Page 15 - TOB Magazine Jan/Feb 2013

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TOBACCO OUTLET BUSINESS
JANUARY/FEBRUARY 2013
Trade them up from domestic.
Brookshire Brothers (Tobacco
Barn), based in Lufkin, Texas, is
yet another top chain planning to
grow its premium cigar business for
this new year. “We’re definitely in
a growing premium cigar market,”
states Phil Metzinger, vice president
of tobacco operations. “With some
of the changes in [domestic] bundle
programs, we’re selling more premium
cigars. You can get a premium cigar
for what domestic costs now; you
can more easily trade people in that
direction, and we are.”
Trade them down to less expensive
premiums. Of course, not everyone
in the category is noticing a surge of
premium business and double-digit
sales increases. And yet, there are
strategies that work for this group, too.
Cheap Tobacco, based in Cincinnati,
Ohio, is one such tobacco chain.
“The premium cigar category has not
shown the growth realized by several
other tobacco-related categories for
us,” maintains John Ewald, general
manager. He believes this is due to the
downturn in the economy. “Individuals
have less disposable income, and in
many cases, are trading down to less
expensive cigars.” So he has upped
his supply of cigars like “Churchill
rejects”—making sure he has smaller
cigar price points (from $2.50 to
$4.50) on hand.
Count on yourself, more than
manufacturers, for support.
While many cigar manufacturers
are notorious for offering tobacco
outlets cigar support in the form
of knowledge, events and samples,
the forward-thinking 2013 retailers
recognize that manufacturer support
should be the added bonus—the best
support needs to come from the core;
the retailer itself. Fred Hoyland, who
could be considered the channel’s cigar
guru for recognizing the premium
appeal early on at his Tobacco Depot
chain, based in Tampa, Florida,
encourages retailers to self-educate
and self-support. “There are quite a
few manufacturers in the category,
especially compared to cigarettes,
and some do a good job to help the
business,” he says. “But some don’t
give a lot of help, and there is always
room for improvement. So you must
count on yourself; we’ve been doing
that from the beginning and we’re
just increasing that aspect as we go
forward.”
Consider social media and daily
deal web sites. Whether or not
you have a retail web site, put the
Internet to work for you by starting
a Facebook page or a Twitter feed.
You can use social media outlets
as a way to offer special deals or
announce new offerings—or simply
as a forum where your customers
can compare notes and share their
experiences. Daily deal web sites,
such as Groupon or LivingSocial,
are another option, enabling retailers
to broadcast special promotions to
a geographically targeted customer
base. A recent Groupon offering from
Cigar Palace of Alexandria, Virginia,
for example, let customers choose
between coupons for $30 worth of
cigars at $15 or a 10-count humidor
stocked with 10 cigars, a cigar cutter,
and matches (a $160 value) for $79.
TOB
John Ewald
“With some of the changes in [domestic] bundle
programs, we’re selling more premium cigars.
You can get a premium cigar for what domestic
costs now; you can more easily trade people in
that direction, and we are.”