AN OFF IC I A L MAGA Z INE OF TOTA L PRODUCT E XPO VOL 2 5 NO4 V JULY/AUGUS T 20 22 HITMAKER BEHIND THE SCENES An intimate look at Plasencia, J.C. Newman, La Flor Dominicana and more THE FUTURE OF TPE Why the TPE23 trade show will be the biggest show yet Drew Estate’s Willy Herrera on his life, career and his most popular cigar blends
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For more details, visit totalproductexpo.com. TPE23 IS TURNED UP: It’s Our Biggest Show Ever! TPE23 is expanding in floor and focus to bring you more people, products, and potential for profits. Whether exhibiting or attending, you won’t want to miss out!
10 TOBACCO BUSINESS | JULY / AUGUST | 22 F E AT UR E S J ULY / AUGUS T 2 0 2 2 ON THE COVER: WILLY HERRERA PHOTOGRAPHY BY SLAV GORDEYE 32 MASTERING THE PROCESS There are no shortcuts to becoming a master blender, and the life and career of Drew Estate’s Willy Herrera is proof that greatness takes time. 46 WHAT YOU DON’T SEE Each day, cigar enthusiasts across the globe enjoy the cigars made with the Plasencia family’s tobacco, but few understand the hard work and dedication behind one of the world’s most successful tobacco growing and cigar making businesses. 62 RESTORING HISTORY With the restoration of the El Reloj cigar factory now complete, J.C. Newman Cigar Company takes you behind the scenes of this historic destination in Tampa, Florida. 54 SET IT OFF Instead of aiming for big production numbers and profits, Luis J. Falto has found that focusing on quality and opting for short runs helped him build a cigar brand with staying power. 70 BOUTIQUE BY DESIGN Tony Gomez, vice president of La Flor Dominicana, pulls back the curtain on his family’s business, including its cigars and lessons he’s learned working alongside his father, Litto Gomez. 78 EXPRESSION OF A JOURNEY Sébastien Decoppet, who left his corporate job in Switzerland to learn about the cigar business in Honduras, discusses his experience creating his own cigar brand and running a factory. 32
12 TOBACCO BUSINESS | JULY / AUGUST | 22 COL UMNS 16 | DESTINATION: SUCCESS Next year’s TPE trade show will be bigger than ever, with many new exhibitors and an updated name that reflects the big changes attendees will experience at one of the industry’s most anticipated events. 22| GOOD NEWS FOR PREMIUM CIGAR IMPORTS If January 2022’s numbers are any indication, the premium cigar market in the U.S. remains strong following the post-pandemic boom many retailers and manufacturers experienced. 24| LESS-RISKY BUSINESS As consumers make the move away from traditional tobacco products, retailers are left needing a new sales strategy and products to help them maintain and grow their customer base. 28 | REGULATING FLAVORED TOBACCO PRODUCTS If passed, the FDA’s latest proposed regulations would keep menthol cigarettes and flavored cigars off store shelves. Here’s a look at the proposals and how they could potentially impact your business. 30 | A DECADE OF SERVICE In May 2022, Operation: Cigars for Warriors celebrated a major milestone, the organization’s 10th anniversary. Here’s a look back at the organization’s biggest achievements. 86 | PATENT WARS As tobacco manufacturers search for alternatives to traditional combustible products, many are finding themselves entangled in costly legal battles waged over patent infringement claims. 92 | WHEN RETAIL TAKES FLIGHT Tobacconist Ramón Torres grew up working in his family’s duty-free stores. Now he’s running a well-known tobacco retail outlet located within one of America’s busiest airports. 98 | ON YOUR SHELF As summer heats up, Tobacco Business takes a look at a number of the season’s hottest premium cigar releases that consumers are anticipating and that will send your sales through the roof. TPE STARTUP ASSOCIATIONS OTHER TOBACCO PRODUCTS TOBACCONIST 16 92 J ULY / AUGUS T 2 0 2 2 26| SOLVING THE IDENTITY CRISIS Age verification continues to be an important necessity for retailers carrying tobacco products, and FasTrax Solutions’ latest release will make the process even easier for all involved. 30 Photography courtesy of Tobacco Media Group (TMG), Operation: Cigars for Warriors, and Ramón Torres.
