PML closed its 16 IQOS-branded shops after two years of operation. What was the thinking behind that and how has the change of direction affected sales?
IQOS is growing rapidly and is the number one smoke-free product in the UK – surpassing its nearest competitor in June 2020[1]. The increased demand in the heated tobacco category has prompted PMI to increase the availability of IQOS and HEETS in the UK, with Philip Morris Limited (PML) doubling the size of its field force and expanding into 18 new cities and regions at the start of 2021. Our customers can now buy our products in more places than ever before, from thousands of local convenience retailers to major supermarkets, as well as our own IQOS website.
Successive lockdowns have changed consumer behaviour—like many companies we have responded by prioritising rapidly growing channels which have seen a significant increase in sales over the last year. The changes to our distribution model reflect these changes in consumer behaviour rather than a lack of demand for IQOS, which is growing rapidly.
IQOS launched in 2016 and already accounts for 25 per cent pf PMI’s business – in what way did this affect thinking behind the strategic decision to “quit smoking” at Philip Morris?
In 2016, Philip Morris International (PMI) announced that it was moving away from cigarettes and staking its entire future on a portfolio of smoke-free products including, IQOS, our breakthrough heated tobacco system.
In the five years since, we have accelerated our journey to become a majority smoke-free business by 2025—in February 2021, we increased our ambition to generate at least 50 per cent of net revenues from smoke-free products. In the third quarter of 2021, smoke-free products accounted for nearly one third (29 per cent) of total net revenues globally[2].
In the UK, we are committed to a smoke-free future and with the right measures in place could stop selling cigarettes in 10 to 15 years’ time. To accelerate this transition, we are improving access to smoke-free products through the convenience channel for those adult smokers who want to continue using tobacco or nicotine products.
We strongly believe that independent retailers are a vital component in providing meaningful access to better alternatives, particularly in more deprived communities within the UK where smoking prevalence is disproportionately high.[3]
What is the position of heat-not-burn products and uptake in the UK now?
Momentum behind the heated tobacco category continued to build in 2021.
In the third quarter of 2021 (September), UK market share for HEETS was up by 0.7 percentage points vs. the prior year quarter to 1.9 per cent. In that same quarter, London – a key trend indicator in the UK – was up 2.2 percentage points to 5.0 per cent[4].
In that same quarter, the number of stores selling HEETS in the UK had increased six-fold since 2018. This has resulted in PML selling almost 50 times the volume of HEETS each month than we did on average in 2017[5].
While category growth is strong, I’m most proud of the impact we’ve had on adult smokers and the percentage of those we’ve helped, through our retail partners, to abandon cigarettes. Total global IQOS users were estimated at approximately 20.4 million as of September 30, 2021, of which approximately 14.9 million have switched to IQOS and stopped smoking.[6]
What has the traffic to your new digital trade engagement platform from independent retailers been like since rolling out IQOS more generally after closing the lounges?
Features such as 24-hour fast-track delivery on our range of HEETS, including our tenth variant, HEETS Mauve, as well as peer-to-peer engagement tools, our latest trade incentives, and new support services, strengthened the digital support we offered retail partners in 2021.
DTE forms part of an omni-channelled approach we take to supporting retailers, so they get the most out of stocking IQOS and HEETS. The support and services offered extend beyond digital platforms to having more boots on the ground, with a field force that doubled in size in 2021 and will continue to grow in 2022.
This investment is vital to our smoke-free ambitions, providing the convenience channel with multiple touchpoints to engage with, so they feel fully serviced and are given every opportunity to expand their knowledge and understanding of our portfolio of smoke-free products.
In August, HEETS’ share among all cigarettes and heated tobacco sticks in Europe surpassed five percent, and in London was more than double 2020’s share. What is this year looking like and what incentives and discounts are you currently providing?
Retailer partners should visit PML’s DTE platform or engage with their field force representative for full details on our latest trade incentives.
On advising adult customers on IQOS and HEETS, retailers may want to focus on cost and choice – two potential barriers preventing many adult smokers from switching to smoke-free products.
20 HEETS tobacco sticks cost £5, less than half of the average price of £10.77 for a pack of 20 cigarettes[7]. Comparing the cost of a pack of HEETS with the cost of cigarettes and communicating that cost saving to an adult smoker, could mean the difference in them switching to a smoke-free alternative or continuing to smoke.
Some smokers will only leave cigarettes behind and switch to better alternatives if these products meet preferences linked to taste and nicotine delivery or replicate the ritual characteristics of a cigarette. Raising awareness that heated tobacco delivers a real tobacco taste and cigarette-like satisfaction could help smokers view these products as a viable alternative to cigarettes.
Giving smokers a choice of variants to meet their different taste preferences plays an important role in product acceptance. With a choice of ten HEETS variants available – ranging from smooth or full-bodied classic tobacco through to a choice of menthol blends – retailers should ensure they stock a wide range to meet the preferences of their customers.
IQOS Mesh disappeared without announcement in early 2020, along with the VEEV nicotine cartridges it used. Is there any latitude to renew a PMI vapour offer, either as a pod or a disposable?
