Nevertheless unless you are about to pull the plug on your business because of it, resilience is the order of the day as new high-volume vendable products are sought to replace the ‘fag’.

Iestyn Armstrong-Smith reports…

The ban on smoking in public no doubt has far reaching effects with many tales of woe to be heard from various quarters. For example, since New York state banned smoking in 2003 reports abound of bar and restaurant businesses struggling to make ends meet because of fewer customers, waiters needing two jobs to make up for a drop in tips and so on. Yet other reports show that more people go out now and they go out more often.

Impact on business

One firm that understands fully the backlash and fall-out of the smoking ban in Ireland is Harrington Vending Machines.

Kevin Alcock, Harrington Vending Machines Ltd, Glasnevin, Ireland, says that the announcement of the ban by the Irish Government “took us by surprise.” He recalls the effect it had on the business. “Orders for new cigarette vending machines were cancelled almost immediately,” says Kevin.

“A lot of site owners and operators were removing machines; but two to three weeks later they were being reinstalled,” he says. “Cigarette machines remain in the pubs and clubs, but there is a big difference.”

Kevin points to the fact that at one time cigarette machines were an essential element of the pub business and if one broke down at 11 pm, then an engineer would have to go out and fix it. Not any more as machines tend to be maintained when they get replenished, some may go weeks inoperable but it no longer seems an issue for smoking pub goers.

Also, the number of machines per site has halved as cigarette vending is no longer seen as an investment business for Irish vending operators. Prior to 2004, tobacco was 50% of business for Harrington but now it is only about 10%.

“The income for vending operators has halved,” says Kevin. However, there is light at the end of the tunnel as companies such as Harrington have diversified their offerings, which in turn opens up opportunities for vending operators to also diversify. “We have moved into supplying more machines for washroom products, nut and Pringle vending. We also broke new ground with Saharas Hot Nuts; we now have the exclusive distribution rights in Ireland for this exciting product,” he says.

The smoking ban in Ireland therefore has had far reaching effects, but there are opportunities for smart operators. “We are encouraging our customers to look at other products. The ban has opened up the opportunity for operators to become one-stop-shop organisations. Now that we have adjusted to the ban, people still go out and so there are opportunities for vending operators.”

Regional and national differences

In the UK we are beginning to feel the bite of the ban according to vending operators Fort Vending and Essex Vending.

Ron Parfitt, Proprietor, Fort Vending, has been in the market for nearly 18 years and cigarette vending is a major part of his business. He says that people are not going out as much and so the effect is being felt not only by pubs and clubs, but also allied trades - and not just vending operators. He says businesses such as ventilation engineers have been effected as they do not need to service equipment as regularly.

He says that already there has been a 40% reduction in cigarette vending business but we are yet to see the further effect of the winter; whether or not this will reduce sales further as fewer people are prepared to leave home to stand outside the pub to smoke.

“I have diversified into hygiene and sanitary products but you can only make a sale if people are going out,” says Ron. “I am looking at other products such as snuff but you need opportunities for volume sales to make up for the turn down in cigarettes. Nevertheless I am constantly reviewing new opportunities.”

Roger Longman, Proprietor, Essex Vending, sees huge differences in his region. “The smoking ban is affecting the pub trade,” he says. “Pubs are erecting smoking shelters and some are very sophisticated but they are not the answer to bad weather.

“A London pub I service has a clientèle that is mainly retired folk. They go for a pie, a pint and a cigarette; it’s part of their retired life. On one visit I saw an elderly gentleman who was confined to a wheelchair sitting out in the rain. These are the people who helped us get through the war. It isn't right,” says Roger. “Rather than an outright ban, pub and club managers should have been given the option to go smoke free.

“The ban hasn’t opened up new opportunities for me as I vend hygiene and sanitary products that the establishments offer as a service to their customers,” he says.

“Supermarkets have to take their share of the blame as this is hitting beer sales. Why should you go out in all weathers, pay pub prices and, then if you smoke, you have to stand around outside,” says Roger.

Chris Evans is a partner of KE Vending in South Wales. The company vends cigarettes throughout South Wales and Bristol, with over 600 sites. The firm also manages the vending wholesale of Nicogel for the UK and Ireland.

“Our cigarette business has been affected by about 30%. Sites that continue to do well for us are those whose management had the foresight to make provision for smokers,” says Chris. “Nightclubs on the other hand have been greatly affected.

“Nicogel sales have increased and are increasing. It’s new for the majority of people and so the novelty value is helping with sales,” says Chris.

“Nicogel is available in 56 countries throughout the world and it is gaining a lot of interest in the UK and Ireland. Currently Nicogel is available from in the region of 10,000 vending machines in the UK,” he says.

“Like the large establishments in Las Vegas, bingo halls and casinos over here are beginning to provide Nicogel free of charge to customers. This helps to keep them on the premises and it is gaining ground as a nicotine product,” says Chris.

Regarding pubs, Chris says: “Some landlords worried about having cigarette machines on site, but getting them to look at Nicogel as a complementary product to cigarettes it meant that we didn’t lose any sites. It is a really good product that can help to protect your cigarette vending business.” He also says that Nicogel has helped to grow KE Vending’s business.

As for diversification, KE Vending is always looking at new products and opportunities. “We diversified into providing bar supplies and washroom solutions so that we could provide a greater range of services; this is going down well with our customers. One product we are very excited about is a new Viagra gel - Viagel - that we are launching through vending in December 2007. In this market you just can’t afford to sit still,” concludes Chris.

Pubs speak up

Simon Evans is group press officer for Imperial Tobacco Group. “Our expectation of the ban will be an initial dip similar to what happened in Ireland, Scotland and Wales. Clearly smokers will continue and we will all adapt culturally to the ban. Across Europe new legislation is giving smokers and nonsmokers a choice of facilities,” says Simon.

Chris Butler, director of machines and vending for Punch Taverns, said: “In general, our figures relating to income from all types of vending machines in pubs look stronger than this time last year.

“Since the smoking ban came in very few cigarette machines have been removed from our pubs because many outlets have outside areas where people are able to continue to smoke. It is too early to get a clear picture but, along with some of the vending companies, we expect some fall in usage over time.

“As part of our retailer support package we provide individual advice on machines to help licensees produce a tailored solution which best suits their business and customers.

“We are always looking at ways of helping improve the retailer offering with cutting edge innovations including new machine options to adapt to changing consumer trends, such as National Lottery machines and new developments in snack vending.”

Eddie Gershon, company spokesperson, JD Wetherspoon had this to say: “We support the ban. We do still use vending machines as it is another income stream,” says Eddie.

In conclusion, the smoking ban has far reaching consequences. However, if we look at the fact that the BMJ reports that about 13 million people smoke cigarettes whereas in 1972 over half the UK population smoked. This is a huge change and undoubtedly this change will continue. Vending operators will continue to look at new opportunities that suit their territories, but it certainly is not a situation where one-size fits all will save the day. Vending operators servicing pubs and clubs are at the sharp end, they can only make money when people are on the premises. It clearly is a situation where adaptability will help maintain good levels of business, but the issue is finding the volume products that deliver good margins for the operators.

Printer friendly version

Email this article to a friend

Bookmark this

---