Plain, but not-so simple
Norman Pridgeon, vice-president, sales – JTI-Macdonald Corp., on how tobacco companies and c-stores can work together to navigate the new world of plain packaging.
- How is plain packaging reshaping your business in Canada and what are you doing to respond to the new regulations?
Over the last few years, retailers and tobacco manufacturers have successfully navigated a number of regulatory changes—display restrictions, menthol bans and changes in health warnings and packaging—and we expect to manage this transition just as effectively together.
We’ve learned through each one of these transitions how critical the role of retailers and clerks is in guiding adult smokers through the changes as smoothly and efficiently as possible. This time, we’ve been able to learn from the experiences of JTI markets that have already converted to plain pack and apply the best practices to Canada. From the beginning of this transition to plain packaging, being a true partner through change has been our top priority.
- What do you want c-stores operators and their staff to know about the changes? Any tips?
As of February 7, all tobacco products—with the exception of cigars—sold by retailers to consumers must be in plain pack.
We appreciate how hard c-stores and their staff have been working to get ready for this transition. In just three months, c-stores will have reorganized their storage, shelving, trained staff and sold through branded inventory—this is the shortest implementation timeline of any country so far and the speed and agility Canadian retailers have demonstrated has been truly impressive.
When you can’t use branding, colour or pack shape to differentiate between products, it will be even harder to provide quick and efficient service to the hundreds of customers c-stores serve every day.
The experience from other countries tells us that smokers become frustrated as they spend more time waiting in line and as they are more likely to be accidentally handed the wrong tobacco product.
Tobacco storage needs to be exceptionally well planned and organized so that SKUs can be quickly located when customers ask for them.
- How are the changes expected to affect the number of SKUs?
Under the new regulations, only Regular Size and King Size cigarettes are permitted. This means that after February 7, super slim and super king (or 100s) SKUs can no longer be sold.
It’s too early to speculate beyond this. We do know that new brands have continued to be successfully launched in markets that already have plain packaging in place, and we know that Canadian adult smokers are discerning. They will continue to seek out the best quality product for the best value and we will continue to take great pride in meeting their high expectations.
- How do you think this will influence the contraband market?
When all packs look the same and only the brand name visually distinguishes one product from another, there is a risk that price becomes the key driver and smokers trade down to cheaper products or turn to the illegal market. That’s a risk to all of our businesses and we need to take every action to crack down on illegal trade now and call on governments to step up and do their part.
We’ve been working with law enforcement to make sure they are aware of the move to plain packaging, understand how this could impact the illegal trade and provide information to help them identify legitimate from contraband product. In a plain pack environment, their jobs become even tougher and it’s up to us to provide them with tools and training to support their work.
Retailers should continue to be vigilant in reporting any suspected illegal tobacco activity in their area to local law enforcement or Crime Stoppers.
- What is your company doing to help c-stores prepare for the transition to plain packaging?
It’s in everybody’s interest to have the smoothest possible transition at point of sale, and we’ve been committed to educating and supporting retailers every step of the way.
Retailers play a critical role in answering questions from tobacco consumers about pack, branding and product changes and it’s our job to help them answer them. When smokers can’t buy super slim or super king cigarettes after February 7, or don’t understand why their pack has changed, retail clerks are the front line. Over the past few months, we’ve set up information sessions, a dedicated trade website and communications materials to explain what’s changing, why, and what the alternatives are.
We’ve also worked closely with c-stores to better understand their needs going forward, suggest storage solutions and ways to organize shelving so that clerks are able to more easily identify products when consumers ask for them.
While much of the work will already have been completed before February 7, there is no doubt that it will be an evolution. It’s important that we listen well to what adult smokers and retailers need and respond effectively.
- How are you reaching out to consumers to help smooth the transition?
In the weeks leading up to plain packaging, we used our packs and advertising in adult-only locations to let adult smokers know that their packs would be changing and alert them to any name changes, as colour-based brand variant names are no longer permitted. We printed the message “Red is Bold” for example, so that smokers know how to order their favourite LD pack after February 7.
We also used these tools to reassure consumers that while the pack and product is now plain, the blend and quality has not changed. This reassurance is critical; when the packaging of any consumer good changes, some consumers will assume that the product is also different. In fact, we would never make a product change at the same time as a pack change for exactly this reason—all of JTI’s tobacco blends and filters remain exactly the same inside their plain exterior.
This interview originally appeared in the January/February issue of Convenience Store News Canada.