We continuously improve our products to meet the changing needs of adult consumers, and, ultimately, to switch every adult smoker who would otherwise continue smoking to smoke-free products.
With a global conversion rate of 73 per cent, our primary focus as a market is on IQOS and continuing to expand the category throughout the UK.
IQOS VEEV – our most advanced e-vapor product to-date - is the successor to MESH and first launched in New Zealand in August 2020. Further expansion into other markets will be announced separately.
Competitors such as BAT originally left the HNB market open to you in the UK by not selling their glo products here. Likewise, JTI was shy with Ploom. Now that Ploom is here, however, how do you view the new competitive pressure and what are your plans for meeting it?
IQOS is the number one smoke-free brand in the UK, a position it has held since June 2020.
The launch of a new heated tobacco product in the market is good news for the category and increases the choice adult customers have available to them.
Did the pandemic and lockdown underscore to PML just how important the nation’s network of convenience stores is to sales? What are your plans for future collaborations with the channel?
In 2021, PML changed its entire commercial model to fully support independent retailers. Their importance to us, the adult customers they serve and the role they can play in accelerating the transition to a smoke-free future is significant.
In 2022, we will consolidate the support we offer our retail partners with a sharp focus on expanding their knowledge of the heated tobacco category. This will include the distribution of multilingual content via our DTE platform and within the field, to help retailers communicate the benefits of IQOS to their adult customers.
How is the IQOS 18 Cities initiative progressing, and do you plan to expand its scope? What are you doing to get more IQOS product more easily into retailers’ hands?
At the start of 2021, PML expanded into 18 new cities throughout the UK. Based on consumer demand and growing popularity in the heated tobacco category, we went further and are now present in over 30 cities and regions nationwide.
For us, the success of IQOS isn’t solely dependent on getting the product into the hands of more retailers faster; it’s about ensuring we’re phased in our approach – onboarding our retail partners successfully and helping them maximize the benefits that heated tobacco can bring, both to their businesses and the adult smokers they serve.
This means supporting retailers create a good retail experience, providing materials so customers can deliberate and consider their options away from the counter, and encourage retailers to seek best practice from their peer group.
NOTES
[1] Nielsen: “Smoke-Free” product categories – average SOM (June ’20-’21) e-cigarettes (device and consumables) and Heat-Not-Burn (device and consumables) specifically – in Multiple Grocers and General Trade in retail[2]PMI 2021 Third-Quarter Results[3]Local tobacco control profiles for England: short statistical commentary, December 2021 - GOV.UK[4]PMI 2021 Third-Quarter Results[5]PMI Financials and Estimates[6]PMI 2021 Third-Quarter Results[7]Assumes average price of cigarettes at £10.77 per pack. Source: ONS dataset. Average price – Cigarettes 20 king size filter, 2019.RRP = Recommended Retail Price. All on shelf prices selected by retailers alone.
New rules about how and where foods high in fat, salt and sugar (HFSS) can be promoted and displayed in larger shops and online have been passed by the Senedd.
The regulations are designed to prevent impulse purchases and over-consumption and expected to help to tackle the growing problem of obesity in Wales.
The Food (Promotion and Presentation) (Wales) Regulations 2025, which largely mirror rules already in place in England, will:
restrict promotions that can encourage over-consumption, such as multi-buy offers and free refills of sugary drinks
restrict the presentation of foods high in fat, sugar and salt products at prime selling locations such as store entrances, checkouts and website homepages
apply to medium and large businesses with 50 or more employees
The Welsh government said, citing research, up to 83 per cent of purchases made on promotion are impulse buys, with almost half (43%) of food and drink products in prominent store locations promoting sugary foods and drinks.
“These regulations are a key part of our strategy to tackle Wales’ growing obesity problem,” Welsh health secretary Jeremy Miles said after the vote in the Senedd.
“We want to make it easier for people to make healthier choices and we’ll achieve this by improving the food environment around them. If we ensure healthier food and drinks are more available, accessible and visible to people in shops and stores, it will support our efforts to reduce obesity rates and improve public health.”
Miles has earlier said that the government will continue to support businesses and local authorities to implement and enforce the requirements introduced by these regulations.
The regulations will come into force in March next year following a 12-month implementation period.
JET New North Road store in Ilford, London is expecting its flower sales to cross £85,000 this year from popular calendar days, including Mother’s Day, International Women’s Day and Valentine’s Day.
Tulips, roses and mixed bunches are among the bouquets expected to sell well this Mother’s Day weekend, with predicted sales of £20-25,000.
Valentine’s Day remains the most popular flower-buying event, with sales of £35,000, while the increasingly popular International Women’s Day celebration recently led to sales of £25,000 for the family-run business.
JET New North Road in Ilford
“We’ve seen our flower sales skyrocket over the years – helped along by calendar days like these,” Kayur Patel, business manager at JET New North Road, said.
“Flowers bring so much joy, and we’re proud to be a part of helping customers bring that joy to their loved ones with a beautiful bouquet!”
Offering high-quality flowers from Amsterdam and Kenya, the Ilford-based service station has become the go-to place for quality flowers in the community - with more than 1,000 customers expected to buy Mother’s Day flowers this weekend.
