Paul Hill discusses wholesale strategy with Alastair Williams, country director UK of cigar and pipe tobacco manufacturer Scandinavian Tobacco Group
How has STG helped wholesalers grow sales in the past 12 months?
We’ve recently seen wholesalers working unbelievably hard in very challenging circumstances, and for that we are all very grateful. They have had to be agile in responding to fluctuating demand for products and challenging supply chain issues.
From a STG perspective, we’ve continued to offer them promotional support and, although we are not physically visiting depots, to alleviate pressure on staff we remain in regular contact to assess inventory levels to maintain continuity of supply. We also ensure we provide up-to-date advice on adult cigar consumers’ smoking habits.
What is the greatest challenge that the wholesale industry faces?
I think it’s probably going to be dealing with the ‘new normal’ and adapting accordingly, as it’s likely that some consumer buying habits and, therefore, retailer buying habits may have changed forever.
Delivered wholesale will probably be more popular than ever, and technology will continue to develop and enable retailers to shop in different ways. Wholesalers need to be mindful of that and respond appropriately.
What trends and opportunities are emerging that customers can take advantage of?
Since the pandemic, the tobacco category has proved to be pretty resilient. While most of the usual key cigar trends have remained, we have seen some interesting new ones, too.
Probably because people have been at home more, coupled with some nice weather, we have seen sales of our larger format cigars being particularly positive. In fact, sales out from our warehouse of our Henri Wintermans Half Corona were up 20% in April, compared with the same time last year.
What challenges has STG had to overcome in the past year?
It is fair to say that planning for Brexit has been, and remains, a challenge as we await what will happen at the end of this year. The terms of our leaving the EU may well have consequences on tobacco import tariffs, as well as subsequent challenges related to packaging.
What is STG’s greatest achievement in the past year?
Firstly, the successful transition of our Café Crème brand into Signature to bring it in line with other European markets. Secondly, the introduction of our new Signature Filter Cigarillo product. It’s always going to be challenging to launch a new tobacco product when it’s hidden behind a gantry door, but early signs are very positive. Finally, the completion of our acquisition of Royal Agio Cigars should provide some exciting opportunities.
What would you like to see happen in wholesale in the next 12 months?
The economic outlook is probably not as rosy as we’d all want it to be, so it’s more important than ever for wholesalers and suppliers to work closely in partnership to deliver the right consumer-relevant products and ensure continuity of supply.
What advice would you give wholesalers looking to grow sales in the cigar category?
I think wholesalers have sometimes been guilty of stocking too broad a range of cigars that doesn’t necessarily match up with current consumer trends. This is probably because they are aiming to provide their customers with the perception of choice, but in reality, the top 10 brands are responsible for almost 90% of total volume sales.
