Cross-category strength: Imperial Brands on portfolio scope and variety

By Luke Barras-hill |

The Imperial Brands Global Duty Free & Export management team. Left to right: Giannos Zompolas, Head of Finance; Tobias Baude, Head of Corporate and Legal Affairs; and Christian Münstermann, General Manager.

In a detailed Q&A and extension to the annual tobacco report contained in the February e-zine, Christian Münstermann, Global Duty Free & Export General Manager, Imperial Brands, explains to TRBusiness why tobacco remains an integral component of the core duty free offer and therefore essential to the industry’s recovery.

How would you assess the performance of your travel retail tobacco operations in 2020 and were there any bright spots in an otherwise forgettable year?

Last year was an exceptionally challenging year. We saw the travel sector come to an almost complete halt, sales took a plunge, we had to re-prioritise and focus our operations while the uncertainties of the operating environment continued to manifest.

Despite the challenges of 2020, we were proud to bring innovation to duty free that we believe will help drive the recovery of the channel.

Our Davidoff brand continued to be a leader in the market, supported by the launch of Davidoff Evolve, which caters specifically to the demands of the modern, urban smoker.

Davidoff Evolve features the signature Davidoff quality at a new more accessible price point. It is also presented in a simpler pack and in a more compact king size format, with Imperial’s innovative combo-filter and premium cigarette paper. It is perfectly tailored to [meet] demand from modern smokers around the world.

We were proud to showcase Davidoff Evolve at online trade events in the second half of last year, where it was well received by the industry. It featured alongside key innovations from our other brands, such as Lambert & Butler and Rizla.

For Lambert & Butler, we showcased our roll-your-own variety, which has enjoyed great success in the UK prior to crossing over into the travel retail market. Meanwhile, Rizla, a brand known to never settle for the ordinary, showcased its exciting new flavour varieties.

Throughout the year, we have continued to work in close cooperation with our partners in duty free and travel retail on pioneering solutions, so that we can not only come out the other end of the pandemic but also rebuild a stronger future in line with our ethos, ‘Together as One’ (above).

Christian Münstermann, General Manager, Global Duty Free & Export, Imperial Brands: “Variety is vital in the duty free sector and tobacco is a core part of the duty free offer, driving sales and increasing basket sizes of travellers.”

How have you pivoted the business – in both the sale of conventional tobacco and potentially reduced-risk products – to respond to customer demand?

At Imperial, we know that having a strong cross-category offer is vital in the duty free tobacco market today and in the future.

With our complete offer of both traditional tobacco products and exciting next generation products (NGP), we are better placed than ever to ensure we can meet the demands of shoppers all over the world.

Variety is vital in the duty free sector and tobacco is a core part of the duty free offer, driving sales and increasing basket sizes of travellers.

Travellers enjoy taking advantage of the duty free channel’s unique proposition, so our focus is on ensuring we have a complete range to provide what they [travellers] want, where and when they want it.

At Imperial, we believe it is important to focus on addressing global and regional consumer needs.

In what ways have you seen the dynamics of an already tough regulatory landscape (packaging/display bans, allowance restrictions etc) that poses challenges for suppliers, retailers and consumers alike change as a result of the pandemic. Have the present challenges been exacerbated?

Although the global pandemic and the resulting economic crisis have been at the forefront of many regulators’ agendas, this has not resulted to parallel regulatory trains coming to a halt.

In contrary, the tough regulatory landscape for highly regulated product categories, such as tobacco, as well as the duty free and travel retail channels in general, has continued to evolve. This is on top of the current challenges that Covid-19 has brought to the entire travel industry.

Correspondingly, the industry has continued to work closely together to defend such product categories, as well as the duty free and travel retail channels, against such threats.

The second Meeting of the Parties to the Protocol (MOP2) addressing the Illicit Trade Protocol was delayed until November 2021 to allow the WHO to focus on the pandemic. From what you as a supplier are seeing and hearing, has the industry been making good use of this extra time to engage with you to rally support against the allegation that duty free contributes to illicit trade?

Covid-19 has been at the top of everyone’s agenda in 2020, both on a global and a national level. Most certainly so at the World Health Organisation, the focus was on the pandemic.

This has allowed for the industry to take a step back in order to take stock and re-evaluate what is the best way to address this issue in 2021.

The global pandemic has greatly changed the industry during the past year and many stakeholders within it have also transformed in the process, resulting in a change in priorities, as well as less time and resources to dedicate to such engagement.

The second Meeting of the Parties to the Protocol to Eliminate Illicit Trade in Tobacco Products (MOP2) is scheduled to take place on 15-17 November at The Hague, Netherlands.

So in 2021 discussions will continue at national and regional levels, as preparations for the MOP2 meeting begin and decision makers form their view. It is important that the duty free industry is heard and fairly considered. We are in contact with key industry stakeholders and will share more about it soon.

Can you outline your key strategic priorities and activities for travel retail in 2021 and what do you feel is required for tobacco to forge its own successful recovery from Covid-19?

With all the hurdles that the pandemic has brought, we remain convinced that the tobacco category will always be an integral part of global duty free and travel retail.

Duty free tobacco is a resilient category that is going to be vital to re-engage travellers with a varied, cross-category selection, which offers choice and excitement. In some parts of the world, tobacco has the highest conversion rate of any category in duty free and offers opportunities for retailers to boost average spend.

This unique feature places the tobacco category at the heart of the recovery and Imperial is ready with its strong cross-category offer, boosted by our recent innovations and additions such as Davidoff Evolve and Lambert & Butler RYO, to help build customer engagement.

This will require close work and coordination with our partners in the duty free industry to ensure we meet the needs of shoppers at every location. We are confident the market will bounce back and we are ready to be at the core of a strong channel recovery.

For more commentary, click here to read the annual tobacco report including nicotine alternatives and shisha in the TRBusiness February e-zine.

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