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14 TOBACCO BUSINESS | JULY / AUGUST | 22 A question that I get asked a lot when it comes to Tobacco Business is, “Who is your audience?” I’m never bothered by this question because, as a writer, every story starts with identifying a target and speaking directly to them. As a trade publication, Tobacco Business is designed to cover all aspects of the tobacco industry from “seed to shelf,” as they say. That means there are times when we’re covering cigarettes and cigars, and other times when the stories deal with the evolution of the industry and touch on vapor, e-cigarettes, nontobacco-derived nicotine products andmore. Still, that doesn’t answer the question of who our audience is. Tobacco Business is written primarily for retailers, and our stories are structured in a way to be accessible and relevant to other professionals that are working in or interested in the tobacco industry as it is today and as it may be tomorrow. For the past several years, Tobacco Business has had a focus on cigars and more specifically premiumcigars.Why?Because these products have a lot of stories and history behind them that often get overlooked. Another question I hear a lot is, “Why does this magazine not do reviews?” Well, it’s because reviews are, in my humble opinion, objective, and there’s no real industry standard for reviewing a cigar, thus a 93 rating from one media outlet is an 88 for another. It’s also my belief that a rating doesn’t tell the real story of any brand or the people responsible for bringing that cigar to market. Without that story, you’re missing out on a lot of what makes that cigar you’re lighting up special and different from any other tobacco product in the market. I’ve had this discussion with many in recent months: “What’s happened to the story? We don’t hear the story behind brands anymore, and press releases, though helpful in informing the industry of a newly released product, focus more on wrapper, binder and filler than they focus onwho brought this product tomarket and why. Just ask a cigar maker what’s in a cigar and compare their answer to why they made that cigar and what the real story is behind the blend or the product in general. You’re likely to go from a short, terse answer consisting of general information you can find listed online to a deep, rich story full of family history, sacrifice, ups and downs, twists and turns, failure and ultimate triumph, which makes for a heck of a story. It’s those stories that resonate with retailers who in turn can pass along those stories to their customers, who aren’t looking for just any kind of cigar but one that has a story they can connect with and that transforms the relationship between them and the manufacturer from being solely transactional to something more human and relatable. Many of the features in this issue are stories about cigars and why certain people chose this industry as their profession. You’ll read stories that show that a lot of work goes into bringing just one cigar to market and that cigars are often a reflection of those that make them. Willy Herrera and Sébastien Decoppet’s stories in this issue both show the very personal journeys both men embarked on when getting into cigars. We dive into the details of the Plasencia family’s tobacco growing operation and show you the results of J.C. Newman’s factory restoration project. You’ll come out of this issue understanding the importance of the story when trying to understand what makes a cigar such a special product. There’s that old saying that goes, “Sometimes a cigar is just a cigar.” That’s only the case when we forget the story of the people who help bring those products to life. As an industry, we need to keep our “audience” in mind, and sometimes that means the people who aren’t in the industry and don’t understand what makes it special. Let’s make sure we’re constantly sharing the story of the families, individuals and people that make this industry extraordinary. TB A ED I TOR ’ S LETTER VOL25 NO4 JULY / AUGUST 2022 PRESIDENT Jason Carignan MANAGING DIRECTOR Ben Stimpson SENIOR EDITOR AND DIGITAL DIRECTOR Antoine D. Reid ART DIRECTOR Harrison Brackett COPY EDITOR Stephanie Banfield CONTRIBUTORS Thomas Briant, Nathan Deily and Danielle Dixon TOTAL PRODUCT EXPO TRADE SHOWDIRECTOR Ellie Hansen TMG SALES MANAGER Dawn Conger DIGITAL MARKETING MANAGER Brian Rodak TRADE SHOWOPERATIONS & LOGISTICS MANAGER Scott Gibson SENIOR GRAPHIC DESIGNER Rachel Esteffe TMG SALES ASSOCIATE Carly Gegorek TOBACCOBUSINESS MAGAZINE 5449 Endeavour Ct #1712, Moorpark, CA 93021 A DIVISION OF KRETEK INTERNATIONAL, INC. CHAIRMAN Hugh Cassar PRESIDENT AND CEO Sean Cassar CHIEF FINANCIAL OFFICER Don Gormly Tobacco Business is published bimonthly at 5449 Endeavour Ct #1712, Moorpark, CA 93021. Printed in USA. Copyright 2022 by TBI, LLC. Subscription rate is $45.00/year. Send paid subscriptions to Tobacco Business at same address as mentioned above. For reprint information, contact Ben Stimpson at 919.412.7380. Copying: Permission is granted with users of the Copyright Clearance Center Inc. To photocopy any ar ticle, with the exception of those for which separate copyright ownership is indicated on the first page of the ar ticle, provide a base fee of $1.25/copy. Tobacco Business International is a registered trademark of TBI, LLC. POSTMASTER: Send address changes to Tobacco Business, 5449 Endeavour Ct , Moorpark, CA 93021. LETME TELL YOU A STORY… THE TEAM Antoine D. Reid, Senior Editor, antoinereid@tobaccobusiness.com TOBACCOBUSINESS.COM TOBACCO BUSINESS In the March/April 2022 issue of Tobacco Business, the story "Do the Right Thing" was printed without a proper photo credit. Photos in that story were by Mario Peña / mapstudios.co.
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DESTINATION: SUCCESS —STAFF REPORT— As the first business-to-business buying show of the year, the team behind TPE is revealing big changes for next year’s show that will expand the show’s focus and its square footage. Photography courtesy of Tobacco Media Group (TMG) 16 TOBACCO BUSINESS | JULY / AUGUST | 22
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18 TOBACCO BUSINESS | JULY / AUGUST | 22 Since 2017, TobaccoMediaGroup (TMG) hasworked hard to make the Tobacco Plus Expo (TPE) trade show a leader in the tobacco and alternative space for independent retailers. TPE brings together the buying power of thousands of independent retailers, cash and carry stores, and local distributors. Over the years, TPE has expanded and evolved to reflect the changes taking place in the tobacco and alternative industries. It’s brought in new exhibitors and products—such as cigars, vapor and CBD—to help give retailers a competitive edge in their respective markets. Now, TPE is about to enter its next evolution to better serve retailers. TPE has been recognized by many as being a must-attend trade show for many retailers. It has been ranked as one of the fastest-growing shows in the U.S. by Trade Show Executive magazine, and it has continually outperformed other consumer goods and retail trade shows since 2017, according to the Center for Exhibition Industry Research. In addition to hundreds of tobacco, alternative and tobacco-related exhibitors, TPE23 will feature an even larger trade show floor and new exhibitors who will help retailers fulfill their multicategory inventory needs. This is an expansion of the original vision set forth for TPE by TMG and its parent company, Kretek International, to create a trade show that offers easy access to hundreds of thousands of products at one show. As part of this vision, TPE will be changing its name from Tobacco Plus Expo (TPE) to Total Product Expo (TPE). Total Product Expo will conveniently offer attendees even more product offerings under one roof. Some of the new product categories attendees can expect