In February 2013, a group of the nation’s top premium tobacco retailers joined together to create their own cigarmaking company, Sindicato Cigars. Led by Abe Dababneh, the owner of Smoke Inn Cigar Company and Kiss My Ash Radio, a group of nearly 70 retailers had met at the previous year’s International Premium Cigar & Pipe Retailers Association (IPCPR) trade show in Orlando, Florida. There they discussed creating their own brand of cigars, having grown weary of working to build manufacturers’ brands inside their stores only to see those same brands for sale on websites and in catalogs at prices that they could not meet. From that initial meeting, 45 retailers agreed to invest an undisclosed sum to begin Sindicato Cigars. They selected Jim Colucci, who had retired from his job as executive vice president of sales and marketing at Altadis U.S.A. roughly 18 months before Sindicato’s establishment, to serve as the company’s president.
“Sindicato’s retailers got into the cigar business and made their own brand because they were tired of building brands in their brick-and-mortar stores only to see the manufacturers then selling the brands at deep discounts to the catalog and internet companies,” says Colucci, who continues in his role as Sindicato’s president while recently taking on the same duty for Gurkha Cigars. “Retailers aren’t making a lot of money, and those who have businesses in states with high taxes are getting killed. Abe’s idea was that Sindicato Cigars would build brands for sale at only brick-and-mortar retailers.”
Sindicato Cigars would lean on the collective experience of the company’s retail members and Colucci’s long career in the cigar industry to create unique premium handmade cigars. Cigar retailers would appreciate the company for its focus on serving them. Consumers would love Sindicato Cigars for its cigar flavor profiles and price points. However, some critics at the time of Sindicato Cigars’ founding deadpanned that the company would never last—there were too many cooks in the kitchen that would spoil the broth, they claimed. There was also a lot of misinformation spread throughout the industry about the company and its goals, which made the company’s early months very difficult.
“We were basically boycotted by some of the regional brokers because some manufacturers were upset,” Colucci recalls. “They feared that the retailers would take their stuff off their shelves for only Sindicato’s cigars. It’s ironic that it’s OK for manufacturers to buy or open retail stores but it’s not OK for retailers to become manufacturers. Our competitors were also telling people that you had to be a member of Sindicato to be able to sell its cigars. That was complete BS. That was never the case. We have more nonmembers who sell our cigars than we have members, and some of our nonmembers have become members by buying shares in Sindicato.”
Yet six years later, Sindicato is as strong as it’s ever been, with an impressive array of brands that includes Sindicato, Sindicato Maduro, Affinity, Affinity Maduro, Casa Bella, Maniac, Cubico and Particulares. The company has 45 stockholders, made up completely by premium tobacco retailers—who, among them, represent more than 100 stores across the country.
“In essence, retailers have been trying to build national brands from their own private-label brands over the years,” Colucci says. “It’s tough to build a private-label brand into a national brand for a small chain of stores, though some have done it, such as Ashton. Abe’s idea was to get together with other retailers and build a national brand. Thanks to having the support of more than 40 of the country’s best retailers, we’ve been able to build a national brand that all retailers can carry. They can also trust that these brands won’t be discounted deeply on the internet or in catalogs.”
The secret behind Sindicato’s success has been the dedication the company shows to its retail partners. The company runs a series of promotions geared at sweetening its retailers’ bottom line. For the holiday shopping season, Sindicato offered retailers a buy three, get one free promotion on its boxes and asked those who bought into the deal to pass their savings on to their customers by offering a buy three cigars, get one free promotion themselves. The company supported the deal with marketing materials, such as shelf talkers and posters.
“Giving retailers extra margin is the focus of our business model,” Colucci says. “We’ve got great cigars that we know fit into the flavor and strength profiles that consumers want. We’re confident that if they carry our cigars they’ll improve their bottom line. They’ve just got to give us a chance.”
Not ignoring consumers’ interests, Sindicato’s prices were initially aimed at the $8 to $14 range, but within the past year, Colucci has renegotiated agreements with one of Sindicato’s biggest manufacturers, Aganorsa Leaf, which has dropped the MSRP by a few dollars for each of the Sindicato Natural and Maduro cigars. In addition, the company also updated the packaging on its Sindicato brand, thus accompanying the new pricing with a new look.
“We got great reviews on the Sindicato line, but the pricing was a little too high,” Colucci explains. “Everything is down a few dollars per cigar. The Magnum was $13.95, but now it’s $9.95. We’re at a very competitive price with our most expensive cigar at $9.95. We did new packaging at the same time, so it looks like a relaunch though it’s the same top quality it’s ever been.”
All Sindicato Cigars’ products are made in Nicaragua by Aganorsa Leaf and NACSA. One of the biggest stories in the premium cigar industry in the 21st century has been the growth of the Nicaraguan cigar industry as more consumers seem to be demanding cigars made in the Central American country. Sindicato Cigars’ partnerships with Aganorsa Leaf and NACSA have it poised to grow alongside Nicaragua’s emergence as a cigar producing country.
“I love working with Aganorsa Leaf because I know they do everything right—from growing tobacco to making cigars—and I knew that they would make great products for us,” says Colucci. “NACSA also makes great cigars. The quality of the product coming out of that factory is outstanding.”
Extending Sindicato’s Benefits
Colucci reports that last year was one of the best for Sindicato, despite a lingering problem of getting brokers to represent the brand nationwide. Sindicato Cigars’ best opportunity for growth has been at the IPCPR show, where the company routinely picks up a few new retailers each year. While the company is continuing its search for reputable dealers to represent its brands in the shops, Sindicato Cigars was at last able to make a distribution to its stockholders for the first time in 2018, and, according to Colucci, interest in becoming a member of Sindicato is growing, though he reiterates that a retailer doesn’t have to be a member to sell Sindicato’s cigars.
“If you’re interested in becoming a Sindicato member, you can contact me and I will take the request to the board,” he says. “We’re growing little by little, and I don’t think that there is a retailer in the country that we would turn down unless they weren’t willing to agree to the terms of membership regarding our price guidelines: You can’t discount the product more than 10 percent, and you can’t distribute it to other retailers. Our nonmembers buy our cigars at the same prices as our members, so you don’t have to be a Sindicato member to enjoy the benefits of the company. We would love for any retailer to consider becoming a Sindicato member, but you don’t need to be a member to sell our cigars.”
This story first appeared in the May/June 2019 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.
– By Stephen A. Ross, senior editor of Tobacco Business Magazine.