Taking Accoutrements into Account

January/February 2007

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Accessories are hardly a new part of the cigar business, but the category would grow stale without their enhancement.

By Renee M. Covino

Where premium cigars go, so go their shadows—cigar accessories are typically not far behind that which they complement. “If the premium cigar business is good, the accessories follow suit,” says Allen Roth, general manager for Garden State Tobacco, trading as H.J. Bailey, a wholesale tobacco distributor based in Neptune, NJ. “Right now, cigar accessories are a strong business because premium cigars are still a strong business.”

And even though cigars are the backbone of the business, they are greatly enhanced by cutters, lighters, humidors, cases, ashtrays, tubes, and the like. “Good accessories help accentuate the overall smoking experience, which results in increased customer satisfaction,” says Tim Clark, president of For Smokers Only, FSO. “Plus, retailers can make 40-60 percent gross margin on our products depending on the program.”

But good merchandising is a prerequisite of these near-keystone, keystone, and keystone-plus margins. It is logical that just as cigar accessories follow the overall sales trends of premium cigars, they also benefit from similar—and complementary—merchandising tactics, such as:

• Offer an ample, well-presented selection. “If you don’t make an investment in cigar accessories, then how can you expect to sell them?” That’s the pointed question asked by Jeff Abel, president of Mitchell Thomas Trading Company. “Most all accessory items are impulse sales, unless they are being purchased as a gift, so tobacco outlet retailers need to have a full selection and they need to have them arranged nicely or on a glass showcase. All accessory items, and especially those of more value, should be presented in a way that gives them a look of better quality and value.”

• Think in terms of product adjacencies. “Many of our retailers have had success putting our lighters closer to the cigars themselves or near the entrance to the humidor,” offers Clark. “It almost creates a situation similar to pairing a good wine with your favorite dish. Others have had success at offering a discount on the lighter as a trade-up incentive to purchase a full box of cigars.”

• Watch, look, and listen—to all players in the industry. “Retailers need to see what their counterparts are doing in the category, not just in in their towns but in other parts of the country,” says Allen Roth, general manager for Garden State Tobacco, a wholesale distributor trading as H.J. Bailey. “Also, listen to your vendors, they tend to create new products because of the feedback they’re getting in the marketplace. Distributors like us are also an important resource—distributors will tell you what consumers are looking for, especially in their regions. There is no need for retailers to burden themselves in carrying a tremendous inventory —we can help them be smart with their money.”

That’s important because one of the biggest challenges of the category is maintaining the balance between good merchandising and over-merchandising:

“The biggest problem we see is clutter,” begins Clark. “Retailers want to maximize their sales and profits with a broad product assortment, but at the end of the day there is only so much space to merchandise items correctly. You can reach a point where there is so much in the store that the consumer sees nothing. I see a lot of duplication at retail. There may be five different choices for similar products at the same price point and no offerings in other segments at a different price point. It really comes down to a category management approach and offering consumers a good, better, best assortment.”

Two consumer groups that tobacco outlet retailers should not forget to target with cigar accessories are new cigar users and those buying gifts for their cigar-smoking loved ones.

As for the latter—“Accessories make great gifts because the non-smoking spouse or friend is sometimes hesitant to purchase cigars because they know little about them,” reasons Clark. “If they see a great lighter or ashtray, they might feel a greater confidence that the recipient will like it.”

Cigar smokers just entering the market are somewhat of a different breed to target, too. “If somebody want to try cigars for the first time, they still need a cutter, a cigar case, a lighter, a humidor, but they may want items at the bottom of the barrel, they’re not sure yet they’re going to like it,” says Roth. “That’s the job of the store clerk—know to sell new cigar consumers the lower-end cutters, not a $100 one. Then, if he really likes it, he’ll come back in regularly, and that’s the time to sell him up on cigars and accessories.” •

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Keep the Core Burning Strong

Cigar accessories are a viable part of the cigar business, but since they depend on the core business being strong, it pays to regularly boost cigar sales in general. Here are some top tips for retailers to heighten their overall cigar business—recommended by Alex Goldman, vice president of House of Oxford Distributors/ Mom’s Cigars:

Develop a mailing list for events. “We do events co-sponsored by premium cigar manufacturers around once per month. We mail postcards to customers who have signed up in the store to make them aware of the event. We also bring in food and drinks for the events. Some free food, a good deal on a cigar, and sales go up.”

Do in-store promos. “Come up with a different unadvertised sale every week. Your regular customers will keep coming in to see what bargains they can get that week—and if they don’t like it, chances are they will still buy their regular brand. Either way, you got a sale.”

Emphasize variety. “If you have a good selection, you will gain a loyal customer base. In addition, having a well-trained sales staff—which can tell the customers about the latest and greatest cigars —will help tremendously.” u

Not New—Better Value

There are only so many ways to make a cigar cutter, case, humidor, or ashtray, so new is hard to do very often in this business,” says Jeff Abel, president of Mitchell Thomas Trading Company. “However, we have introduced a product with better usage and value than similar items previously offered.

Indeed, the key word in cigar accessories these days is value, even though often these items are also considered luxury goods. Manufacturers/wholesalers are therefore well-versed in offering today’s cigar smokers items with added extras:

• From Mitchell Thomas Trading—“We have a black leather case with stainless steel tubes that accommodate cigars up to 64-ring,” explains Abel. “Also included is a tube flask and double-blade cigar cutter.” Four models are available depending on the customer preference for robusto/toro size or Churchill/ double corona size. Retail prices vary from $30-$50. The cigar tubes are also available individually with a retail price of under $10 each.

“The retailer and consumer will notice that many items are now being labeled with the Mitchell Thomas name and/or MT logo,” says Abel. “We hope that by promoting our name to the retail trade, it will encourage outlet salespeople to explain to consumers about quality and value. There’s a reason why our products are a little bit more expensive than the cheaper knockoffs.”

• From For Smoker’s Only (FSO)—“Our specialty is licensed windproof flame and torch butane lighters,” says Tim Clark, president. “While this is a very crowded category, we are trying to differentiate ourselves on many fronts. First, we have licensing agreements that leverage trademarks smokers already know and like. Recently, we have added new marks that brought balance to our overall portfolio.”

The FSO “stable” now includes the NFL, Dale Earnhardt, Inc., Blue Rhino, West Coast Choppers, DUB Automotive, and Sturgis Bike Week. “Most of these are exclusive to FSO and we have helped these brands extend into the tobacco accessories category,” Clark maintains.

Second, FSO only develops “high quality products that carry a performance guarantee to the consumer,” according to Clark. “Included with the lighter is a warranty certificate letting the consumer know how to contact us if there are any problems. We did this to help ease the burden of consumers going back to the retailer.”

Its “value equation” is another important mark the company is emphasizing. “Our products retail from $9.99 up to our higher end Blue Rhino torch models at $32.95,” states Clark. “The field is very crowded with products retailing at the low end and at the high end. We see tremendous opportunity in the middle with good quality and brands that celebrate the lifestyles of today’s adult smokers.” •