Having identified how powerful a platform travel retail represents to inform and educate the consumer, particularly about its smokeless products, BAT plans to accelerate its investment in a critical business channel.
That’s the message from General Manager of China and Global Travel Retail (GTR) Andy Hrstic and Head of Customer Group Management of GTR Vincent Chai, speaking to The Moodie Davitt Report at TFWA World Exhibition. They say that travel retail can play a role in continuing the company transformation from a tobacco business to a dynamic consumer goods group.
It also can help communicate its narrative about moving towards a ‘Smokeless World’, with an ambition to have 50% of its revenue from non-combustibles by 2035. Here, smokeless brands glo (heated product brand), Vuse (vapour product brand) and Velo (oral nicotine pouches) are front and centre.
Backing the group’s vision with action, BAT is doubling down on the focus placed on global travel retail.
Hrstic says: “Travel retail is such an amazing channel to be able to engage and educate people and to test out new experiences – as we accelerate our Smokeless World narrative.
“Showcasing means visibility, it means education and it means engagement.
“The company is very clear and understands that, but it also recognises the opportunity the channel represents. And that comes back to research and understanding how shoppers engage with the channel. We made a compelling case as to why this is a great business to treat separately and to invest in – and the company has backed that.”
He adds: “Further deepening our investment in GTR enables us to become closer to the shopper than ever before.
“We now have our own insights function within the travel retail business, and so we can directly invest into understanding the shopper journey better.
“Some of our retailers are asking how they should merchandise vapour and oral nicotine pouches and heated products together? Now we can do joint programmes to understand the shopper journey better and work our joint merchandising plans around that.”
BAT also aims to tie into retail partners’ loyalty programmes where possible to help connect with shoppers along the journey.
A major consumer insights programme is already informing BAT about how it can do more within those partnerships.
Hrstic says: “What we have seen is consumers seeking more local experiences, which can span exclusives, gift with purchase, and much more.
“Local stories around authenticity are really important in Asia, and gifting has become even bigger there too. It is about how you can focus your promotions, limited-edition products or packaging even more around events, whether that is Chinese New Year, summer campaigns in Europe or other regional themes worldwide.”
An example of how insights can be leveraged to powerful effect was BAT’s Velo x McLaren Formula 1 Team partnership, executed via a pop-up with Qatar Duty Free at Hamad International Airport last year.
Chai says: “That was very successful in terms of consumer engagement. It was exciting, sparked curiosity and encouraged customers to stop and talk to us, offering the chance to introduce them to the world of oral nicotine pouches through Velo. We are conscious that this is not an easy product to pick up so you need the right staff training to explain what it is and how to use it.
“Investing in Brand Ambassador (BA) resource is key as they are the face of the company to the consumers, to help bring them along the journey to move from combustibles to smokeless products. We also use digital to support the work of the BAs so they can give insights back to us, and we can measure their effectiveness with the retailers.
“Having seen the impact in Doha, we will do more of this kind of partnership in other places. We are also aware that retailers want something unique to them, whether that is a product or a campaign. We will aim to deliver that.”
Complementing the Velo awareness drive was the brand’s Tasting Bar, where adult consumers can try out the product. This was enhanced with high-impact ‘Weirdly Wonderful’ campaign branding, inviting them to test the offerings through key partners.
Other recent signature investments in the channel have included tailoring activations and promotional spaces for glo at Kansai, Riyadh King Khalid and Incheon International airports, the introduction of an innovative glo Smoking Lounge at Narita International Airport, and showcases for the smokeless product ranges from Dubai to Geneva to Paris.
Chai says: “An example of how we are getting close to our partners and to the customer was in the period around the Paris Olympic Games, when we ran a high-profile promotion around smokeless products. We saw a very strong uptake in terms of sales, and we doubled sales in some of the categories that we showcased.”
These pop-up stores and immersive campaigns can help to guide adult smokers but also ensure they experience something new on the journey. For example, at Narita International Airport the Smoking Lounge features areas for both cigarettes and heated products.
“Anyone who goes there can immediately sense a difference and even without a BA, consumers can naturally sense the benefit in switching to smokeless products,” says Chai.
BAT is also adapting to each market to tailor its messaging where appropriate.
Hrstic says: “It’s not an easy task to take a localised approach to communicating about a global brand. With a brand such as Velo and the Weirdly Wonderful campaign, we can work with the retailer to tell the story about how it is used, that you can take it on the flight, and talk to the retailer about how it’s positioned at the front of the store where consumers can find out about it.
“It is really important that we can actually speak to the retailers and guide them as well around the importance of smokeless products and their usage, and cut through to the consumer who wants to change.”
Driving the message around tobacco harm reduction, smokeless products and the diversity of solutions that BAT offers also has commercial impact.
Chai notes: “We see a win-win here for consumers, retailers and the airports. It is important for consumers to have choices of smokeless products. This is why we’re taking a multi-category approach, and that also helps us on our journey to A Better Tomorrow.”
Hrstic says: “While tobacco continues to be a driver for a segment of consumer purchases, as we look to the future, our focus will be on providing a wider range of innovative smokeless products and how we can encourage our consumers to make the switch.
“We need more focus on shopper research to help our partners get to that place. And that comes with collaboration.”
For BAT a key callout for airports and retailers is to offer the opportunity for trial, and to allocate space, with the understanding that everyone has something to gain from the growth of smokeless products.
Hrstic says: “These categories need investment and they also need a leap of faith from the retailers. We are investing on educating our retail partners about the transformation journey we are on with the ultimate aim to encourage adult smokers to switch to alternatives with reduced-risk potential to smoking.
“If our retail partners can offer space, as we saw with the McLaren Formula 1 Team campaign at Qatar Duty Free, it’s a chance to build excitement among adult travelling consumers too.”
BAT also identifies ‘must win’ markets, locations where it will back its targeting of key audiences with investment.
Hrstic says: “While both country and category are important, our approach is centred around the passenger experience with a focus on the unique profiles of individual travellers, such as Chinese and UK passengers who are key demographics for us. For example, when a UK traveller visits Spain, we offer different marketing strategies tailored specifically to their needs, which may differ from the marketing strategy offered in the domestic market.”
Hrstic also offers an upbeat assessment of how 2024 has tracked to date, with passenger traffic robust and many of the investments BAT has made delivering returns.
“If we look at category first, we’re seeing it tracking travel growth, with Asia flying year-on-year from a lower base and Middle East and Europe performing well,” he says. “We’re still seeing good growth in volume across the categories: vapour is growing well, oral nicotine pouches are booming and heated product is performing well too. The channel is in a good space right now.”
Offering a concluding message to the travel retail community, Chai says: “How do we work closer with the retailers and partners to drive the new agenda? Some retailers are further along on the journey but how do we get everybody on the same page? And how do we increase the basket sizes so that the consumer benefits and we all benefit? Those are the questions that are top of mind as we move forward.”
Hrstic adds: “The biggest thing, we believe, is to understand the potential around smokeless products and how we invest in them now to build them for the future. That comes down to space and how we jointly invest.
“We also believe those partners should work with us because BAT does this across over 100 countries. We have a good idea about what excellence looks like, and we can bring them best practice examples of how we partner effectively.
“Let’s not just debate about margin or the costs of doing business. Let’s invest in and understand the journey because that is going to deliver us all a better outcome. In essence it means collaborating around what tomorrow looks like, not just about delivering for today.” ✈
