communications Mark Yaxley recognises. “Price has played an increasingly important role in the purchasing decisions of existing adult smokers,” he says. “The trend towards value brands continues.”

But don’t write tobacco off just yet. Even if PMI only succeeds in converting its own consumers to the smokeless Iqos (it wants to make fags obsolete; below), that could protect annual sales of 136 million cigs. Just they’d be being heated, not burned.



Iqos by Philip Morris International

PMI chose the weekend in May when plain packaging was introduced to announce a national rollout of its heat not burn cigarette alternative Iqos. It still has a long way to go to achieve PMI’s stated goal of making traditional cigarettes obsolete - but it’s starting to gain traction. The Iqos devices are available online and from four dedicated stores, but the Heets sticks to use with it are now sold in more than 1,000 stores in London and rivals JTI and Imperial are looking into similar products.

Related files/tables

The Grocer Top Products Survey 2017: Up!