Pushing Premiums

March/April 2007

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All hail premium cigars; the backbone of the business is in prime shape for tobacco outlet retailers to give it even more of a merchandising push.

You’ve substantially expanded your tobacco focus to premium cigars; improved on selection; set up a killer humidor, and even organized a cigar promotion or two with some primo manufacturers. Think you’ve done all you can in the category? Think again. As the category continues to grow, so, too, should a tobacco outlet retailer’s merchandising methods.

Here are a few “advanced” tips of the trade:

Create an experience.

“Customers are looking for a retail experience more than they are looking for a simple tobacco product,” says Aaron Guenther, director of marketing for Toraño Cigars. He advises tobacco outlet retailers to strengthen their relationships with regular customers. “Customers these days have more options with online retailers and continual growth in the category,” he says. “Find an appropriate way to share information and make recommendations about what is good and what is new. Don’t be afraid to ask your regular customers why they like what they do, and respond to that with specials or promotions to try and expand their horizons.”

Put slower-selling cigars at eye-level.

"This will be among the first product noticed by your customer,” advises Jon Huber, chief marketing officer for CAO International, Inc. “People are going to ask for your best sellers anyway, so you need to drive sales on what isn’t moving as well.”

Take advantage of creative point-of-sales material, or design them yourself.

“Often, manufacturer-supplied POS materials are discarded, but they can be a very effective sales tool,” Huber asserts. “Think about the last time you went into a wine store and what provoked you to purchase one bottle over another; it may have been a nice shelf talker that drew attention to a particular rating or flavor description.” The same type of clever/colorful singing can be “drawn up” for premium cigars.

Surprise customers with “sample” packs.

Tobacco outlet retailers don’t have to store all their premiums in the humidor all the time. “I suggest they store sample packs—packs of two, three, or four premium cigars—in the humidor at night, but then take them out during the day and place them near the register, particularly at the busiest times,” relays Janelle Rosenfeld, vice president of advertising and communications for Altadis USA. “Packs are a great last-minute buy.”

Become the smoking destination in your area.

“With increasing regulation, places to smoke are becoming a rarity; therefore, tobacco shops with lounge areas are becoming quite popular,” begins Rosenfeld. “By making your store a ‘destination’ store you can increase your customer loyalty and single stick sales. Although many retailers continue to host special cigar night functions, many find that smokers stop by to have a smoke every night or every noon hour. These have become popular times for smokers to buy a few cigars. Welcome your customers during such times by providing coffee or an ‘honor’ bar with sodas or bottled water. Some retailers even work with nearby sandwich shops so their customers can order lunch while enjoying a smoke at the tobacco shop.”

Keep abreast of the latest manufacturer events.

It’s not enough for tobacco outlet retailers to host one good cigar event a year. Manufacturers are constantly changing/improving/extending their sponsored events—and nothing gets a cigar

consumer jazzed more than to participate in frequent cigar outings that he can’t get anywhere else. Puros Indios Cigars, for example, is continuing its “Big Mouth Tour” cigar tasting events this year, in which Jose Ortega, national sales manager, visits stores around the country to show off the company’s big ring gauge cigars. “It has been a smashing success,” notes John Curry, international sales manager.

CAO is boasting its continued event success, too. “A typical CAO Cigar Night can be anything from a tasting at a local retail tobacconist for 40-50 guests to an evening at the Hard Rock Vegas pool for 3,000 guests where Tommy Lee is performing,” says Huber. “During our peak season, we host 50-plus in-store tastings across the country in a given month. These tastings have proven to be a very effective promotional tool for us as well as a successful sales opportunity for the retailer. Our regional sales team is constantly fielding requests from retailers to conduct a CAO tasting at their store.” •

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Boom Time?

Premiums are in fine form once again. “Right now is an excellent time to be a cigar smoker,” says Jon Huber, chief marketing officer for CAO International, Inc. “There are so many excellent cigars hitting the shelves in all prices ranges. Manufacturers have only gotten better over the years in developing blends, creative packaging and innovative ideas; and now cigar consumers are reaping the benefits.”

