20|Retail News|June 2015|www.retailnews.ie
The Retail News Interview
The Marlboro Men Matthew Tisdall, Commercial Manager, and Paul Adeleke, Corporate Affairs Director, Philip Morris, discuss the changing face of tobacco in Ireland, the growth of the value category and how legislation is shaping the industry. IT’S almost impossible to discuss the tobacco category in Ireland without talking about legislation. The last decade in particular has seen the two go hand-in-hand, as the industry reacts to new laws that have seen huge changes introduced, including high taxes, a ban on the display of tobacco products and the introduction of large graphic health warnings on cigarette and tobacco products. “The growth in regulations and the discount category are clearly linked,” says Paul Adeleke, Corporate Affairs Director of Philip Morris Ltd, whose portfolio includes the worldleading Marlboro brand. As excise hikes push the price of cigarettes ever higher, consumers are turning in increasing numbers towards value products. “It’s a huge challenge for us and every tobacco company, when you have an illicit trade that’s operating at a price point so far below the legal price for tobacco products,” explains Matthew Tisdall, Commercial Manager, Philip Morris. “Identifying that growth in the value segment was key for us and has led us to the portfolio we have today.” Diversified Portfolio Philip Morris has recently diversified its portfolio to address changing consumer needs, and now includes L&M, the best value brand on the market, with an RSP of €8.35. While the premium category remains the dominant choice amongst adult smokers, the discount category has steadily increased. “Since 2008, value has been absolutely key,” Matthew explains. “As time went on, however, value was still expected but not at the expense of quality. This was a challenge not just for tobacco but one that every FMCG organisation needed to address. If we look at the tobacco category, even since 2013, the value segment has almost doubled in size, growing from 11% to almost 22% share. This is a place where Philip Morris needed to have brands, hence
Matthew Tisdall, Commercial Manager, Philip Morris.
Paul Adeleke, Corporate Affairs Director, Philip Morris.
the growth of L&M.” According to the Commercial Manager, the rise of the value sector has been at the expense of both premium tobacco brands and the middle ground. “The consumer is shopping across categories and will dip in and out of premium,” he explains. “For example, we introduced Marlboro Gold Touch into the market, which has a slightly thinner stick than the premium Marlboro Gold, but offers what the Marlboro smoker is looking for with a lower price point. We see that smokers are switching between Marlboro premium and Marlboro Touch, as well as trading in from competitive brands.” The L&M brand is attracting smokers of premium and discount brands who are looking for quality and value, according to Matthew, but L&M has a unique challenge: