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TOBACCO BUSINESS INTERNATIONAL
JULY/AUGUST 2014
Kretek’s Cuban Rounds premium
cigar brand, popular at smoke shops and
tobacconists for more than a decade, are
now encased in a three-pack resealable
pouch—specifically to “captivate and
capture” the convenience store shopper,
according to Kevin Newman, brand
manager of Kretek’s Ventura Cigar
Company, distributor of Cuban Rounds.
Because of space concerns and the fact that
premium smokers aren’t expecting to find
premium cigars in the channel, the c-store
that wants to be in the premium cigar
business continues to face challenges, but
“the trend is growing and we’ll continue
to support it,” says Newman.
Fresh Opportunity?
The sealed-fresh pouch concept is
one the industry specifically launched
for this channel. The poly pouch (with
clear-front windows that allow for easy
product viewing) reportedly sustains cigar
freshness for up to a year, and does not
require a humidor. It also mimics the on-
the-go convenience that the channel is
known for.
And so the obvious question becomes:
is there fresh premium opportunity in the
somewhat stale little cigar segment for
c-stores?
Some convenience retailers came to the
TPC show and participated in a premium
cigar roundtable, looking for ways to
attract some on-the-go stogie customers
in the hopes of beefing up tobaccomargins
and tallying up larger overall basket rings.
Premium cigars are known to have some
of the highest margins in the tobacco
category (in the mid-double-digits up to
keystone) and they yield higher basket
rings; premium cigar smokers typically
make more than one purchase.
The FDA’s pending proposal on other
tobacco products (OTP) regulation and
the expectation that it will be less onerous
on premium cigars than machine-made
and less expensive cigars is another reason
why premium is attracting a bit more
convenience channel attention these days.
MitchZeller,director of the FDA’s Center
for Tobacco Products, recently stated that
the agency received the message that there
may be differences between premium and
“other”cigars, and implied that this will be
taken into account when figuring out how
to regulate them.
Julie Montague, a buyer for Jr. Food
Mart, which does business with 24
convenience stores in Mississippi,
Louisiana and Alabama, was on a mission
to meet with a few popular and popularly-
priced premium cigar manufacturers at
the show as a way to “diversify and grow
up sales and margins,” she tells
Tobacco
Business International
. “We don’t know
a lot about this category, but we want
to learn. I think we could sell [premium
cigars]—we do get requests.”And putting
in humidors is also a consideration for
some of the stores in the Hattiesburg,
Mississippi-based chain.
Regional Consideration
From the independent c-store arena,
Speedi Car Wash & Fuel in Flagstaff,
Arizona is another convenience retailer
on the premium cigar track. Being an
independent retailer and thus free from
corporate hierarchy, the store has the
autonomy to experiment a bit with the
category, according to Jeremy Goerts,
general manager.
“The increased awareness on premium
cigars definitely got my attention and I
talked it over with my owners…so we are
right now in the experimentation phase,”
Goerts says.
Regionally speaking, Flagstaff is
“home to one of the oldest universities
in the state—NAU, Northern Arizona
University—and right now the college
students are very into the cheaper cigars,
but some are starting to trade up and ask
more about what else there is,” Goerts
relays. “I want to try some new things
and have items that cater to this group,
and [to] a college crowd that is always
changing.”
And actually,the “millennial generation”
(those born in the early ’80s to the early
2000s) has been pegged as an adult
consumer group that aspires to the pursuit
of the “finer little indulgences”such as craft
beer, premium spirits, and now premium
cigars, according to RBCCapital Markets
Tobacco Analyst Nik Modi.
Goerts admits that “you don’t hear a lot
of people saying ‘let’s go to a 7-Eleven for