to find on the show floor next year will include the categories of snacks, beverages, point-of-sale systems, general merchandise, gifts and more. Tomake room for these new categories, TPE23 has increased its show floor size by 30 percent and will have a dedicated space for the new brands and product categories. “We are really pleased with the increasing success of TPE and are excited about the potential of our evolution to the Total Product Expo in 2023,” says Jason Carignan, president of TMG, the host company for TPE. “Every year, we seek feedback from the show, and we have consistently heard attendees ask for category expansion so more business can get done in one shot. This year, we are answering the call, giving our customers an array of new exhibitors with products that their customers want and need.” In the interview that follows, you will find out what else Carignan has to share about TPE23, including the reason for changing the name ahead of next year’s show, additional changes attendees can expect and the vision for TPE going forward. Tobacco Business: What led to the decision to update the name of Tobacco Plus Expo toTotal Product Expo? Jason Carignan: Over the years, we’ve heard our show attendees ask for moreproducts andproduct categories so they cangetmore of their inventory needs met while at the TPE show. Offering additional categories optimizes their travel and buying budgets by bringing more categories under one roof, plus the added advantage of buying products at trade show deal pricing, which means more profits at the end of their day. So we knew we needed to expand our product offerings, and the name change to Total Product Expo is part of this natural progression to better support our customers. TPE is now a complete destination for the independent retailer. Many of the readers of Tobacco Business are in the business of premium cigars and have noticed cigars have had a bigger presence at TPE.What placewill cigars have at TPE going forward? Premium cigars will continue to have a prominent role in our show. We’ve worked hard to expand their presence, andwe’re not stopping now! Our goal of expansion is not to replace but to complement our industry by offering more products the end customer is looking for. Many tobacconists have needed to attend regional gift shows to find unique items to carry in their stores.We’re planning to bringmore of these lifestyle accessories to theTPE show, along with their bread-and-butter cigar offerings. We’re just making it easy to shop for all types of inventory in one spot, and we will continue to offer the top-of-the-line premium cigar exhibitors and products that people have come to expect at TPE. What newproduct categorieswill attendees nowfind at TPE? Through our research, we have found that the focus of our diverse range of independent retailers continues to evolve as their customers are seeking new and innovative products, and the retailers are looking for additional ways to grow sales. Independent retailers of all types are looking for extras like more general merchandise, giftable products, apparel, snacks, beverages and easy point-of-sale items. We’re continuing to add new exhibitors, andwe are excited about this attendee-driven expansion. TPE has long been known for its red and blue carpet split. Howwill the show’smakeup and ratio changewith these newcategories coming in? The Total Product Expo will continue to cater to our current audience, with the thousands of tobacco, vapor and alternative products our attendees know to expect. The new products are designed to complement our offerings and that of the show attendees rather than replace anything. The red and the blue carpet split will continue to be an easy indicator of product, and our additional categories will also be grouped together for easy browsing and buying. S Jason Carignan, president of Phillips & King International and Tobacco Media Group (TMG).
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20 TOBACCO BUSINESS | JULY / AUGUST | 22 In addition to changing the trade show’s name, are there some other changes that exhibitors and retailers can expect at TPE23? In one word, they can expect more: more exhibitors, more categories, more products, more deals, more show floor, more buying attendees, more opportunities, and the potential for more revenue streams and profits. What can you share about themarketing or outreach plan to bringmore independent retailers to the show? We’re building this show to support the independent retailer, which helps our entire industry succeed as a whole. So, a big initiative for this year is to build awareness for the newly expanded TPE23 and why it’s a must-attend event. As part of these efforts, we are adding staff to specifically focus on attendee recruitment and experience and to helpwith their retention. Our registration opens up this fall, andwe’ll have some great early bird specials, so I encourage people to visit totalproductexpo.com to sign up for emails and make sure their spot is reserved. What do you hope attendeeswill get out of attendingTPE23? We hope our showattendees get their business done and are set up for success in 2023. Our goal is to make it easy for them to start their year strong by stocking up as much as possible in one place, getting great deals and finding exciting new products while they’re at it. We hope that TPE23 attendees will take advantage of our fun, energetic show setting to network with existing vendors and colleagues while establishing new relationships too. We also hope that our show attendees will take advantage of the opportunities to carry new products and find new revenue streams to complement their existing offerings. TPE has continued to grow year after year. Do you envision the show will continue to expand in the years to come? We’re lucky to be in an industry that’s constantly innovating with product and possibility. Our attendees come to the show to stock their stores with top sellers, but we are always looking for the next hot product or trend, which means there’s always a need for newness and growth. We plan to continue growing the show as the independent retailers’ needs continue to evolve and expand. In the past, TPE’s mantra has been “a fun place to do serious business.” What is themantra ormotto going into the 2023 show? TPE23 is a fun place to do more serious business. Year after year, our show attendees come to buy, and our exhibitors put their best foot forward with awesomeproducts to sell. It is a showwherebusiness gets done, but itwouldn’t be TPE without the fun factor. We’ll have more products and exhibitors for getting the work done during the day, andwe are lining up some exciting stuff for our industry party. With registration set to open this fall, could you offer a final pitch to Tobacco Business’ readers as to why TPE23 will be a must-attend trade show for them? TPE23 is going to be the destination for success. We’re helping the entire industry start the year with a bang, bringing together more people, products, categories, brands, deals and potential for profit, while making it easy for everyone to take advantage of these opportunities. Our goal is to make it easier than ever for independent retailers to discover and sell the products their customers crave. TPE23 will be held Feb. 22-24, 2023, at the Las Vegas Convention Center in Las Vegas, Nevada. Attendee registration will open in September 2022. For updates on the show and early bird offers, sign up to join the Total Product Expo (TPE) email list at totalproductexpo.com. Editor’s Note: Tobacco Media Group (TMG) is the owner and operator of the TPE trade showas well as the publisher of Tobacco Business magazine. TB TPE23 will feature an expanded show floor showcasing general merchandise, gifts, apparel, snacks, beverages and point-of-sale items in addition to tobacco, vapor and alternative products.
