TOB: Villiger Stokkebye has a venerable history in the cigar and pipe businesses. Can you tell us a little about the company’s origins?
Erik Stokkebye: Villiger Stokkebye International was started in September 2005 as a partnership between Villiger Sons Cigar Company, Switzerland, and me. The company combines many generations of two families and more than 240 years of experience in the tobacconist’s art into one company. The Villiger family of Switzerland and the Stokkebye family of Denmark have long been recognized as key families in the cigar and pipe tobacco businesses, respectively.
Villiger Sons was established in 1888 by Jean Villiger in the small town of Pfeffikon, Switzerland, where Villiger remains headquartered to this day. The company manufactures and sells more than 500 million cigars annually. Villiger cigars have been marketed in the U.S. for more than 30 years and have experienced steady popularity during this time.
The Stokkebye family of Denmark became involved in the tobacco business in 1882. Peter Stokkebye, an icon in the American pipe tobacco business, began to market the company’s pipe tobaccos in the U.S. in the early 1970s. The products soon became—and remain—among the most popular pipe tobaccos in the country.
TOB: What are your most popular pipe products suitable for tobacco outlets? What is your view of the growth potential of the category at this point?
Erik Stokkebye: Our most popular pipe tobacco among tobacco outlets is the Skandinavik brand, available in pouches and tins. We have, however, during the past few years successfully helped start many tobacco outlets in the bulk pipe tobacco arena as they learn about the profits that can be made in this segment. The pipe tobacco category has suffered for many years. Nevertheless, the retailers who get behind the products (i.e. a bulk tobacco program) can be successful and enjoy strong profit margins.
TOB: What trends or preferences have you observed in the pipe category? In tobacco retail as a whole?
Erik Stokkebye: The water pipe tobaccos from the Middle East have enjoyed a strong following during recent years—particularly among younger adult smokers. I see an opportunity for many of these smokers to merge into regular pipe smoking as they learn about the pipes and tobaccos being offered.
TOB: What are your most popular cigar products suitable for tobacco outlets?
Erik Stokkebye: Our Braniff Villiger cigarillos and Export cigars are very popular among the tobacco outlets—offering strong value to the consumer.
TOB: What trends or preferences have you observed in the cigar category?
Erik Stokkebye: Small cigars and premium hand-rolled cigars continue to show strong sales trends. We continue to see strong sales growth on our Villiger cigars mainly, I believe, because it’s a great cigar for the money.
TOB: What new products have you introduced recently and what product lines do you plan to expand in the next six months?
Erik Stokkebye: In April of this year we introduced two new lines: our handmade Villa Dominicana bundled cigar from the Dominican Republic and our 3.5 oz Peter Stokkebye RYO cans. Both lines have been received very well from the tobacco outlet stores.
At this year’s RTDA Show, we’ll be introducing a new Villiger Export cigar: Export Maduro, which we have had under development over the past 10 to 12 months. The line will be available in five-pack units and 50-count wooden boxes.
TOB: Will you be offering any promotions geared toward outlet retailers?
Villiger Stokkebye: On a regular basis, we offer promotions on all of our products, and with our new introductions we offer POS displays, pre-packs and other POS material.
TOB: What can merchants do to increase sales in the pipe category? How wide of a variety do they need to offer? How important is display?
Erik Stokkebye: I believe the key is understanding the category, knowing the blends available, different cuts, flavors, etc. As with many other consumer products, the customer comes to the retailer looking for guidance and advice. The retailer needs to have a minimum of five to six blends available and displayed in glass jars for the pipe smoker to smell and try. It’s also important to have an ample inventory of pipes on display.
TOB: What trends or preferences have you observed among cigar smokers?
Erik Stokkebye: Stronger and bigger ring gauge seem to be the trend at this point in the premium cigar segment.
TOB: What can outlet merchants do to maximize the potential of their cigar sections?
Erik Stokkebye: Selection and knowledge is key. It’s important to have a wide selection of machine-made and hand-rolled cigars—understanding the differences between the cigars and attributes.
An email list to communicate with your customer about new cigar arrivals, cigar events, promotions, and so on is also a great tool.
TOB: What regional preferences have you observed in the categories? How should outlets in different parts of the country determine which of your products to stock?
Erik Stokkebye: We don’t see a big difference in the regional areas, more so between rural and urban locations. Naturally, it’s important for the retailer to learn what kind of customer base he/she is dealing with in terms of their value orientation, which determines which type of products to stock.
TOB: There has been a great deal of controversy about regulation of cigars and tobacco by the FDA, as well as tax increases. What is your view of FDA regulation and how it will impact the industry and your business?
Erik Stokkebye: FDA regulation of the tobacco industry would be negative. Depending on the extent of the regulations, I’m concerned that many smaller manufacturers will be impacted to a great degree, making it difficult to conduct business.
TOB: As a fourth-generation Stokkebye family member, what do you see as the biggest challenges ahead for your company and the industry as a whole?
Erik Stokkebye: The constant threat of higher taxes and regulations is a major challenge for the industry as a whole. I don’t think it will change in the future, and we have to incorporate it in our daily routine as part of doing business in the tobacco industry.
TOB: What are your goals for the business?
Erik Stokkebye: We hope to be able to continue to grow our business on our current lines as well as adding new products. I’m a strong believer in offering consistent quality products that the consumer can enjoy now and tomorrow. •
