TOB_Magazine

[ 30 ] TOBACCO BUSINESS [ MAY / JUNE | 18 ] Future Forecast While the regulatory environment throughout most of the world might seem ready to kill the premium cigar industry, Frederiksen insists that the future is far from bleak. The Cigar Association of America’s recently released data on 2017’s premium handmade cigar imports into the U.S.—330 million, the most premium cigar imports in 20 years—bears witness to the overall health of the industry. With challenges come opportunities, and STG will be among the first to capitalize on them. “We expect the industry to be stable, with slight growth over the next five years, and there is absolutely reason for optimism,” Frederiksen says. “The driving force behind our optimistic view is the resilience of our retailers and consumers. Cigars will always face regulation; however, we have an extremely passionate base of cigar lovers who are willing to adapt their smoking occasions. We will be there to support their passion, and will continue to support our brands and drive innovation in the category. Our resources and capabilities will allow us to serve both the retailer and consumer in more customized and more impactful ways than ever before. We are committed to deliv- ering the utmost excitement to retailers, along with great moments to smokers. And we are on track to fulfill our mission to ensure a bright future for the category. Rest assured, STG will light the way.” TB STG& Thompson: Acquiring Synergies On Jan. 31, 2018, Scandinavian Tobacco Group (STG) announced that it had purchased Thompson & Company of Tampa, Florida, the mail order catalog company that earns approx- imately $100 million in annual revenue. With Cigars International already under STG’s own- ership, the purchase of Thompson makes STG the undisputed leader in the lucrative online and mail order cigar retail category. The purchase gives STG access to Thompson’s large customer database, auction and retail websites, customer service center and retail store. It also gives STG access to more predicate blends developed by Thompson over the years. “Thompson is a strong and distinctive brand with a dedicated consumer base and a retail presence in the important market of Tampa,” says STG CEO Niels Frederiksen. “With the acquisition of Thompson, we reinforced our leadership position in the online retail channel, which accounts for nearly two-thirds of the market for handmade cigars in the U.S.The com- bination of Cigars International and Thompson allows us to deliver an unmatched range of premium cigars at the highest level of customer service, along with significant cost savings to consumers. In addition, these private-label brands expand our library of predicate blends, allowing us to innovate in compliance with federal regulations.” Some brick-and-mortar retailers might be hesitant to do business with a company with such a large presence in e-tail and mail order markets, but Frederiksen argues that such pro- tests don’t take the full picture into account. Companies like Cigars International andThomp- son can help the entire industry improve sales. “We have taken the initiative to level the playing field by renewing our focus on brick- and-mortar,” Frederiksen says. “We have programs in place that allow cigar shops to com- pete with Internet and catalog retailers, and we have shown by our track record that we’re not here to play favorites. We are committed to supporting both channels of trade, and our retail partners recognize this. “Cigars International and Thompson have their own brands, each with an established consumer base. As we did with Diesel, we can leverage the success of these brands and bring them to brick-and-mortar retailers. This gives the brick-and-mortar retailer the chance to compete with Internet and catalog retailers, and also gives the Internet/catalog consum- er an incentive to shop in-store and experience the personal interactions that come with brick-and-mortar experiences.” Niels Frederiksen Continued