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22 TOBACCO BUSINESS | JULY / AUGUST | 22 According to a May 2022 report from the Cigar Association of America (CAA), premium cigar imports are up so far in 2022. Compared to January 2021, import data showed a 3.8 percent uptick, with approximately 21 million handmade cigars having been shipped to the U.S. in January 2022. For the sake of comparison, 20.6 million handmade cigars were shipped to the U.S. in January 2021. The import data showed a 19 percent increase in Nicaraguan-made cigars being shipped to the U.S. in January 2022. This amounted to 14.7 million cigars and accounted for 68 percent of total shipments, making Nicaragua the top premium cigar importer. The next largest importer of cigars was Honduras, accounting for 33 percent of imports. Rounding out the imports was the Dominican Republic, which accounted for 3.3 million handmade cigar imports. This was a 40 percent decline brought on by ongoing impacts from the global COVID-19 pandemic, which has caused both staffing and supply chain issues. Previously, CAA issued a report showing that the U.S. cigar business experienced its best year yet in 2021. A record 456 million handmade cigars were imported into the country in 2021, as reported by CAA and written about in “A Record Year for Cigars,” which was published in the May/ June 2022 issue of Tobacco Business magazine. While these numbers are estimates, they do correlate with the increased consumption of premium cigars reported by many companies over the past two years. The 2021 report issued by the CAA showed a 25.3 percent increase in cigar imports between 2020 and 2021. Nicaragua led the way in terms of cigar imports, having shipped 240.9 million handmade cigars in 2021. This was a 29.4 percent increase compared to the 2020 numbers in the same report. The Dominican Republic shipped 129.5 million cigars (a 22.5 percent increase) while Honduras shipped 84.2 million (an 18.3 percent increase). CAA’s numbers are based on import data provided by the U.S. Customs Service, U.S. Census Bureau and various cigar manufacturers. TB A STARTUP : MARKETWATCH GOOD NEWS FOR U.S. PREMIUMCIGAR IMPORTS Poda Holdings Inc. has entered into a definitive agreement with Altria Client Services, a subsidiary of Altria Group Inc., to sell all of its assets and properties used to develop, manufacture and market multi-substrate heated capsule technology. This includes Poda selling its patents related to heated capsules and Poda’s exclusive, perpetual license of certain patents pursuant to an amended and restated royalties agreement dated April 12, 2019, for a total purchase price of $100.5 million, subject to certain adjustments and holdbacks. Poda’s patented heat-not-burn (HNB) technology makes it a strategic buy for Altria, which has been making investments outside of traditional combustible tobacco products. Altria has a licensing deal in place that enables it to distribute Philip Morris International’s IQOS in the U.S., although a patent infringement case ruling has temporarily prevented the company from importing the popular HNB device into the U.S. This new purchase agreement with Poda Holdings could give Altria another way to take part in the U.S.’s growing HNB market. PODA SELLS IP ASSETS TO ALTRIA FOR $100.5 MILLION Photography courtesy of Poda Holdings Inc.
24 TOBACCO BUSINESS | JULY / AUGUST | 22 How would you describe your current customer base? What are you doing to attract new customers? These are questions every retailer should be asking themselves on a regular basis— and they are questions you’re likely to be asked by Inter-Continental Trading USA when speaking to them about the tobacco and vapor products they have to offer. How to Introduce New Products Although it may sound cliché, Inter-Continental Trading has become a one-stop shop for retailers over the years. Products such as OHM pipe tobacco and Shargio cigarette tubes, as well as the acquisition of the Daughters & Ryan and Roxwell brands have all made Inter-Continental Trading a market leader with products that appeal to a wide audience of customers seeking affordable, value brands as well as more premium selections. While some tobacco retailers prefer to specialize in one particular product category, Inter-Continental Trading’s president, Shargio Patel, believes offering a diverse selection of products is the winning strategy in today’s competitive retail landscape. “Offering a littlemore variety is always beneficial as tastes and trends change, if it’s within reason,” he says. “Giving customers a reason to shop at your store versus the place down the street that stocks the same brands can turn your shop into more of a destination. It can also lead to the feeling that your store truly caters to your customers’ needs instead of just stocking the bare minimum.” Bringing in new products always feels like a gamble, and in today’s economy, taking any risks in business is a tough ask. Patel and his team at Inter-Continental Trading push and promote a wide range of products each day and work with different retailers on a regular basis. With their unique portfolio of tobacco and vapor products, Inter-Continental Trading typically recommends the following three simple tips to introducing new products to a store’s customer base: 1. Engage with your customers. Make them fully aware of the new products and their benefits or special/limited time offers. “All too often, retailers take a ‘stock it and they will come’ approach and then wonder why it’s not moving,” Patel explains. 2. Make sure your store’s new products help fill a need, whether it be a price point or a trending product. 3. Make a little extra marketing effort by engaging on social media or creating an eye-catching in-store display. The goal of your marketing efforts should always be to make the new product a “must-have” item. Retailers looking to expand their store’s product offerings cando sowith ease with help from Inter-Continental Trading. Patel’s company has over 50 grandfathered tobacco and cigarette tube products, giving retailers a greater level of confidence that the products they bring in through Inter-Continental Trading will be available for the foreseeable future. Inter-Continental Trading also monitors the changes in the marketplace to ensure it has something timely and in demand to offer consumers. For example, after witnessing explosive growth in the cannabis market, InterContinental Trading developed its own U.S.-made rolling paper brand, Kashmir Organic Hemp and Unbleached Rolling Papers. In addition to these products, Inter-Continental Trading’s Kashmir Pre-roll Tubes have since become bestsellers for the company after their introduction. “In the last five years, Kashmir has become the fastest-growing rolling papers brand with papers in virtually every size, an accessory line that boasts over 75 products and the 2022 launch of our American-made Kashmir Pre-rolled Cone line,” Patel explains. At the 2022 Tobacco Plus Expo that was held in January, Inter-Continental Trading also introduced the VIO Pulse e-cigarette brand after seeing a demand among its customers for a highquality vape line from a trusted manufacturer. “We went to great lengths engineering a sleek, slim, U.S.