Good cigar smokes—and profit—do come in little packages. Little cigars and tins hardly make up the largest portion of a tobacco outlet’s cigar mix, but the category is growing, and it represents a little bit of heaven for many cigar smokers with just a little bit of time.
“The cigar industry has been inundated with people from a fast-paced life who want ‘shorties,’ ”explains John Thornton, partner, marketing and product development, for Eden’s Gate LLC, makers of Adan y Eva Cigarillos. “The old cigar smoker was someone who could afford to take a lot of time out, sip a cognac, and have a long smoke; now we have a new population of smokers and they like short-smokes.”
“Certain cigar smokers prefer a smaller smoke, perhaps before dinner or earlier in the day,” adds Aaron Guenther, director of marketing for Toraño Cigars. “We all saw that the late ’90s brought such a push to very large ring gauges but perhaps we’re seeing the pendulum swing in the other direction.”
Often, that short-smoke that is more in demand now is dictated by work and time constraints—but it offers a tiny indulgence during the day—something consumers from all walks are affording themselves.
“Little cigars like our Dutch Delights still offer true tobacco enjoyment, but remain an inexpensive alternative when a cigar consumer doesn’t have two hours to smoke a fine cigar,” offers Harry Preston, national accounts manager, J.C. Newman Cigar Co. “It give customers a chance to enjoy them quickly—and toss them if they get a phone call and have to go inside. It’s an alternative to a larger cigar when they’re in a hurry.”
Thinking along these lines, Scarface Cigars uses “The Longest Slowest FAST SMOKE You Will Ever Enjoy!” as its mini cigar tagline. But the company also recognizes that “mini cigars play an integral part for the cigar and tobacco industry” for multiple reasons, according to Brian Stevens, general manager for Today’s Trendz/GJS International, Inc., which distributes Scarface Cigars. So in addition to mini cigars and tins being less time-consuming, they also “lend themselves to bringing new cigar smokers to the cigar industry—they are sometimes an entry into the category,” Stevens maintains.
Additionally, “tobacco product users who are looking for other tobacco products to replace their current use, are welcoming mini cigars as their alternative product of choice,” he says. Finally, and also influencing the category, “new tobacco product users are often preferring mini cigars as their first choice of tobacco products,” Stevens adds.
This is all helping the “little guys” seem like a bigger deal in a cigar set. Indeed, “the popularity of the category continues to increase beyond its historic base,” according to a spokesperson for Conwood. “The expanded consumer base has grown to include adult smokers under 35 and an increasing number of adult female smokers.” He reports that “2006 growth in the category was approximately 13 percent on a taxable removals basis.”
John Geoghegan, director of brand development for Kretek International Inc., agrees that “both tinned small cigar and 20-pack little cigars appear to have grown dramatically, even though the market share numbers are relatively small.” He observes that consumers now have much more choice in the category with new brands, packaging styles, wrappers, filters, and flavors.
Toraño’s spin on the category is that “tins and little cigars represent only about three percent of our total sales; however there is a market for them that is very consistent,” says Guenther. “I personally see the market trending slowly and consistently upward.”
But to make the most of the category’s potential, tobacco retailers must continually move along with category education and appropriate merchandising. Here are the latest tips of the trade:
Consider your local input.
“Regionally, cigar smoking habits can be vastly different, and it’s always a good idea to respond to what your customers are asking you for,” begins Guenther. “If, as a retailer, you are unsure about bringing in a large new display or a significant inventory investment, try working with your distributor on consignment or perhaps a trial order,” he advises. “Even if the order is unprofitable for your store in the beginning, you’ll learn something about your customers and how your market will respond to the little cigars or the new inventory items. Since this business is always changing, you need to be ahead of the curve, and this is one of the best ways to lead your customers.”
Distinguish between little cigars/tins that need to be humidified and little cigars/packs that do not—and make an impact with both.
“I believe the category should be dually merchandised—both in the humidor and on the counter, with synergy in both places,” says Thornton. “When customers go into your humidor all the tins should be in one place—that’s synergy.”
“Floor space is precious, so assign space based on a percentage of sales,” adds Guenther. “That mix would allocate the most space to a walk-in humidor with less than 5 percent of floor space going toward tin sales. Tins are compact, and most manufacturer displays are very efficient, making this an economical and profitable mix.”
