Join the independent party­ Imperial Tobacco PO Box 244, Southville Bristol, BS99 1LQ Tel: 0117 963 6636 Fax: 0117 966 7405 Website: KEY PERSONNEL Sales director UK Division Geoffrey Couchman Trade marketing controller Lisa Davies-Evans National accounts controllerRoger Batty KEY BRANDS Cigarettes · Lambert & Butler · Richmond · Embassy · Regal · Superkings · John Player Special Cigars · Classic · Small Classic · Panama · King Edward Coronets · Castella Panatella · Henri Wintermans · Café Crème RYO tobacco · Golden Virginia · Drum RYO accessories · Rizla Pipe tobacco · St Bruno · Gold Block "Sixty per cent of an independent outlet's customers say that buying cigarettes is the main reason they visit a shop, and 62% of them will buy something else as well, often on impulse. Tobacco is therefore a hugely important traffic-builder and cash generator," says Lisa Davies-Evans, trade marketing controller at Imperial Tobacco Limited. She points out that 50% of smokers shopping in a multiple grocer will not buy their tobacco there (source: National Shoppers Survey), and, despite the trend to trade down on tobacco products, the gap between independent and multiple price points is narrowing. In fact, during 1999 the independents' share of the total cigarette market increased by 5.6% to 20.8%. "Comparing return on space in store, tobacco products contribute more profit per square foot than most other products. Also there is zero wastage on tobacco unlike perishable food products, for example. Tobacco is an efficient product to stock," says Davies-Evans. But range, merchandising and brand presence are becoming increasingly important, despite the sector's apparent resilience to price cutting. "Imperial Tobacco is working more closely with retailers to make sure they have an appropriate range, and to help them avoid out of stock situations ­ especially since research shows that 45% of smokers would leave a shop without buying cigarettes if their usual brand is not in stock," says Davies-Evans. "Our salesforce visits over 100,000 outlets on average every five weeks and this provides the trade with a vital direct link with us. We offer merchandising support and advice, information on all tobacco products and are ready to help wherever we can with tobacco related issues." Looming large among those is the Government's determination to fulfil its election pledge and ban tobacco advertising from newspapers and magazines. The European Commission, pursuing its own Euro wide ban, recently suffered a set back when the First Advocate General concluded that there was no legal basis for such a move. Wherever the threat comes from, ITL remains resolute in its defence of tobacco advertising. "We are convinced that the European Court of Justice will rule that the EU Directive, to ban main media advertising, is invalid," says Davies-Evans. The company is unfazed by high profile court settlements across the Pond, where a $6.9m award against the tobacco industry has become a powerful weapon for the anti smoking lobby. "We believe that it is unlikely that Imperial Tobacco will face claims such as those in the US," says Davies-Evans. "The US and UK legal systems are entirely different ­ and the recent smoking related claims for damages in the UK failed as the cases were either dismissed by the court or abandoned," she points out. With a third of all tobacco sales through independent retailers, any fall in sales would hit the high street hard. "To safeguard sales, ITL closely monitors consumer smoking habits and reacts accordingly," says Davies-Evans. She is particularly concerned that retailers do not miss out on profit opportunities in RYO ­ including tobacco, papers and accessories. "Many smokers now dual between manufactured cigarettes and RYO tobacco, and cigarette papers and accessories offer great margins. Creating a RYO block by placing cigarette papers and accessories next to RYO tobacco will make the category easier to shop and maximise impulse purchasing. "Another profitable segment of the tobacco category is cigars which offer average profit margins of 18% ­ equivalent to around 40p profit per pack sold. Retailers can capitalise on this by concentrating on the growing miniature cigar sector which includes the recently introduced Café Crème Fresco and Small Classic brands. "Newly launched brands should always be stocked as the high profile and heavyweight marketing support they are given will ensure that consumers will ask for them." The miniature sector's share of total cigar sales has increased to over 25%. Imperial believes this has been driven by some cigarette smokers deciding to cut down by switching to cigars. Imperial Tobacco predicts the miniature sector will account for 31% of total sales by 2002, says Davies-Evans. Meanwhile, cigarette smokers, who represent over 90% of the total tobacco market, are increasingly looking to the economy priced sector, prompting ITL to launch Richmond in September last year. It joins ITL's Lambert & Butler range which already accounts for over 16% of total UK sales. {{Z SUPPLEMENTS }}