-designed device and proprietary Americanmade liquids. The line has quickly grown to 12 flavors—including four tobacco varieties—and we’ve compliedwith PMTA application guidelines,” says Patel. Finding An Experienced Partner As consumers continue to move away from combustible cigarettes and traditional tobacco products, retailers will also need to update their strategies in order to stay competitive. Vaping and e-cigarette consumption, although under more government scrutiny and regulations, continue to experience increasing interest among consumers, so retailers need to determine which products are in demand and fast-movers if they want to continue to maintain and grow their customer base. With Inter-Continental Trading’s help, retailers can better position themselves for success when looking to expand into new product categories. Patel states that he’s very much aware of the fact that margins can be razor-thin in today’s market and that supply chain issues aren’t making things any easier or better. This is another advantage Inter-Continental Trading has to offer its customers: as a domestic manufacturer that uses mostly U.S. vendors for raw materials, Patel’s company has greater control over costs and can offer its retail customers competitive pricing as a result. Although risk will always be a major part of business, retailers can confidently and successfully expand their store’s offerings with the help and insights of a skilled and experienced partner like Inter-Continental Trading. TB H STARTUP : SALES LESS-RISKY BUSINESS Photography courtesy of Inter-Continental Trading USA Are your store’s sales going flat? Here’s how you can gain the upper hand and successfully introduce a new product category to your store with the help of Inter-Continental Trading USA.
26 TOBACCO BUSINESS | JULY / AUGUST | 22 Many businesses, including tobacco shops, ensure they’re taking the necessary precautions when selling age-restricted products so they always remain in compliance with all government ID validation requirements. If these laws are violated, they could face a hefty fine or even the suspension or revocation of their business license. The issue that continues to persist is the advancement of fake IDs, which has reached the point where many can now pass the most common methods of ID checks, including visual inspection, barcode scan and magstripe swipe. According to one study quoted by BASSETOn The Fly in 2020, 66 percent of college students have used a fake ID at least once to purchase age-restricted items. There’s also a vast number of state ID classifications (the standard driver’s license, commercial driver’s license, IDcards, etc.) alongwith the regular adjustments that states make to their IDs (such as changing the hologram or a UV feature location), equating to around 600 valid state ID designs in the United States (See, “Fake IDs Have Improved Dramatically. Has Your Screening Process?” Forbes, August 20, 2021). Smokers Choice, a tobacco outlet that is owned by FasTrax Solutions and has over 50 locations, understands the importance of staying in compliance with ID check regulations. In response to the fake ID and fraud issue, FasTrax Solutions created FTx Identity, which is changing the form of age verification technology (AVT) for the tobacco industry. FTx Identity is an easy-to-use, time-saving solution that provides seamless age verification, identity management, and a unified login authentication and authorization system. One of its major advantages is that it fully supports various ID documents from over 180 countries. Sell Age-Restricted Productswith Confidence With the AI-based, multistage verification process of FTx Identity, you only have to validate a consumer’s identity once. A consumer’s age can be extracted and verified using its facial recognition technology, which entails a search of their secured profile and comparing their selfie picture with the picture of the ID. Then, the personal information from the ID will be automatically extracted to query public records to verify the consumer’s identity and age. With its liveness detection feature, FTx Identity is also able to block masks, avatars and any other sophisticated spoofing attempts to eliminate any fakes. FTx Identity has the ability to easily detect tampered with or fake IDs with proprietary AI algorithms. Most government-issued documents includeactiveandpassive security features, suchas watermarks, ultraviolet inks, fluorescent overlays, holograms, microtext and laser engravings. FTx Identity is able to check the consumer’s IDagainst their proprietary internal database of fake and invalid ID documents from various public and private sources all around the world to confirm the ID is completely legitimate. FTx Identity also integrates with your existing point of sale system for advanced facial recognition to eliminate fraud and prevent any minors from purchasing age-restricted products. Another major feature of FTx Identity is that you have the ability to build age-restricted solutions for your e-commerce site with ease, enabling a unified login system with the SDK using extremely low coding and effort, which will provide your consumers a quick and easy checkout experience. A Secure Consumer Experience That’s Easy toUse With FTx Identity, businesses can provide consumers a hands-free experience with a self-registration and online ID verification process via the consumer’s mobile device or on the web, which will verify their age and identify them without the need for them to present their physical ID. Consumers can prove their age without sharing their personal information by presenting a short-lived QR code containing their date of birth and ID expiration date, or with the use of facial recognition technology. When it comes to the FTx Identity platform, consumers will feel relieved knowing their data is safe and secure. By preserving the consumer’s information in a cloud-based, secured digital vault, it ensures the security and confidentiality of a consumer’s data. The data gets stored in encrypted form, only allowing the end user to access their personal profile. A consumer’s personal information is never shared with unidentified parties without their consent, which allows them to share or unshare their information with their chosen businesses. AQuick and Easy Age Verification Process The fight against fake IDs and fraud is a top priority for many businesses, including those within the tobacco industry. It’s crucial for them to remain in compliance with regulatory ID requirements while preserving the safety of their consumers. By integrating FTx Identity into your business, you will experience a quick and easy age verification process that eliminates the manual ID verification process, which is both time-consuming and risky. Overall, your business will thrive, and your consumers will feel assured knowing you’re committed to providing an enriched experience with the most effective safety measures in place. If you want more information about FTx Identity, get in touch with one of their specialists today to set up a consultation and schedule a demo. TB —Contributed by Danielle Dixon, content writer for FTx POS. M STARTUP : TECHNOLOGY SOLVING THE IDENTITY CRISIS How FTx Identity is changing the face of age verification technology for the tobacco industry Photo: Adobe Stock
