1. WIN IN MACHINE MADE CIGAR
Increase market share and optimise and manage prices effectively
The UK market is one of the most important in Europe, but there have been some tough challenges recently. Scandinavian Tobacco Group’s team assessed the issues, changed its priorities and grew its market share as a result.
When UK groceries wholesaler Palmer and Harvey collapsed, it caused some major disruptions for those businesses which relied on it to distribute products.
That included Scandinavian Tobacco Group, because two of its major clients – Tesco and Sainsbury’s – were no longer able to source and restock with its products. But rather than firefighting, trying to deal with the problem and then going back to normal, the Group’s UK operation took it as an opportunity to reinvent how it does business.
It was an issue across all of the Group’s major UK accounts; those reliant on Palmer and Harvey couldn’t get the products, and others were selling more as a result and running out of stock.
“We had to be agile and everyone had to come to the table and muck in,” says Darren Clifford, National Account Manager. “It was a wake-up call, and we refocused our sales force to prioritise who should have our time.”
The overall UK market is one of the most valuable in Europe but overall volumes are declining. The result of refocusing the Group’s operation has been that in 2018, the UK business – predominantly machine-made cigars, in particular the brands Café Crème and Moments – has delivered on its plans and gained market share, even as the biggest player in the market.
The overall strategy was to keep complexity out of the operation and focus resources on large accounts, which are major supermarket chains Tesco, Sainsbury’s, Morrisons, Asda and Coop, and thereby spend less time on the smaller retailers. There are still a lot of these, which are now supported through wholesale cash and carry.
It is particularly pleasing for Alastair Williams, Head of Sales for the UK, as the market had been challenging with a lot of volatility.
“What we have done as a team, with everyone adapting and working together, has made me extremely proud. We took a decision and then everyone lined up behind it. Our response may sound simple in theory, but in practice it is a major change to the organisation,” Williams says. Following the strategic change, availability – meaning the proportion of the Group’s products that a customer can source at a given time – rose from 93% to a more regular 97%.
“It takes some courage to do it, to stop doing some things and focus on others. It was a logical decision, but gutsy to move away from something and step back from those customers,” Williams says. “You can only do it with experience and expertise in the team.”
The UK market
Looking back, Clifford emphasises the extraordinary nature of the period after the collapse of Palmer and Harvey. The Group was asked to deliver directly, weekly to Tesco and Sainsbury’s major retailers and while there was a contingency in place to do this, there were some challenges, for example communication between IT systems.
“It was a wake-up call, and we refocused our sales force to prioritise who should have our time.”
A team effort, within the Group and with customers, was able to find solutions, quickly, and get products to the shelves.
An important element was the new Customer Relationship Management (CRM) system, which enables sales reps to gather data about customers, stores and products. Seeing data in real time makes it much easier to deliver what customers need.
“We’ve never worked like this with key national accounts. As a result of the way we helped them, we have built and further re-enforced our relationships,” Clifford says. “We’ve become closer in the way we work, both to customers and within the team – it runs straight through senior management, field sales, business development and the warehouse. It’s an exceptional effort from everyone.”