Meanwhile, those little cigars that are dry-cured and do not require humidification should also be merchandised together—“somewhere where there’s good foot traffic,” suggests Preston. “It’s a different animal than items in a humidor—if a customer comes in looking for them and can’t find them in an obvious way, they may not come back,” he advises. “If a retailer puts them all together, it creates a larger view—they’ll see one tin, then they’ll look for others right there. We recommend right next to the cash register.”
Plus, “the price point and convenience of little and tin cigars make them a potentially effective impulse purchase for many consumers,” adds the Conwood spokesperson.
Recognizing that there isn’t really one “optimal ratio” for either side of this sub-category, Geoghegan states that “a strong small cigar section should carry a minimum of four brands of tinned cigars including imports, each one in three to four flavors.” As to little cigars in packs, he also advises retailers to go with “four brands including the leaders, and always have something on promotion, rotating specials every couple of weeks.”
Most players agree that because the category is evolving, attractive and cohesive merchandising is still catching up—but Geoghegan advises retailers to recognize that “little cigars and tinned cigars are becoming a segment unto themselves.”
Don’t assume you completely know your customers; suggest outside the box with ‘experience’ choices.
“Habits are different based on the expected experience,” says Guenther. “My recommendation is to ask what your customer generally smokes and give a couple of suggestions within those parameters; but also include an ‘outside’ suggestion based on your idea of a similar preference. A good tobacconist knows the products and is not afraid to mention new things to regular customers.
“Be honest about what you’re selling and what to expect—for instance, relaying ‘this cigar is excellent with an apple martini,’ etc.,” he continues. “Many times, if you focus on the experience that the customer is looking for, you’ll find it easier to communicate with them. Remember that the store’s profitability is based on regular, repeat customers, so get to know them and respond with a few profitable suggestions which are also outside their box. Make sure that they feel comfortable declining your advice. This is why I find it easier to make suggestions in there different price ranges with three very different taste profiles. Make the customer feel empowered to make a decision because that is what will help them enjoy their experience. After all, the experience is what you’re selling.”
Sample these small ones—and wait.
In areas where it’s allowed, companies like J.C. Newman will send two-pack samples of new flavor introductions, such as its new NEOS tins Cherry Feelings.
Eden’s Gate, too “sends samples out all the time,” according to Thornton, but the company doesn’t expect retailers or consumers to respond immediately. “We have a rule that when we drop off something as a sample, we won’t call back for feedback on it for at least three weeks,” he says. “You have to let new tastes settle in—even on the quicker smokes.” •
The Big Challenges of Small Cigars
Like any segment of tobacco these days, little cigars and tins are not without their industry hurdles. Looking ahead, the three biggest challenges seem to be:
Mistaken Identity: Many states look at the weight and size of the product to determine the tax structure, and many times, this causes little cigars to be taxed as cigarettes,” maintains Aaron Guenther, director of marketing for Toraño Cigars. “Generally, being placed into the cigarette category is bad in terms of taxing and regulation. The kind of tobacco and the reasons why people are smoking little cigars are different from cigarettes. This is hard to define and government agencies often overlook this point.”
Conflicting State Regulations and Tax Structures: “The biggest challenge as a manufacturer and importer in this business is dealing with the swamp of conflicting state regulations and tax structures,” explains John Geoghegan, director of brand development for Kretek International, Inc. “Some states tax little cigars as cigarettes, so we make a heavier product to qualify as a cigar. Some states make it illegal to sell in a 10-pack, some states make it illegal to sell a single stick tube, and some place a 20-pack as illegal. Tax rates vary by manufacturer cost, wholesale value, etc. Other states are attempting to include little cigar volume in MSA payments; meanwhile the Federal Government is telling us that if we accede to that, we’re in violation. We have an entire compliance group devoted to this.”
‘Illegitimate’ Product: “One of the most important challenges is that of products which are described as little cigars, but do not meet the current legal definition of a little cigar,” notes a spokesperson for Conwood. “The consumer of such a product does not get a true cigar smoking experience, nor do such products reflect positively on the true little cigars within the segment.”•