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28 TOBACCO BUSINESS | JULY / AUGUST | 22 On May 4, 2022, the U.S. Food and Drug Administration (FDA) published two new proposed tobacco product standard regulations in the Federal Register. A tobacco product standard regulation is a power granted to the FDA under the Family Smoking Prevention and Tobacco Control Act to reduce or eliminate an ingredient in a tobacco product or a constituent in tobacco smoke. One of the proposed tobacco product standards would provide that a cigarette or any of its components or parts (i.e., cigarette roll-yourown tobacco, cigarette filters, cigarette wrappers and cigarette rolling papers) shall not contain menthol as either an ingredient or a smoke constituent. The second proposed tobacco product standard would prohibit an artificial or natural characterizing flavor (other than tobacco flavor) in cigars, cigar components and parts (i.e., cigar tobaccos, filters or wrappers). Specifically, the flavors that would be banned include but are not limited to an herb or spice, strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, coffee, menthol andmint. It is important to note that the proposed regulationwould apply to premium cigars, which means that premium cigars could only have a characterizing flavor of tobacco. If these proposed tobacco product standards are finalized and implemented, FDA enforcement will only apply to manufacturers, distributors, wholesalers, importers and retailers who manufacture, distribute, or sell cigarettes and cigars within the U.S. That is, these proposed tobacco product standards do not include a prohibition on individual consumer possession or use, nor would the FDA take enforcement action against individual adult consumers. The FDA is proposing that these regulations, when and if finalized, become effective one year after the date of the publication of the final rule. Prior to the regulations becoming effective, there are severalmore steps in the federal regulatory process. While there are a total of nine steps in this process, the FDA’s proposed regulations are currently on Step 6. The sixth step allows for the public to submit comments to the FDA on the proposed regulations. Currently, the FDA is allowing the public to submit comments for 60 days, a period that runs through July 5, 2022. Once the comment period ends, Step 7 requires the FDA to review each of the comments submitted and make any changes it deems appropriate to the proposed tobacco product standards. Then, in Step 8, the White House Office of Management and Budget will need to review the final regulations because they will have a significant impact on the U.S. economy. In the ninth and final step, the agency will publish a final version of the regulations and state a specific effective date that would be one year from the date the final regulations are published in the Federal Register. During this open public comment period, it is very important for retailers, their employees andeven their customers to submit comments to theFDA.While comments can be mailed or delivered directly to the FDA, the federal government utilizes a website at www.regulations.gov to accept the submission of comments online. Following are step-by-step instructions for how to submit comments. Note that since there are two proposed regulations, comments should be submitted on each separate proposed regulation, which will require using the www.regulations.gov website comment submission process twice. 1. Go to www.regulations.gov. 2. In the “Search” box, for submitting a comment on the menthol cigarette regulation, type in FDA-2021-N-1349-0001 and click the “Search” button. 3. In the “Search” box, for submitting a comment on flavored cigar regulation, type in FDA-2021-N-1309-0001 and click the “Search” button. 4. On the next screen, below the title of the regulation, there will be a “Comment” box; click this “Comment” box. 5. At the top of the next webpage, under the heading “Write a Comment,” you can manually type in your comment. If you plan to upload a file with your comments, see Step 7 below. 6. Beneath the “Write a Comment” section, there is a “What is your comment about?” question. Click the small arrow to the right and select the choice titled “Private Industry.” 7. To upload comments, scroll down the webpage to the box with the heading “Attach Files.” If you have already drafted comments in a Microsoft Word document, click the “Browse” button and select your file to upload. 8. Below the document uploading box, you will need to fill in your email address, and then under the “Tell Us About Yourself” heading, click on the “An Individual” icon. 9. Fill in your contact information, check the “I Am Not a Robot” box, and then click the “Submit Comments” button to file your comments. With these instructions to navigate the www.regulations.gov website, it is important to focus your comments on some key points, including the following: • Prohibition of legal tobacco products is not the answer. This country has tried prohibition of alcohol and it failed. • Retailers are responsible businesses who serve as the first line of defense in preventing the sale of tobacco to underage persons. • Theunderageuseof tobacco isathistorically lowrates,withlessthanonepercent or just over 1 percent of youth regularly using traditional tobacco products. • Explain that illicit sellers will come to supply the banned products through illegal means. • These regulations will trade licensed retailers for unregulated sellers who do not check IDs, do not pay any taxes and will sell to anyone, including youth who have cash. • Explain the impact of banning menthol cigarettes and flavored cigars on your business. Include information on how much business will be lost, where will your customers go and howmany employees might be laid off. The time is now to let your voice be heard by the FDA, and the means to do that is through the public comment process. TB O ASSOC I AT I ONS : NAT I ONAL ASSOC I AT I ON OF TOBACCO OUTLETS REGULATING FLAVORED TOBACCO PRODUCTS: WHAT YOU NEED TO KNOW Thomas A. Briant, Executive Director, National Association of Tobacco Outlets FDA regulations prohibiting menthol in cigarettes and characterizing flavors in cigars This article provides a summary of the newly proposed U.S. Food and Drug Administration (FDA) regulations that would prohibit the use of menthol in cigarettes and ban all characterizing flavors in cigars. Retailers should submit comments to the FDA regarding these proposed regulations. This article contains instructions on how to submit comments.