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Victoria Lockie leaves Unitas for a new adventure.
Unitas Wholesale retail director and executive board member Victoria Lockie is to leave the business in April as she looks to take on a new challenge, the buying group confirmed to Asian Trader today (27).
Lockie joined the business in September 2024.
In a span of six months, she has played a pivotal role in strategically reviewing the Unitas retail proposition and the overall service provided to Unitas members.
Heading up the retail and commercial functions, she has made a significant impact by identifying strategic opportunities, developing her team and revitalising Unitas’ DE&I agenda.
Managing Director John Kinney said, “I would like to thank Victoria for her hard work and commitment in the time that she has worked at Unitas. We all wish her the best of luck with her next opportunity.”
Lockie also oversaw Unitas' Plan for Profit scheme, which is a subscription service offering independent retailers business updates, rewards, and resources to help them succeed in the convenience market, including core range guides and promotional packages.
Prior to Unitas, Lockie spent more than 12 years at NISA.
Joining in 2012 as a sales support manager, Lockie served in positions such as head of retail operations and head of key accounts. Her time at Nisa was transformative, both for herself and the company.
She also led the symbol group’s retail team through significant transitions, including Nisa’s shift from a mutual-style ownership structure to a corporate governance model.
Lockie also became a trustee for MADL (Making A Difference Locally), where she worked to help independent retailers support their local communities.
She is an ambassador for Diversity in Wholesale, Women in Wholesale, GroceryAid, and WiHTL ‘Women to Watch 2024. or many years has heavily supported the Association of Convenience Stores including the more recent Shopkind campaign.
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Brian Eagle Brown with new ShopMate 360 EPoS solution
ShopMate has introduced ShopMate 360, a “streamlined and affordable” EPoS system designed for convenience retailers.
ShopMate said the new solution ihas been developed with small retailers in mind, offering an easy-to-use till interface that requires minimal training. With an intuitive design, even those new to retail technology can quickly get up to speed, ensuring smooth daily operations.
“One thing we often hear is that many EPoS systems come with complex features that small retailers just don’t need. Their tech needs to be smart, but that doesn’t mean loading it up with all the bells and whistles – it actually means the opposite,” Brian Eagle Brown, managing director at ShopMate, told Asian Trader.
The system separates store operations from business management, allowing retailers to focus on till functionality while still having access to key back-office tools like:
Product and category management
Hotkeys and SELs
Wholesaler promotions
User management and reporting
Retailers will benefit from automatic wholesaler pricing and promotions, removing the hassle of manual price updates and ensuring accurate pricing.
Helen and Andrew Wood of Edith Weston Village Store in Edith Weston, Rutland
Additionally, integrated payments with ShopMate Pay simplify payment workflows and reduce overhead costs, offering retailers a single, streamlined solution.
“We understand that convenience retailers need a reliable, easy-to-use solution that helps them run their stores efficiently,” Eagle Brown said. “ShopMate 360 delivers just that – essential functionality without distractions.”
Helen Wood, owner of Edith Weston Village Store, has been among the first to trial ShopMate 360 alongside ShopMate Pay. She praises its intuitive interface: “We’ve found the till interface intuitive and easy to use; everything is precisely where you think it should be. And ShopMate Pay works seamlessly, exactly as you hope it would – it’s just really easy.”
Among the last few tea drinkers, Brits still have profound loyalty for their cup of tea, with Yorkshire Tea standing out as a true favourite, shows a recent survey, also highlighting fall in the popularity of tea among younger generations.
According to a national survey of 6,000 adults by Tracksuit, brand tracking expert for more than 650 consumer labels, those who drink tea, Yorkshire Tea was crowned the favourite brew, surpassing its long-standing rivals PG Tips and Tetley.
Some 24 per cent of tea drinkers said that Yorkshire Tea was their favourite, ahead of PG Tips at 17 per cent and Tetley’s at 15 per cent. Twinings came fourth with 11 per cent, well ahead of Typhoo with 3 per cent.
The survey also found a striking level of loyalty among British tea drinkers, with 39 per cent refusing to switch from their preferred tea brand, which was far higher than the typical 13 per cent loyalty rate across food and drink brands generally.
However, the survey also shows lays bare the rapidly decreasing popularity of tea among younger generations.
Some 37 per cent of people aged under 35 said that they would choose coffee as their favourite hot drink, according to a national survey of 6,000 adults by Tracksuit, brand tracking expert for more than 650 consumer labels.
Tea came third with 25 per cent of those under 35 choosing it as their favourite drink, after hot chocolate in second with 31 per cent.
Analysts said that the figures “suggest [tea’s] popularity could continue to fall in future generations”, raising concerns that beloved cuppa could face extinction as Millennials and Gen Z prefer coffee and hot chocolate to the traditional brew.
Matt Herbert, the author of the report and co-founder of Tracksuit, said, “Our research uncovers the profound loyalty Brits have for their tea, with Yorkshire Tea standing out as a true favourite.
“The data reveals that brand preference goes far beyond taste; it’s an emotional connection. British tea drinkers are weirdly loyal, which speaks to how brands have successfully woven themselves into the fabric of daily life and national identity.”