TOB_Magazine

[ 22 ] TOBACCO BUSINESS [ MAY / JUNE | 18 ] refreshing the packaging, giving old products new life and bringing old blends back to market as “new” or limited-edition releases. The vapor industry has struggled in some ways to find stability in an overly regulated marketplace, and many vapor and tobacco-related businesses have simply had to close up shop due to the costs that come with being in compliance. The alterna- tive industry has continued to grow and expand, but it is under constant scrutiny and attack by both the federal government and local governments, which have attempted to slow the growth of a prod- uct category that’s constantly evolving and at times can be difficult to understand. Today’s Innovation Even though innovation is under assault by legis- lators, it’s still present and has yet to be completely extinguished. As more challenges have arisen, the tobacco industry has been forced to change and to conduct business in a new way. Out of adversity has risen a new spark of resilience and creativity that shows tobacco businesses will continue to evolve and to innovate despite challenges. “We’ll probably see a lot more innovation coming up around the product than in the product,” predicts Justin Tarbell, senior vice president of strategy and business development at Ohserase Manufacturing. “By that I mean you’re going to see packaging innovations, you’re going to see point-of-sales inno- vations, you’re going to see innovations in consum- er engagement.” Beyond products, tobacco businesses could also shift innovation toward the retailer and consumer experience. To grow sales and their retail footprints, many tobacco companies have created programs to encourage customer loyalty and activity. From Alta- dis U.S.A.’s Montecristo Social Club that connects consumers to the company, to Davidoff’s Access program that gives consumers access to limited and hard-to-find products, to Drew Estate’s Drew Diplomat program that rewards loyal retail part- ners and consumers, tobacco businesses are finding new ways to increase demand for their products. Others, like Casa de Montecristo and Rocky Patel, have expanded their luxury smoking lounges to tap into providing consumers with a memorable expe- rience. To get customers to buy into their brands and companies, the tobacco, vapor and alternative industries all now realize that they must create new experiences for their customers in order to bring them closer to their brands and products. The New Frontier of Tobacco Looking ahead, there comes the daunting question few in the industry want to pose: What’s left to inno- vate? We’ve seen just about every e-liquid flavor imaginable; cigars of every shape and size; smoke- less tobacco products come and go; and product categories like pipe tobacco, hookah and electronic cigarettes rise and fall. Have the tobacco, vapor and alternative categories already seen their best days? The FDA’s recent issuing of advance notices of pro- posed rulemaking (ANPRMs) for nicotine levels in combustible tobacco products, premium cigar reg- ulation and flavored tobacco could be another blow to the tobacco industry’s innovation, but it could also be the beginning of a new frontier of business and opportunities. Already, there has been innovation in products, with the rise of next-generation devices, like Philip Morris International’s iQOS and British American Tobacco’s Glo heat-not-burn devices. Companies like Juul, Pax and Blu have released and are devel- oping new vapor devices that offer new options to those interested in ditching traditional tobacco. New products from the cannabis category are com- ing onto the market, ranging from products to keep the flowers fresher for a longer amount of time to products that offer new ways to consume the herb. Opportunities to be innovative abound for the tobacco, vapor and alternative companies today, so much so that Tobacco Business deemed it necessary to devote an issue to the topic and to show you the different ways you can reignite innovation within your company and your brands. TB DEFINING INNOVATION Think there’s a one-size-fits-all definition of innovation? Think again. We asked five entrepreneurs within the tobacco industry how they define innovation, revealing a broad and sweeping take on the popular and powerful word. ➤ “Innovation can take a couple of forms. It can mean taking an existing product and improving upon it and competing in the same market, or it can mean seeing a void where something doesn’t exist and creating a product and its subsequent market.” —Steve Gherebean, Render Social ➤ “Innovation doesn’t always have to be a specific product. Innovation is anything! It’s the way that you think about branding. It’s how you use social media, how you speak to consumers, how you speak to retailers. Innovation is about breaking down the norm.” —Michael Giannini, Ventura Cigar Company ➤ “Creation is from zero to one. Innovation is from one to infinity. It is the refinement or redirection of a proven approach.” —Robert Caldwell, Caldwell Cigar Company ➤ “It’s about being able to flip some- thing on its head and try to add value to it, no matter where it is within the organization or whether it be a product or process.” —LeonardWortzel, ScandinavianTobacco Group Lane Limited ➤ “Innovation involves moving the boundaries of what already exists— or creating a new playing field altogether.” —Matt Booth, Room101 Michael Giannini Robert Caldwell Leonard Wortzel Matt Booth Innovation Continued