The industry is not exactly calling it a cigar boom—well actually, some players are—but with qualifiers.

“We believe we are currently in a bit of a ‘controlled cigar boom,’ and as it is much more gradual than in the past, we don’t think there is a down-side,” says Harry Preston, national accounts manager, J.C. Newman Cigar Co. “Cigars of all shapes, sizes, and prices have grown as cigarette smokers continue to look for alternatives. Additionally, we have seen many consumers try them because their uncle, grandfather, or dad had smoked cigars, and they now want to relive those favorite memories.”

“I think that the overall growth of the premium market is sustaining, however, we are seeing somewhat of a resurgence of a ‘mini-boom,’” is how Huber describes it. He believes that “this is interesting considering all of the anti-smoking legislation.”

Janelle Rosenfeld, vice president of advertising and communications for Altadis USA agrees that “despite increasing regulations, the interest in premium cigars remains strong.” She states that “consumers continue to see the value in the hand-made luxury of a premium cigar.”

Apparently, the “luxury in moderation” viewpoint is a popular one these days. “We believe that the growth in cigar smoking will be steady as more serious people learn of the pleasure of good quality, natural tobacco used moderately,” says John Curry, international sales manager for Puros Indios Cigars. “Unlike the cigar boom, we expect this general trend to last.”

Those in the business and consumers who smoke premium cigars (often one and the same) seem to share a passion for pleasure: “People are interested in experiencing all that life has to offer, and sometimes that means enjoying one of the finest cigars made,” says Aaron Guenther, director of marketing for Toraño Cigars. “More and more people are attaining success in life and celebrating with a premium cigar more regularly. I believe that this growth is genuine and here to stay, and this is one reason that I love this business.” •

Happy Anniversary!

2007 rings in as an anniversary year for some premium cigar manufacturers, and they are celebrating with special blends that tobacco outlet retailers are invited to highlight:

Toraño Cigars is touting its “outstanding” product on the market this year—Noventa 90th anniversary blend. “The Toraños started in Cuba in 1916 as tobacco growers and brokers,” says Aaron Guenther, director of marketing. “That history lives on in the cigars that we produce today. The Noventa is a true Nicaraguan Puro and the most complex cigar we offer. I can tell you personally it is truly quite a smoke.”

He adds that the company is “constantly innovating and trying to come up with new and more exciting ways of improving the cigar smoker’s experience,” but for right now, it is pretty immersed with the release of Noventa. “We’ve had quite the response,” he says.

Puros Indios Cigars is launching its new limited-edition, super-premium cigar—Anniversary—sometime this spring, according to John Curry, international sales manager. “This cigar commemorates the 83rd birthday of our founder, Cuban tobacconist, and Master Blender, Rolando Reyes Sr. and his 70-plus years in the business, as well as the 100 years of the brand name—Aliados,” he explains.

CAO International, Inc. isn’t celebrating an anniversary per se, but it is beaming over its just-released CAO Vision, a special product that the company hopes will be cause for much celebration this year. “Vision is our first Dominican-made cigar and the focus-group testing results have been overwhelmingly positive,” reports Jon Huber, chief marketing officer. What’s more, CAO Vision, which began shipping in February, is packaged in a “revolutionary” new “Sensi-Box” that also serves as a travel humidor and has an exterior digital readout of the interior humidity level. “We have very high expectations for CAO Vision,” Huber states.

Another 2007 coup for the company is its CAO The Sopranos Edition line, especially if the series concludes this year as expected. “This line is fairing extremely well in the marketplace,” says Huber. “I think a portion of its success is the obvious tie-in with such a franchise series, however, I also believe that the cigar is even better than most would anticipate as evidenced by the ratings and accolades CAO The Sopranos Edition has received.” (CAO The Sopranos Edition was rated as one of "The Top 25 Cigars of the Year" by Cigar Aficionado magazine). •