Travel retail has a big part to play in driving BAT’s purpose to build ‘A Better Tomorrow’, aimed at reducing the health impact of its business. Recent moves include the accelerated expansion of its multi-category portfolio alongside education and awareness-building in travel markets for its flagship New Category brands glo (tobacco-heating product brand), Vuse (vapour product brand), and Velo (modern oral brand).
Highlights include a pop-up store with Dubai Duty Free plus promotional activations in Paris, Geneva, Vienna and Madrid airports that reinforce its strategy with key retail partners.
Newly appointed BAT General Manager China and Global Travel Retail Andy Hrstic and Head of Customer Group Management – GTR Tony Clayton spoke recently to Dermot Davitt about the opportunities ahead for travel retail – against the backdrop of a fast-growing New Category products business.
“The BAT narrative around building ‘A Better Tomorrow’ and tobacco harm reduction is front and centre for us,” says Hrstic. “It’s about how we take that and further educate and make adult consumers aware of alternative products to smoking through strategic locations for our brands. That’s the biggest opportunity I can see so far.”
He adds: “It’s early days and I like to work through several cycles in the business to really see what is going on. The business is in good shape and Tony and the teams around us have done an extraordinary job of navigating through COVID. We have great customer partnerships.
“If you look at the shape of other markets globally versus this channel, travel retail has access to all these adult smokers globally who would otherwise continue to smoke, offering an opportunity to reach those people in the moment with their dwell time. So how do we work with retail partners to leverage that at airports?
“There are so many opportunities we can explore in travel retail. The challenge is to focus on strategic locations where our products can have most impact in making tobacco harm reduction a reality. So that is one of the interesting things I’m working through now – where do we turn up and where do we want to engage first in travel retail?”
He says that BAT aims to have “an educational conversation” with adult consumers at the major travel hubs where engagement is possible – such as those named above – that can then be applied to other airports and geographies.
Here travel retail can play a key role – both as a driver of sales in its own right but also as a showcase for brands – magnified through the educational role it can play in terms of highlighting the reduced-risk potential of New Category products compared to smoking.
Hrstic says that there is still a journey to embark on to really understand travellers’ needs, especially in how they have changed post-pandemic.
“That’s a programme we want to go on with our retailer partners to understand their shoppers better – and to then turn up with education around our reduced-risk products in a better way*.
“What we know is that BAT is well positioned though its multi-category story to cater to different needs. There may be regulation in their country that allows different New Category solutions so how do we apply that in key strategic locations such as Dubai or elsewhere? We are saying ‘you have a choice’ and that is exciting. We don’t have to have a one size fits all solution.”
Clayton adds: “We also need continuity of brand education and communication worldwide, whether you’re in Dubai or Tokyo.
“We are here to offer adult consumers’ choice, which is why we have a range of New Category products that we can educate on clearly and consistently. That’s the case with say Velo, which is an excellent product for airlines, works well for this industry but we need to ensure adult consumers know what it is and how to use it.”
BAT has partnered with TUI Group to introduce Velo on the go via its inflight offer, with positive results.
Hrstic says: “Velo can be used any time, anywhere, and where allowed on the plane too. That is innovation matching the preferences and needs of adult consumers when and where they want it. So how do we then start to look at more opportunities like that, and build awareness among the adult customer base?”
Clayton adds: “With TUI, most of the travellers who are existing adult smokers that we talked to Velo about were new to the opportunity and were interested in making a complete switch from smoking. So that underlines how we can move existing adult smokers into an alternative product with reduced-risk potential. Their experiences have been positive – for us it’s about bringing awareness of these products to those who would otherwise continue to smoke.”
Similarly, he adds, the airport campaigns noted above – allied to the power of experiential pop-ups and animations – have generated strong consumer reaction and helped build awareness of New Category products among the adult smoker shopper base.
With China outbound travel now on the way back, BAT is also tailoring activations in Europe and the Middle East to engage with these shoppers, showing and highlighting products and campaigns in a way that was not possible during the pandemic.
Across the network BAT is aiming to further sharpen its consumer education through digital activation – and here the pop-up stores and immersive campaigns play a vital part in guiding adult travelling smokers but also in ensuring they experience something new.
Hrstic says: “What we know is that adult consumers are seeking more information. They are asking us to give them more and we can guide them through to the market where they travelling. We actually play a role in facilitating the conversation with our local market where the consumer wants to opt into that. And that creates an ongoing digital experience, which is quite exciting.”
Clayton adds: “We have also seen an increase in adult consumers wanting to prioritise experiences. They want more now that they did before. It was revenge travel at first but now it’s wanting to understand the brand world, activations and our pop-ups offer the adult consumers a way to interact and become more aware of what’s there.
Hrstic says: “Instant gratification is a big thing right now. So how do you offer the adult consumer choice but also when they have dwell time, satisfy their curiosity for knowledge and information? Going on the switch journey is quite a big thing for adult smokers so guiding them through brand websites becomes important here. The keys are instant gratification and the continuing funnel of information.”
Beyond building relationships with adult consumers, partnerships with airports and retailers are also evolving. With this in mind, says Hrstic, the big combined work-on remains better knowledge of the adult consumer of today and tomorrow.
“We need to understand what the future looks like in this category, and then understand the role of the different categories around potential for tobacco harm reduction.
“What can these partners do in terms of adjacencies in the store between cigarettes and these New Categories that facilitate these conversations with consumers? It requires some shopper insight and research to be able to support that.
“The first request [of retailers] is making sure that those adjacencies are clearly outlined for that shopper journey. The second thing is for us all to do a better job of providing education to the Category Manager through to the people that are working in the store so they have a better understanding of the adult consumer. Then number three is how our brands tell the message in the moment, with clarity and consistency.
“It’s about message hierarchy. We are clear on those layers of communication when you walk into a store, the signposting of brand and category. It’s something I have seen from my FMCG background and the insights into the adult consumer and how they translate into disciplines in the domestic market. How can we use this with our airport retail partners? From what I’ve seen we can do more.”
Clayton adds: “Our retail partners are on the same journey as we are in terms of the multi-category strategy. Now it’s about how we work with them to activate, to execute and to give adult consumers choices in prime retail locations where we can interact effectively.”
The interaction generated by the Dubai Duty Free pop-up stands out in terms of recent investments and the ability to tell the multi-category story well. Now the attention turns to the next stage in the journey.
“We cannot just think about the traction the category is getting now,” says Hrstic. “It’s about the next five years, when so many adult smokers who would otherwise continue to smoke are empowered to switch to better alternatives. And we have a unique market at international airports to execute in, in ways that we cannot do in other markets.
“Together with our partners we are starting that adult consumer switch journey, which then goes into their particular home market, and when they travel again, they come back, bringing repeat business and continuing the message to switch completely to reduced-risk alternatives*. So that’s why we invest in trial and education, as there are rewards down the track.”
*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive. ✈
*This feature first appeared in The Moodie Davitt November Magazine. Click here for access.
