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Last year, JM Tobacco marked its 20th birthday with
the reintroduction of the company’s very first cigar:
Española, first launched in 1996. In addition to hon-
oring the company’s history, the move was also stra-
tegic, marking a return to the company’s premium ci-
gar-making foundation at a time when the U.S. Food
and Drug Administration’s deeming regulations were
poised to reshape the marketplace.
“Española was our very first cigar, a super-premium
cigar launched at a time when premium cigars weren’t
divided into subcategories,” says Anto Mahroukian,
president of Los Angeles-based JM Tobacco, who
explains that the company shifted its focus to its value-
priced JM Dominican line in the late 1990s when the
premium market became saturated. Now, with a new
regulatory environment poised to reshape the market,
the company is staging the re-entry of Española, which
retails for between $7 and $8 plus tax. “We'd like to
focus on that part of the business again, so we thought
why not Espanola Cigars—a super premium cigar that
should be grandfathered in?"”
Like many in the industry, Mahroukian
sees big
changes ahead for the industry, including opportuni-
ties for manufacturers of cigars introduced prior to the
2007 cutoff date to grab market share as newer brands
are forced off the market. “We are comfortable with
our situation,” he says. “We have always been known
for quality and consistency. Our philosophy has been
that a JM Tobacco cigar from 2007 and one from 2017
should taste exactly the same, and that’s a positive in
this environment.”
In particular, Mahroukian
expects his company’s
private-label business to grow as companies unable to
produce the products they sell currently explore other
options. “We already supply private-label product to sev-
eral companies, which are ecstatic about having access to
grandfathered cigars now,” he says.
Even without private-label program growth, however,
JM Tobacco has been seeing solid sales of its established
brands, as well as growth from recent introductions, in-
cluding humidity-sealed three-packs it brought out in
2013. “The three-packs opened up opportunities for us
in smaller stores that don’t have humidors,” he explains.
“They can sit on store shelves for up to a year, and they
don’t even need shelf space because we offer clip strips
that the stores can hang from just about anywhere.”
While Mahroukian is optimistic about the opportu-
nities ahead, he also acknowledges that complying with
FDA regulation around labeling will be challenging for
the cigar industry. For example, requiring manufac-
turers to rotate six warning labels equally during the
production and packaging process is more complicated
than it sounds. “We’re supposed to submit an imple-
mentation plan about how we will print the labels and
stack the products to ensure that the six versions are
equally distributed in each case and around the coun-
try,” he explains. “I was thinking to shuffle them but
that won’t cut it. And we need to get it right, because
you don’t want to risk them coming back to you and
saying, ‘No, this won’t work. You need to resubmit.’”
Fortunately, the May 10 implementation deadline was
recently extended by three months, giving manufactur-
ers more time to develop solutions.
Mahroukian
also anticipates the FDA turning its at-
tention to social media marketing, which has been very
effective for his company. JM Tobacco has fostered re-
lationships with many “influencers,” each of which has
as many as 20,000 followers. “We send them cigars, and
they post about them,” he explains, noting that the com-
pany is active on Instagram and Facebook. “We do spe-
cials where you can win a free three-pack by tagging a
friend in a post about our cigars. It’s a great way to get
the word out.”
Ultimately, that type of marketing may come under
fire from the FDA, which has yet to place restrictions
on social media. But when it does, the industry will find
ways to persevere, says Mahroukian. “Tobacco contin-
ues to get hit hard by taxation and regulation—those
challenges will always be there,” he says. “But right now,
I think that out of the smoke there will be sunny skies.
What will come out of FDA regulation is that the tobac-
co products that will be left on the market will be cream
of the crop. They will be quality products made by the
manufacturers who have been in business for more than
10 years, which is pretty cool.”
TB
Our philosophy
has been that
a JM Tobacco
cigar from 2007
and one from
2017 should
taste exactly the
same, and that’s
a positive in this
environment.
JM Tobacco
Continued