80 TOBACCO BUSINESS | MARCH / APRIL | 22 Like many retailers, taxes have been an issue he’s had to continually address. When he started, he recalls the tax rate being at 9 percent for his business. As cigars became more popular and the state of New Jersey sought ways to make money from the sale of tobacco products, that tax rate increased to 24 percent. Another bill raised the floor tax to 48 percent. To pay the necessary taxes within the 90-day timeframe set by the government, Patel had to sell several of his prized cars, including one he had purchased from Sylvester Stallone. Normally, these tax increases would be passed on to the consumer, but Patel didn’t want to put this burden of business on his customers. The way he handles pricing is something he takes great pride in and something his customers have come to appreciate, but it’s also something that other retailers have come to despise him for. “Even today, every single cigar we have is at MSRP [the manufacturers’ suggested retail price],” he says. “That was, I think, my biggest challenge because a lot of people started disliking us because of it. If you see my social media, there’s a hashtag that says ‘most hated retailer.’ My store is not hated by consumers; it’s hated by other cigar shop guys. Other cigar shop owners started rumors like, ‘Oh, everything they have is fake.’ It kind of bothered me, but I knew I was doing the right thing.” On the other side of the pricing issue is product quality. Having been in business for several decades, Patel boldly states that today’s cigars are not of the same quality that they were when his store first opened. There are a lot of “garbage cigars,” he says, and due to lack of knowledge and proper education on the part of most retailers today, many consumers are unknowingly buying these products. “I tell [customers] what cigars used to be and that it’s not that way today,” he says. “The old-timers are gone. You know, if you inherit something, you don’t care how hard your mother or father worked for what they had. You inherited it, and there’s no value to it. Manufacturers are devaluing their own brands today. There are cigars, there are fancy boxes and fancy bands, but the tobacco is garbage. You can’t smoke bands, you can’t smoke boxes—pay attention to the cigar.” Patel also complains about how gimmicky cigars have become. He says consumers are not getting the quality product they’re being told they are, and that many manufacturers aren’t taking into consideration the negative impacts of certain marketing tactics, such as overusing the term “limited edition” to sell a product that really has no defined limit to the cigar’s production run. For both manufacturers and retailers, the consumer and his or her right should come first rather than any concerns over the sale or money that could be made. He recalls a customer coming into his store and asking for the most expensive cigar he had to offer for her boyfriend. He was ready to sell this customer several cigars that retailed for $500 each and an expensive lighter until he realized that doing so would have been a disservice to her. “She bought $3,000 worth of stuff within five minutes,” he shares. “As we talked while I rang her up, I said to her, ‘That’s a beautiful present.’ And she goes, ‘Yeah, you know, my boyfriend just started smoking six months ago.’ I told her, ‘Let me have your credit card back.’ She asked, ‘What happened?’ I said, ‘No, let me have your credit card back. I’ll refund the stuff. We’re going to put all this stuff back. You don’t need to spend that money on somebody [if] you don’t even know if they’re going to like it.’ I told her to come back in a year, and if her boyfriend was still smoking, I would gladly sell her the lighter, I’d gladly sell her the cigar, and I would give her one cigar free.” This story serves as the epitome of Patel’s mantra of “do the right thing.” Consumers are vulnerable, he says, and retailers must do their due diligence to ensure their customers are always protected. Sometimes that means offering products at the MSRP and taking on the burden of high taxes in order to keep products available. It also means going at odds with some manufacturers, and demanding better products and better communication when there’s a noticeable decline in the quality of either. Patel preaches patience in retail, urging other retailers to realize that, in many cases, it’s going to be hard to become a millionaire from working in retail. Making a Statement Patel’s strong opinions on the state of the cigar industry and some of the issues he has with current business practices actually inspired him to take action. Wanting to show the industry what it means to do the right thing in terms of business, Patel released his own premium cigar, called SP1014 Love N’ Passion. Distributed through Muga Inc., which is also owned by Patel, this cigar first made its debut in January 1992. SP1014 is a Dominican puro cigar blended by Francisco Rivas with a blend that consists of all Corojo seed tobaccos grown in different regions of the Dominican Republic. The wrapper was grown in the Peñuela region and was aged for three years before the cigar’s release. The tobacco used in the binder was grown in Navarette and was also aged for three years. The filler tobaccos include Viso from La Atravesada, tobacco grown in San Jose de las Matas, and Medio Tiempo grown west of Mao. From left to right: Francisco “Chico” Rivas, master blender for the SP1014 cigar, and Sanj Patel.
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