UK (Parliament Politics Magazine) – An internal document revealed Co-op urged staff to boost vape sales after a £200m cyber-attack, despite concerns over its “ethical” branding.
As reported by The Guardian, the Co-operative Group has directed staff to boost vape promotions to regain customers and recover sales lost after a major cyber-attack in April.
A leaked document revealed that the ethical retailer is boosting vape visibility through new displays, extra branding, and increased advertising. It is also expanding its range of vapes and nicotine pouches.
The plan aims to tackle a sharp sales decline after the cyber-attack, which created disrupted stock and empty shelves.
What did the document say about Co-op’s vape, tobacco, and cigarette sales?
Called Powering Up: Focus Sprint: Cigs, Tobacco and Vape, the document said,
“Sales haven’t recovered compared to pre-cyber.”
In a section titled “Why we need to focus on this category,” it added there are “£1m missing sales per week” and 100,000 fewer transactions.
The leaked file states,
“We know at least 40% of this is customers forming a new habit, shopping elsewhere as they wouldn’t go without their cigarettes, tobacco or vapes. This means we’ve also lost sales from what would’ve been in their basket.”
What did the Co-op say about vape sales and ethical values post-hack?
A Co-op spokesperson stated,
“As a member-owned organisation, our longstanding commitment to ethical values and responsible retailing remains steadfast and at the heart of how we do business. The sophisticated cyber-attack we experienced means we are now even more focused on powering up all aspects of our stores to serve the needs of shoppers.”
They added,
“It is important to be clear that the sale of vape products in our stores is fully compliant with all UK legislation and government guidelines, in their recognised role as a successful route to smoking cessation.”
The Co-op website declared that it follows “principles before profit,” stating,
“As well as having clear financial and operational objectives and employing 54,000 people, we’re a recognised leader for our social goals and community-led programmes.”
What did the source say about Co-op’s new vape strategy?
An insider said employees had not been explicitly asked to push vape sales, but the items are now featured in prominent displays and high-traffic areas, unlike their previously low-key presence.
They stated,
“Before [the hack] even if I didn’t always enjoy work I respected the Co-op. They present the lovely idea of ethical shopping – you might pay a bit more but they are doing things right. This strategy goes against everything we’ve done until now.”
The insider said the Co-op’s ethical approach to business has long been a key factor setting it apart from other companies.
They added,
“This recent decision to exploit a known health problem and make a profit goes against the values the Co-op was built on and stands for.”
The move comes amid growing concern over youth vaping, as data reveals a sharp increase in under-18s trying or using vapes in recent years. Flavours such as bubblegum and candy floss, combined with eye-catching displays, play a key role in attracting them.
The government’s tobacco and vapes bill, now under parliamentary consideration, aims to ban advertising and sponsorship. It will also restrict the flavours, packaging, and in-store display of vapes and other nicotine products.
England’s chief medical officer, Prof Chris Whitty, has raised fears about the advertising of vapes, adding,
“If you smoke, vaping is much safer; if you don’t smoke, don’t vape.”
How is the Co-op tackling financial losses after the cyber-attack?
Following a cyber-attack that disrupted its IT systems, Co-op managers are working to stabilise finances. The retailer said in a recent update that the fallout pushed it into the red in the first six months of its financial year.
The attack caused empty shelves in Co-op grocery stores, while its 800-plus funeral parlours had to revert to paper-based systems for some services due to lack of digital access.
The disruption cost the Co-op over £200m in sales, with the group expecting a £120m hit to full-year profits.
The leaked document details a store-wide “Power Up” programme, which includes every product category.
Referring to the cyber attack, its chief financial officer, Rachel Izzard, said,
“We believe the hit to the half year is £80m, we believe the hit for the full year is £120m and that’s inclusive of any [insurance] recovery.”
She added,
“We had the front-end elements of cyber insurance in place in terms of the immediate response capabilities in the technology space for third parties but we don’t believe we will be claiming on insurance for back-end losses.”
The group’s CEO, Shirine Khoury-Haq, stated,
“The cyber-attack highlighted many of our strengths. But more importantly, it also highlighted areas we need to focus on – particularly in our food business.”
He added,
“We’ve already started on this journey, refining our member and customer proposition, making structural changes to our business, and setting our Co-op up for long-term success.”
The chief digital and information officer at the Co-op, Robert Elsey said the Co-op cyber-attack involved “social engineering” and described it as “sophisticated” and “persistent.”
He stated,
“They impersonated one of our colleagues. As soon as that account was used maliciously or abnormally, our systems are designed to detect that.”
Mr Elsey added,
“So, within minutes, our colleagues were shutting those accounts down. [The attackers] were very persistent and very capable, they were trying to re-enable accounts and then we blocked those as well.”
What is the UK’s tobacco and vapes bill?
The tobacco and vapes bill is a proposed law currently progressing through Parliament. It will make it illegal to sell tobacco products to anyone born on or after 1 January 2009.
The bill includes powers to curb youth vaping by regulating vape flavours, packaging, and point-of-sale displays to make them less attractive to children. It also bans the advertising and sponsorship of vapes and other nicotine products.