It’s pretty hard to imagine a world without flavors—even more so if you’re involved in a business that has recently taken off on the flavor-infused craze—coffee, vodka, and the one that existed even before all those: cigars.
While flavored cigars are nothing new, news and newness still surrounds them, and some see it as an indication that this “colorful” category is being taken more seriously industry-wide.
Fine-Tuning Flavors
The word on the street is that flavored cigars are in a stage of refinement. “This is emphasized by the fact that the larger companies have been acquiring all or a portion of the flavored companies over the past few years,” says Heather Phillips, president of Heavenly Cigar Company. “The fact that well-established pillars in the industry are now taking over a relatively new concept in flavored tobacco shows that the flavored cigar concept is here to stay and will be fine-tuned to allow better product and packaging options for the consumer.”
One of the latest examples of this is General Cigar’s acquisition last December of Havana Honeys Holdings LLC, which had just celebrated its 10th anniversary prior to the acquisition. “General Cigar’s purchase of Havana Honeys represents an opportunity to strengthen our position within the growing flavored segment of the premium cigar category,” says Daniel Nunez, General Cigar’s COO. “The acquisition of such a prominent brand is a great complement to our existing portfolio.”
Joe Gold, founder of Havana Honeys, who still retains his company’s “little cigar” business, believes that General Cigar “has the sales and marketing muscle necessary to bring the [Havana Honeys] brand to new heights.”
Beyond this latest example of industry consolidation, there are other signs that the flavor category is being fine-tuned for future growth, as discussed by players representing both the premium and non-premium side of the business.
Freshness will be a mass-market emphasis
According to an internal study by Swedish Match North America (SMNA), 65 percent of mass cigar consumers consider freshness the most important purchasing factor (followed by flavor—17 percent and price—13 percent). “Swedish Match has spent considerable time and effort working on a ‘FoilFresh’ platform for our cigars,” says Stanley Evans, assistant brand manager. “By packaging our blunts, Palmas, and cigarillos in foil pouches we are guaranteeing our consumers and retailers that our cigars will stay as fresh and moist as the day they were made.” Evans adds that he expects this new packaging concept “to be the biggest source of our growth for 2008.”
The category will also see more of a “singles” scene
“Price increases, driven by ever-increasing taxes, have contributed to the popularity of single sales, which is a wonderful way to try new flavors,” says Jane Green, vice president of marketing for Swisher International. “Smokers who like to purchase their favorites by the pack are likely to try a single or two of the new items.” Swisher merchandises its singles in 25-count impulse units and bonus boxes of 60, which includes 10 free cigars for the retailer.
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Compact displays are on-point
“Unique packaging and space savers, such as our display trays, plus tins, and tubes make retailers happy with the fact that they can put so many flavor options into a smaller area of their humidors,” mentions Phillips. “Also, compact disposable counter displays for impulse buys or add-on sales help all retailers, but especially those without walk-in humidors.”
Swedish Match has introduced multi-flavor displays that “offer a reduced footprint, while offering the consumer a choice of the top flavors for the segment,” according to Evans. “Our new FoilFresh products have been introduced in innovative ways, including the new ‘stadium seating’ 2X2 displays, the use of foil board to help highlight
FoilFresh packaging, and with the recently launched straw dispenser-type blunt box helping us highlight our While Owl FoilFresh Blunts. In addition, in 2006 we launched an acrylic, refillable, Blunts Xtra dispenser that holds 120 cigars on two levels and allows retailers to refill the faster-selling flavors as needed.”
Promotions will encourage trial
“Until recently, there have been little or no consumer promotions to drive consumer trial to the category,” says Evans. “Most Buy-One-Get-One-Free (BOGO) offers were not always passed on to consumers. As a way to induce trial and find a way to get promotions to our end users we have started pre-pricing our FoilFresh White Owl 2 Cigarillo re-sealable pouches at 99 cents—which are available in open price also. We also created FoilFresh BOGO single-stick promotions intended to generate consumer trial of the new FoilFresh packaging.”
“Flavored cigars don’t cannibalize the sales of other cigars, they are generally considered an add-on,” notes Phillips. “Retailers have to continue to learn and sample the products out there to be able to promote the flavored segment of their business, and they need to run periodic specials so they can pass free product out for customers to try even if they’re not regularly flavored cigar smokers.” •
Keep the Peach, Lose the Liquor?
You can’t discuss flavored cigars without discussing the flavors themselves. What are the top flavors? What are the retiring flavors? And which flavors are being considered for future production? It all depends on which flavored manufacturer you talk to—and which side of the market they represent.
From the mass market perspective, “top flavors in the industry are peach, grape, grape variants such as wine, vanilla, and strawberry,” says Stanley Evans, assistant brand manager at Swedish Match North America (SMNA). “Flavors not doing well are niche flavors such as liquors, some of the more tropical flavors, and chocolate.”
Contrast that to comments from a more premium cigar player, Heather Phillips, president of Heavenly Cigar Company. “Our top-selling flavors are Heavenly Vanilla, Raging Rum, Chocolate Thunder, Grape Goddess, and Cupid’s Cherry Cream,” she says. “Our new flavors, Midnight Mocha Crème, Strawberry Banana, Mojito Madness, and Mango-Licious are fast becoming top sellers as their popularity and exposure to the marketplace grows.”
A key takeaway for retailers is that in addition to the differences between winning “flavor menus” of premium and non-premium cigar companies, there are other variants to consider.
“Many times, the consistent domestic sales of certain flavors can depend on the season and/or geographic location,” maintains Phillips.
Of course, variety was what the category was built on, and so a good flavor mix will always leave room for experimentation—by both retailers and consumers. “Even though cigar smokers have typically been cast as brand-loyal, they are apt to try new flavors,” says Jane Green, vice president of marketing for Swisher International, Inc.
Swisher’s new flavor release to the cigar market is one that has been very popular in cigarette tobacco—menthol. Looking to capitalize on that popularity, the company recently unveiled Swisher Sweets Menthol (a cigarillo). •
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