Tobacco: There's still an opportunity

- Last updated on GMT

Related tags: Tobacco, Cigarette, Northern ireland

Smoking might be banned but there's nothing illegal, subject to multiple restrictions, about pubs selling tobacco - and making a profit from what has...

Smoking might be banned but there's nothing illegal, subject to multiple restrictions, about pubs selling tobacco - and making a profit from what has always been an important sideline for the trade.Licensees might worry, though, about whether there is still a strong market for cigarettes, cigars and rolling tobaccos among their customers.

Imperial Tobacco's latest report, released this week, estimates that smoking in Scotland after the first full year of the smoking ban was three to four per cent down, with more recent data suggesting a two per cent decline in consumption.

That trend is so far mirrored in Wales, while the impact of the ban in England and Northern Ireland is too early to call. But, if the UK is to continue to follow what has happened in Ireland, Imperial predicts a full recovery for the market over time.

While there are no firm figures, it's likely that the ban has disproportionately hit sales in pubs.

Tobacco giant Gallaher's estimates are more pessimistic, indicating a five per cent fall in the Scottish market resulting from the ban.

But group communications manager Jeremy Blackburn believes there is "still a market there" for publicans.

"Licensees might be concerned that by selling tobacco they are encouraging people to smoke on the premises, but public awareness of the law is very high, so that shouldn't be a worry."There are also trends within the tobacco market that pubs can take advantage of. Roll-your-own has been less affected by the ban and sales are still rising, and the same is true for smaller cigars. There is a profit stream there for licensees.

"Forty-six per cent of pub-goers smoke, and the Irish 'bounce-back' suggests that people don't give up because of the ban - they adapt. The chances are they are still looking to buy smokes in pubs."The part of the UK market that is really exciting tobacco manufacturers is roll-your-own (RYO). According to Imperial's figures, sales in 2006 were nearly 10 per cent up on 2005 and pubs' share of the RYO market was also up.

This growth is partly driven by the successes in stubbing out smuggled tobacco, but it also reflects a changing consumer. While they may not be giving up, today's smokers want more control over how much they are smoking, and making their own cigarettes gives them that.

Around 4.5 million smokers are what Imperial calls 'dualists', switching between cigarettes and RYO, and RYO is increasingly appealing to young women - the old codger is no longer the target.While UK cigar sales are down overall, miniatures are buoyant, rising by three per cent in 2006.

The message is that by recognising the potential of these growing market segments, publicans can continue to make money from tobacco.

Related topics: Legislation

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