BackSPANISH SUCCESS
2. GROW SUSTAINABLE PROFIT GROWTH IN MACHINE-ROLLED CIGARS
With a focus on brands that appeal to new consumers, Scandinavian Tobacco Group has achieved growth and a significant gain in market share in Spain – even though overall volumes in this important market are declining.
Spain has long been known as a very traditional market for cigars, based on wealthy, middled aged, male consumers. Scandinavian Tobacco Group has brought it back to the future.
Total volume in Spain had been declining over five to 10 years. With fewer consumers to fight for, Scandinavian Tobacco Group decided to focus on compact cigars and introduced filters and the development of flavours.
“It was a traditional market – a very traditional offer for a traditional consumer, declining year on year – and we’ve driven it to become more modern,” says Claes Berland, Marketing Manager, Signature Global. “We dared to do something different. We looked at what we believed was going to be big and focused on it. We now see an inflow of consumers that are different than before, with a wider age spread and more women.”
Offset decline and into growth
In 2017, Scandinavian Tobacco Group had a market share in Spain of 13%. As a result of the new focus on new categories, the future winning segments such as compacts, filters and flavours, that share is soon to reach a milestone of 25%, largely driven by the Signature brand. The acquisition of Agio Cigars in 2020 has also helped to reinforce market share.
“Signature is now aiming to be a leading brand in Spain,” Berland says. “If we had not done this the market would be double digit decline. We offset the decline and went into growth.”
Rather than conduct 10 or 20 launches a year, across the whole portfolio, the business focused on specific brands and ensured these performed and delivered after launch.
“We were focused and single minded and stuck with it – we said, this is our target and this is what we’re betting on, everyone is behind it and then we get these results. We can really outperform the market if we focus on something and give it time and see it through,” says Eva Ramos, Marketing Manager, Spain & Portugal.
“It was a market opportunity we, as a company, could capture with the right products at the right time.”
Focus pays off
It was not a question of addressing underperformance, but rather a continued and focused effort, with the impact now being clearly seen in the numbers. It is supported by the capability of the organisation and the backing of a strong international company, with global product capability that fits local needs.
As a result, Scandinavian Tobacco Group has become more valued to key customers in Spain, by providing a bigger portfolio that is stronger and more balanced, covering all consumer needs.
Now, other markets are able to look at Spain and consider a possible route to gaining market share.
“What’s happening now in Spain is we’re hitting a milestone for our performance. The focus on winning segments is paying off,” says Peter Schønheyder-Vitek, VP Brand Marketing.
