Stack these sticks for stocking stuffers; top these bunches with bows—when it comes to holiday cigar sales, bundles offer tobacco outlet retailers a bundle of merchandising opportunity.
And that’s thanks, in part, to the category’s latest buzz: it is becoming more commonplace to hear “premium” and “bundles” spoken in the same breath. In fact, the way many leading cigar manufacturers see it, the bundle market is in another state of transition.
“The market had been inundated by low-cost, low-quality bundles for a few years,” begins Mike Cusano, president of Cusano Cigars. “It now has become part of the ‘flight to quality’ that is generally taking place in the cigar world.”
Gaining Clout
Thus, Cusano and other premium cigar manufacturers are wisely helping retailers pitch bundles with a bit more prestige. “Consumers are demanding high-quality products at reasonable prices,” Cusano continues. “The challenge for retailers is to move customers from the domestic cigars, where margins are lower, to their bundle programs.”
Cusano’s Dom Rey is offering “the connector” between these two with its new Perfect Cut program of non-humidified handmade Dominican cigars, which offers “much higher margins than domestics at comparable prices,” according to Cusano. “We support this transition with our Premium Tray and Refill program that provides retailers with a high-margin, high-quality bundle-selling program. Combining this with our new Perfect Cut program allows us to present a cohesive brand strategy to the retailer.”
Toraño’s bundle lines include its brands The Brick and The Dominico. “Although our bundle lines are a different grade of quality, our consumers know that the Toraño family ferments, cures, and processes the tobacco at our factories with the same people that handle our premium lines,” says Aaron Guenther, director of marketing. “Our bundle lines are entirely made up of long filler and are entirely rolled by hand, the same as all of our premium lines.”
Guenther relays that even the president of the company—Charlie Toraño himself—loves to smoke The Brick, “especially when he’s outdoors at the factory,” according to Guenther. “Bundles are still extremely high-quality tobaccos; they just have a different personality,” he adds.
Premium cigars packed in bundles make up as much as 40 percent of the premium cigar market year-round, according to industry experts. But they are perhaps even more important to feature during the holidays as they offer “a way for someone to give their favorite cigar smoker quantity and quality,” says Harry Preston, national accounts manager for J.C. Newman Cigar Co.
Highlighting both attributes, Preston relays that the company’s Alcazar Nicaraguan Maduro Handmades are 100 percent long filler and 100 percent handmade; the same is true of its Don Jose Honduran Handmades. Additionally, the suggested retail price for both brands runs around $3 per cigar, but “many retailers will give a 10 percent to 15 percent discount on full bundles sales as they do with boxes,” maintains Preston.
“Bundled cigars clearly provide the retailer an opportunity to offer cigars at a lower price point for customers who may not be willing or able to spend $7 to $10 for a cigar, either for themselves or for gifts,” adds Erik Stokkebye, president of Villiger Stokkebye International. “Price is a key factor in the category, along with larger ring gauges, but shorter sizes.”
And the good news for fourth quarter is that manufacturers such as Puros Indios Cigars “do not anticipate any price hikes for our bundles for this holiday season,” according to John Curry, international sales manager. “We are counting on the continued perception of value—a great smoke for a comfortable price—to carry sales ever upward.”
Puros Indios Cigars has maintained “stellar” sales, according to Curry, with its Roly bundles, available in six vitolas. Apparently, orders have been so great, “an emergency shipment was put together in Danli, Honduras, to try and meet the demand,” he says. “We expect strong sales to be pushed even higher in the coming months by the Holiday demand. Consumers no longer need to feel shy about giving a bundle cigar to friends and relatives. The truth is out—these are excellent cigars with excellent value.”
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 Ho, Ho, Holiday Tie-ins
So during the time of year when consumers are used to stocking up on larger quantities of other consumable items—often to break apart so they can give some/keep some—it makes sense for tobacco retailers to stock up on bundles and present them in special holiday fashion. Here are a few ideas to jazz up bundles for fourth-quarter display:
• Arrange bundles in a more prominent location for fourth quarter and with appropriate seasonal decorations. “Sales of cigar bundles are typically left to the lower priority locations in displays and humidors, but a little effort can convert the presentation to be more enticing and with good sales results,” says Curry. “If you have a walk-in humidor, place a table right at the entrance with signage indicating a special price or promotion” adds Guenther.
• Multiply the mix. “Make sure that you ramp up inventory across multiple sizes within the best-selling bundles lines and display that inventory, especially for the holidays,” advises Guenther. “Don’t keep too many brands around, but rather, focus on what your customers like and make sure that there is enough inventory. From Carlos Toraño, that would be The Brick and the Dominico lines.”
• Utilize structured selling programs from manufacturers that provide display cases and effective point-of-sale material. “Our Premium Tray and Refill program provides all of that and more,” offers Cusano. “Our program allows the customer to purchase single sticks and also to purchase bundles if they desire. This is an ideal selling combination for the retailer. In the fourth quarter, we will emphasize our handmade premium ‘4-pack’ crate program that makes great holiday gifts, as well as being an excellent way to support our premium bundle program.”
• Incorporate seasonal decoration. “Utilize Christmas bows, holiday-themed labels and POP displays, if available from the manufacturer,” advises Stokkebye.
• Package up bundles with an accessory or two and make it an attractive gift offered at a value. “We suggest a bundle of Rolys be accompanied by an accessory such as a lighter, cutter, or elegant ashtray,” says Curry. If space doesn’t allow gift packages to be made up, tobacco retailers can at least offer attractive accessories nearby with signage to encourage gift-giving.
• Promote “two-bundle” specials that let customers buy a bundle to keep and a bundle to give. Sometimes holiday displays are so attractive, customers forget to treat themselves. Curry recommends clearly spelling it out for them.
• Suggest the perfect bundle recipients. Party-givers planning a holiday event can distribute bundle cigars as “favors” or even center the party around cigar smoking, using bundle cigars. Bundle cigars also make excellent gifts for business associates and golfing buddies who smoke. Non-cigar smokers may also be tempted by the value to buy them and share them with their cigarette-smoking friends and relatives as a way to become familiar with the category, especially during celebrations of the season. All of these ideas can be presented to tobacco outlet customers either through signage or by word of mouth.
• Don’t discount boxed premium cigar customers. It’s not a matter of “selling down” to customers, according to Preston, it’s a matter of recognizing that their taste/occasions will vary. His thinking is that “bundles already make up such a large part of the total premium cigar business,” it can’t be totally ignored. Preston would also have tobacco outlets consider that when wine connoisseurs shop for wine, they do not only buy the most expensive—they also shop for those less-expensive wines that have been written up or highly recommended. The same is true for cigar connoisseurs, especially now that more press has been given to bundles.
Guenther adds that “often a bundle buyer is different from a box buyer, but many times they are the same. He feels it is important for tobacco retailers to “take the time to notice what your customers are buying and how those habits change. Often a ‘regular’ cigar smoker might purchase a premium or two for the weekend, yet rely on a bundle from a similar taste profile for his or her everyday smoke.” They may even smoke more everyday cigars during the holiday season, when parties and celebrations are at a high for the year.
The best idea in this instance is for retailers to keep their cigar customers well-informed. “Most cigar manufacturers have bundle lines that they produce under their own brand or private label for someone else,” Guenther maintains. “This gives retailers an opportunity to empower customers with product knowledge by informing them of where these cigars are made and how they’re related to the premium lines that my be manufactured in the same facility.” •
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