The Premiere Retail Association Every Retailer Should Join For more than 20 years, NATO has been the leading trade organization working to protect all retailers that sell tobacco products from unfair taxation and overly restrictive legislation and regulations. NATIONAL ASSOCIATION OF TOBACCO OUTLETS info@natocentral.org 952.683.9270 www.natocentral.org Exclusive focus on tobacco-related issues Local, state, and federal bills/FDA regulations Tobacco Focus Industry-leading NATO News Bulletin reports Updates on legislation, litigation, and regulations Communication Updates Close working relationship with the FDA NATO is the retail voice on agency regulations FDA Relationship National Local Advocacy Alliance: nlaausa.org Pending ordinances and “Take Action” page Local Advocacy Website National network of trade associations Assists retailers’ response to local ordinances National Response Network Alerts on local, state and federal legislation Member contact with elected officials simplified Member Engagement Seminars and webinars on tobacco issues Retailers kept abreast of laws and regulations Educational Sessions Staff knowledge of tobacco issues unparalleled Key source for answers to retailer questions Knowledge Base
30 TOBACCO BUSINESS | JULY / AUGUST | 22 ASSOC I AT I ONS : OPERAT I ON : C I GARS FOR WARR I ORS A DECADE OF SERVICE Operation: Cigars for Warriors celebrates its 10-year anniversary. Operation: Cigars For Warriors (CFW) reached a significant milestone on May 12, 2022: 10 years in operation as a charity devoted to deployed military service members. As a Platinum-level certified charity (verified by GuideStar), CFW operates with the highest ethical standards of transparency and accountability. There are many amazing memories and milestones to celebrate over the past decade, but seven in particular stand out: • The first organization to take CFW on as their primary charity. The C.A.T.S. community has brought massive cigar and cash donations, had great raffle prizes donated and has been the primary source for new volunteers for the first five years. Now there are a huge number of clubs and organizations that have CFW as their primary or secondary charity priority. • The first news article covering CFW appeared in Cigar Press, which to this date still sends magazines to CFW for the troops and still donates three pages to the charity. This opened the door to additional earned media opportunities, including magazines and 50-plus podcasts over the last decade that have dramatically improved the charity’s visibility. • The CFW Donation Center Program. Smoker’s Haven in Lubbock, Texas, was the first store that took a chance on CFW, which led to over 600 stores over the years that have joined the CFWcommunity. • The Event Coordinator Program. The first non-founder volunteer that joined the program was SSG Chris Preetorious, who eventually became the charity’s first military liaison director. Preetorious continues to assist at events on a regular basis. • The “millionth cigar shipped” in 2019 - a truly remarkable accomplishment for the charity. As of this writing, CFW is already well on its way to the second million with nearly 1.3 million cigars shipped. • The launch of the Synergy Program, dramatically leveraging the power of the relationships between retailers, manufacturers and the charity to “do good while doing well.” Major successes include collaborations with Hiram & Solomon’s Live2Serve, Caldwell Cigars’ Mad MoFo “Long Live the King,” and most recently The Nubber and Ventura Cigars’ “The Operator.” • 2020 “Charity of the Year” award from Cigar Trophy/Cigar Journal. Despite the dramatic increase in premium cigar sales over the past two years, the restrictions on social gatherings and events have dramatically affected the charity’s ability to operate and collect both monetary and physical donations. As festival season accelerates, CFW asks for your generosity and support in helping us reinvigorate our financial and operational health. Monetary donations and information on how to donate cigars can be found at cigarsforwarriors.org. Additionally, CFW is announcing a formal challenge to share videos and photos of past events as part of a project to capture the most amazing moments of the charity’s history over the prior decade. Post your memories on social media using the hashtag #CFW10YRS or send photos directly to photos@cigarsforwarriors.net. Storm Boen, chairman and CEO of Operation: Cigars forWarriors commented: “Ten years ago, we took on the challenge of serving deployed men and women, providing moments of comfort and relaxation in the midst of incredible hardship. Bonds are forged in the moments of camaraderie that sharing cigars creates. “CFW and our servicemen and women are deeply grateful for the generous donations and tireless efforts of our volunteers, sponsors and partners to support this worthy cause, and we are deeply committed to continuing this mission and expanding our ability to serve.” Operation: Cigars for Warriors is a registered 501(c)3 charity operating nationwide whose mission is to provide premium cigars and cigar accessories to U.S. troops serving in active combat zones. Since 2012, over 1.2 million cigars have been donated to U.S. service members, in addition to coffee, magazines, cigar lighters and cutters. How you can get involved: • Become an official CFW Donation Center: paul.hinman@cigarsforwarriors.net • Become a volunteer: shane.woodmancy@cigarsforwarriors.net • Sponsorship opportunities: trey.boring@cigarsforwarriors.net TB O Photos courtesy of Operation: Cigars for Warriors Nathan Deily, Public Relations Director, Operation: Cigars for Warriors
NEW! ROBUSTO NE ! R Sold Exclusively by EL ARTISTA CIGARS 1(800) 638-0283 sales@el artistacigars.com www.el artistacigars.com by DAVID ORTIZ
COVER STORY 32 TOBACCO BUSINESS | JULY / AUGUST | 22
MASTERING THE PROCESS If there’s one thing Drew Estate’s master blender, Willy Herrera, has learned over the years, it’s that there are no shortcuts to learning about tobacco and creating great premium cigars. Editorial By Antoine D. Reid Photography by Slav Gordeyev T O B A C C O B U S I N E S S . C O M 33
