Retailers were among those that faced the biggest and most daunting challenges due to the COVID-19 pandemic in 2020. As the virus began taking hold of society, many tobacco retailers were deemed non-essential businesses and were forced to close their doors for months—and those that remained open faced a dramatic drop in in-store traffic. One unexpected result of the pandemic, however, was the meteoric uptick in premium cigar consumption and interest, giving retailers such as Cigars International (CI) a major boost in a very turbulent time.
Cigars International, a subsidiary of Scandinavian Tobacco Group (STG) that is headquartered in Bethlehem, Pennsylvania, has been a dominant force in the tobacco retail category since its launch in 1996. Cigars International is among the largest internet and catalog retailers of handmade cigars and accessories in the U.S. Today, Cigars International has more than 1 million active online customers that the company affectionately refers to as the “CI Nation,” and it annually distributes over 20 million catalogs to consumers across the country. While e-commerce plays a major part in Cigars International’s overall business, it also has seven brick-and-mortar super-stores spread throughout Pennsylvania, Florida and Texas, with several more locations currently in the works.
For Scandinavian Tobacco Group, creating spaces and opportunities where cigar enthusiasts can freely smoke and take part in the lifestyle is important to its overall goal of becoming a leader in the U.S. handmade cigar category. That’s why Cigars International has become the centerpiece of its growth strategy in recent years. Leading the charge at Cigars International is Sarah Santos, a professional with a love of numbers and data as well as a unique understanding of retail and the consumer’s relationship with its businesses and the products they buy. In our interview with Santos, she shared her insights into tobacco retail and the evolving preferences and demands from today’s cigar consumer, giving retailers of all sizes a behind-the-scenes glimpse at how the largest cigar “super-store” franchise operates.
Gaining Retail Experience
Santos grew up in the Pocono Mountains of Pennsylvania. Long before Santos began working at Cigars International, cigars played a role in her family dynamics. Santos’ maternal grandfather, who passed away before she was born, was an avid cigar smoker. Her paternal grandmother hand-rolled cigars in a factory located on the south side of Bethlehem while her paternal grandfather worked at Bethlehem Steel, which was located on the site where Scandinavian Tobacco Group’s office and distribution center now stands.
Santos describes herself as a diligent student who wanted to experience big business. Since she was young, Santos has been good with numbers, and she knew she wanted to work in finance. Yearning for something a bit faster paced than what rural Pennsylvania had to offer, Santos moved to New York in the middle of e-commerce’s coming of age period in the mid-1990s. “I was hooked on multichannel retailing from that point on,” she shares.
While attending college, Santos had the opportunity to gain experience in finance by taking on a role within a finance team, and she quickly realized that she wanted and needed more from a professional career. She did discover, however, that she had an interest in leading a diverse team and learning from professionals of different backgrounds and skill sets.
“I realized that I had a keen interest in enabling growth and efficiency to gain competitive advantage by leveraging advances in technology,” she explains.
Santos’ career before Scandinavian Tobacco Group saw her working in omnichannel
business-to-consumer retail across several categories of various backgrounds, including consumer electronics, teenage girls’ apparel, pet food and sporting goods. “These were all startups, and my roles were entrepreneurial through periods of quick growth. I drove the multichannel tech-intensive agendas of these businesses, covering contact centers to online and all the way through to brick-and-mortar retail expansion.”
These positions allowed Santos to gain the broad experience that was necessary to run a business as she was required to wear many hats at these various organizations. Several of these companies went public and had merger and acquisition strategies, preparing her for much of what she’d face and work on at Scandinavian Tobacco Group. Santos joined Cigars International in 2003 as its director of operations, a position that had her reporting to Keith Meier and John DeMarco.
“I met John DeMarco at an IT conference and became very interested in CI because of the company’s rapid growth,” she explains. “Meeting John was fortuitous: I was living and working as an IT director in NYC and about to have a family of my own. I was pregnant with my first child at the time. As a result, I started thinking about moving back to Pennsylvania to be closer to family. The opportunity to work at CI in Bethlehem, Pennsylvania, seemed ideal at the time, and looking back, it clearly was the right move for me.”
DeMarco, who co-founded Cigars International, was Santos’ first mentor within the cigar industry. She gives him credit for teaching her the ins and outs of managing operations in the rapidly growing e-commerce company as well as how to navigate an industry that continuously faces increasing regulatory and compliance demands. Other mentors that shaped Santos’ career in the cigar industry include William Murphy, Scandinavian Tobacco Group’s former North American vice president of online and retail division, and Craig Reynolds, former Scandinavian Tobacco Group executive vice president of global handmade cigar business. Both taught Santos the importance of developing relationships within the category and the importance of putting consumers first. Dianne Blixt, a Scandinavian Tobacco Group board member and former chief financial officer of R.J. Reynolds Tobacco Co., is one of Santos’ current mentors and role models.
“She’s an incredible role model, and I’m grateful for the wisdom of her experience and the insightfulness of the tobacco industry and the other industries she has been involved in since,” says Santos.
Santos draws inspiration from outside of Scandinavian Tobacco Group as well. Glenn Wolfson, CEO of Drew Estate, has inspired Santos to become more innovative when it comes to managing the inevitable changes that are taking place within the cigar industry. “His support is genuine and valuable,” she says. All of these mentors have contributed to a shift within Santos, enabling her to see the value in focusing on long-term strategies necessary for growth rather than the short-term strategies usually typical of startups during periods of rapid growth.
Santos enjoys work that offers variety and a fast pace. She knew that by joining Cigars International, she’d have very little time or reason to be bored. “Cigars International offered me the ability to develop and lead many disciplines of the business, such as marketing, merchandising, operations, distribution and technology, and I committed myself to becoming fluent in them all.”
Initially, having the chance to expand her leadership skills as a director and gain more experience in the direct-to-consumer channel drew Santos into her new role at Cigars International. As time went on, Santos was fully immersed and taken in by the love and appeal of handmade cigars. When she first started working in the tobacco industry, Santos admittedly was not a cigar smoker. After one or two years of reading about the romance that surrounded the cigar lifestyle, she decided she needed to experience cigars firsthand. Since making that decision, Santos says she hasn’t turned back.