Surprisingly, Republic Tobacco, wholesaler and distributor of top brands in the RYO/MYO category, started out as a small retail store located on the north side of Chicago. A lot has changed since that little smoke shop—called Adams Apple—was launched back in 1969, and today the company has a combined sales and distribution presence in more than 90 countries. Recently, we caught up with Republic Tobacco’s Andrew Panagoplos to discuss the MYO/RYO category’s prospects in the marketplace, as well as the Glenview, Illinois-based company’s plans for the future.
Tobacco Business: Can you tell us a little about the company’s origins? Did it really originate as a smoke shop?
Andrew Panagoplos: Yes, we started in 1969 as a small retail store on the north side of Chicago.
Republic Tobacco has an extensive brand family, including rolling papers, tubes, filters, tobacco and accessories. What do you see as the “secret sauce” behind the company’s longevity?
We focus on one thing only: the MYO/RYO category. We are obsessive about quality in all of our products. We are the only company that can say that. This focus makes us the experts in the category.
How is the MYO/RYO market segment faring? What is your view of the category’s growth prospects?
The category continues to grow as the price of factory-made cigarettes continues to rise.
What drives sales? What are MYO/RYO customers looking for? What challenges does the category face today?
The adult consumer is looking for value and quality. The challenges are inferior, non-FDA-compliant products at lower prices. The adult consumer will try these, but once they don’t get the quality they are used to, they come back.
Which product lines are performing best for you? Why?
JOB and TOP continue to be the best-selling papers in their category due to loyal adult consumers who have come to expect the best-quality French-made paper. Our OCB Organic Hemp paper and JOB Organic Hemp paper are doing extremely well. This is a different adult consumer who is looking for organic product versus our traditional offerings.
What are your goals for your brands going forward? Do you have any new product launches or promotional campaigns planned for 2018?
We are always looking at trends and what the adult consumer is looking for. This is the reason we launched our two organic hemp lines.
How do you work with retailers to merchandise the category and your brands specifically? What advice would you give to retailers to make the most of RYO/MYO’s profit potential?
We offer many different racks and merchandisers for the category. It works best when all the RYO/MYO is in one department. A retailer can carry nine different cigarette rolling papers in one of our racks, with a very small footprint. This makes it one of, if not the, most profitable item per square inch in the retailer’s store.
How price conscious are RYO/MYO consumers?
There are a couple of segments. When it comes to value-brand cigarette paper, such as TOP cigarette rolling paper—the No.1-selling value brand in the U.S.—cigarette tobacco and cigarette tubes, the adult consumer is quite price-conscious. With premium brands like JOB and OCB, the adult consumer is looking more for quality over price.
How do you ensure product quality and consistency?
The factories that make our cigarette rolling papers have hundreds of years of experience. They take pride in the producing the finest-quality French cigarette rolling papers in the world. The factories that produce our cigarette tubes are state-of-the-art, with strict quality controls and processes to ensure the best product at the best price.
How do Other Tobacco Products (OTP) state tax hikes impact your sales? Can you share any state-specific examples? Are you involved with any local efforts to keep OTP taxes down?
Of course taxes affect business, but we just focus on making a better-quality product to keep our adult consumers loyal to our brands. We belong to and support organizations like [the National Association of Tobacco Outlets] that work on the legislative issues.
How concerned are you about FDA regulation? What changes have you made or do you plan to make to your business to prepare for the deeming regulations to take effect?
Most of our products have been under FDA regulation for years. The only product that would be new under the FDA regulations would be our pipe tobacco. We are committed to the category and have been working toward full compliance for our pipe tobacco brands. The concern is enforcement. We are going to be celebrating our 50-year anniversary soon, so we do everything required of us to be compliant. The issue is other companies that don’t comply with the FDA regulations and whether the FDA will actively enforce the FDA regulations against such non-compliant companies and make a fair playing field for everyone.
What else is important for your customers to know about Republic Tobacco and your brand family?
We are and have always been a family-owned company. This means instead of focusing on shareholders’ needs, we are committed to our wholesale partners and our adult consumers. Our main goal is listening to our adult consumers and producing the products that they are looking for at the high quality they have come to expect from Republic Tobacco.
– By Jennifer Gelfand
This story first appeared in the January/February 2018 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.