34 TOBACCO BUSINESS | JULY / AUGUST | 22 There are a lot of moving parts involved in cigar making. When it comes to cigars, people often conjure up images of a cigar blender working like a mad scientist to combine different tobaccos together into a satisfying blend that will hopefully go on to sell well in retail and earn high ratings. That, however, is only part of the story. In truth, cigar making is a complicated process of trial and error. There are a lot ofmovingparts, countless individualsworking with the tobacco in different stages, and countless samples and blends being created and smoked that never see the light of day. This is how all cigars are brought to market, including those produced by Drew Estate. Willy Herrera, Drew Estate’s master blender, has been the man behind some of the company’s most highly rated and sought after premium cigar selections, including the Herrera Esteli, Norteño, Undercrown Shade and Liga Privada, to name just a few. Herrera is the man at the center of Drew Estate’s cigar blending operation, but he didn’t always see himself as becoming such a prominent figure in the cigar making world. Herrera has taken a very careful and considerate approach to his career. He’s never been in a rush to achieve anything. In fact, he’s put in years to learn what was necessary to become great at what he does. The biggest takeaway from Herrera’s career in the cigar industry is that patience pays off and rushing the process is never the answer for those who are looking to create something memorable. FromLoans toCigars Herrera was born and raised in Miami, Florida. Growing up, you would often find Herrera taking part in any activity that took place outdoors. This included BMXing, boating, fishing and pretty much anything else that one could get into outside—except for hunting, which Herrera reveals he was never into. Even as an adult, Herrera’s love for the outdoors remains strong. As he grew up, Herrera was verymuch a dreamer, and he envisioned many different career paths for himself. At one point, Herrera wanted to become a firefighter. At another time, he wanted to get into law enforcement. Then there were the more “out there” professional desires that included zoology and architecture. Although he finally did earn his EMT certification, he ended up settling on a career in banking. He was in banking for about seven years before he got his first taste of what it was like working in the cigar industry. Herrera’s wife’s mother and grandparents started a cigar factory called El Titan de Bronze in 1995. The factory was set up in Little Havana, which is a neighborhood within Miami that is known for its strong cigar culture. When El Titan de Bronze first opened, Herrera would help with it in whatever way he could. This typically involved Herrera working behind the scenes or picking up and dropping off things as needed. Herrera didn’t work in the factory until his wife’s grandfather got sick, leaving a void in the factory. Herrera stepped up at that time, taking on evenmore of a rolewithin the factory and its store, including overseeing its opening and closing and making sure things ran smoothly each day. “I took a week off from work, and I worked there—that was my first real taste of working in the cigar industry,” Herrera states. “Because we manufactured, we had a little factory as well as a retail side because we had a display case where we sold what we made. I kind of got a taste of the whole cigar world that week.” Although hewas new toworking in the cigar industry at this time, Herrera was more than a little familiar with cigars prior to working at El Titan de Bronze. He had been smoking cigars since he was a young adult, he reveals. Thoughhe can’t remember exactlywhat his first cigarwas, he does recall the overall experience as being “fantastic.” He also recalls being around cigars early on in life, often seeing an uncle smoking a cigar when he visitedwith his aunt. His uncle almost always had a cigar in his mouth and lit up wherever he went. Whether it was inside the house, outside the house or while lying in bed, cigars were a fixture with his uncle, who influenced Herrera’s positive view of cigar culture. “That smell and that aroma in that housewas something captivating tome,” Herrera says. “We had these cafeterias that we called ‘littlemarkets’ around the different neighborhoods. You’d go up to the window to buy your Cuban coffee, or your pastries or your Cuban bread, and you’d pay for it there on the counter, and you’d keep going on the sidewalk. Well, on those counters they also had these jars [of] what we’d call fumas or short filler bundles that would cost 25-35 cents. The older men in the neighborhood would get their coffee and their cigars, and it was incredible to see how it could bring strangers together.” When he grew up, Herrera liked smoking cigars, how they tasted and, most importantly, what they represented: the way people connect with one another over great cigars. After a week of working at El Titan de Bronze, Herrera decided that he wanted to work there on a full-time basis. He quit his banking job and decided to learn as much as he could about cigars and how they were made. He was able to carry over some of the lessons he learned from the banking world into his new job within the cigar industry. This included keeping a good record of customer details and the need to always be organized and detail oriented—which he had learned while working as a loan processor. Also, he knew the importance of maintaining a high level of customer service, something that he admits to being very nitpicky about to this day. “That was the key thing,” he says. “At the bank where I worked, the customer or the member was always right. Customer service came first, and that’s another thing that carried over into the cigar industry when I started working in the factory with the family. You get people from all walks of life with all kinds of issues because you’re dealing with a product made by hand, and it’s a natural product. You’re going to have problems from time to time, so you need to know how to deal with the concerns or issues that may arise from a particular cigar that didn’t burn right or was tight or something.” When he went into the cigar business on a full-time basis, Herrera’s main focus was learning as much as he could about the industry and the product he was working with. He didn’t have a mentor or someone who took him under their wing and showed himall there was to know and do when it came to cigars. Instead, he learned everything he needed to know while working the job. At the start of his time at El Titan de Bronze, the factory had two rollers and was only making two cigars. These cigars were not what he enjoyed smoking, so while working in the factory, he’d smoke cigars made elsewhere, much to the chagrin of his wife’s grandfather. “My wife’s grandfather took a little bit of offense that I never smoked any of our cigars,” he says. “We had that conversation a few times. I didn’t know what tobaccowas what, or the difference betweenDominican or Nicaraguan tobacco, or the different binders—I had no clue! I just knew what I liked to smoke. I said, ‘OK, let me grab some of these tobaccos purely based on the smell and how they smelled individually, and I will give it to one of the rollers and have them create something for me.’ Well, that went on for a little while until two weeks later they were like, ‘Hey, man, we need to slow down with all these experiments that you have been doing because we’re running out of time and we’re not finishing what we need to do.’ Rollers got paid by how many cigars they rolled in a day, so by me having them create all these T That was the key thing. At the bank where I worked, the customer or the member was always right. Customer service came first, and that’s another thing that carried over into the cigar industry when I started working in the factory with the family. –Willy Herrera
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