Jeff Borysiewicz, founder of Ocoee, Florida-based Corona Cigar Company, encouraged tobacco outlets to delve into the category, noting that premium cigar smokers are not brand loyal—which means they’ll pick up four or five different cigars at a time. However, they do have expectations. “Humidors are like a kid’s playroom with Legos: You need to have someone picking up all the time or it’s a mess—which doesn’t work because when people come in for a luxury product they shop with their eyes,” he said. “You also want to invest in a good filtration system for the water going into your humidification system. Otherwise your cellophane wrappers will be covered in white dust, and people will think that cigars that have only been there for a week have been languishing on your shelves for months.”
Social media: Building relationships with customers has always paid off in retail, and social media offers an economical way to achieve them, noted Borysiewicz, who considers his four Florida locations to be the kind of lifestyle businesses that plays well on social media platforms like Instagram. “It’s the showoff media; people like to share those moments of sharing a high-end cigar with a Pappy [Van Winkle whiskey],” he explains, noting that his cigar bars specialize in carrying seriously good spirits. “So we’ve been getting heavy into social media over the last eight years.”
Loving luxury: Echoing research presented during the National Association of Tobacco Outlets (NATO) seminars held the day prior, panelists urged retailers to invest in showcasing premium brands and luxury items. Data presented by Management Science Associates’ Don Burke suggests that excise tax hikes actually prompt some smokers to migrate to premium brands. For Smoker Friendly, adding an upscale display space for premium brands boosted sales of the category, reported Gallagher. “We decided to present our ultra-premium products to the consumer in a better way by putting in glass counters,” he said. “By doing so, we are up 20 percent in that category over the last few years.”
Consider cannabis: While some were initially leery of the nascent cannabis industry, panelists report success with accessories for that product category. “We have been in the glass [pipe] business for over a year,” reported Collette. “I had a moral struggle with it until I realized how socially accepted cannabis really is. I encourage you to look at that category—customers are looking for that product, if not begging for it.”
Klafter’s got a wake-up call about the profit potential of peripherals early on. “We didn’t carry glass pipes, but we asked our store managers what customers were asking for, and they kept saying ‘glass pipes,’” says Silverman. “So we brought in a 12-inch by 12-inch display and hid it in the back of the store. All of a sudden, we were selling these high-margin pipes. Now when you walk in, there’s a huge display. It’s crazy, but I don’t see it going away. These are the ways we’ve made up for the loss on other parts of the business.”
Gallagher, who says that Smoker Friendly has been in the glass business for some time, advises those just entering the cannabis accessories business to focus on the under $10 pipes but include some higher-end items in the mix. “Under $10 pipes are 70 percent of our pipe business,” he said. “We also trademarked Glassworks, as we did with our premium luxury cigarette sets. We are trying to build brand equity in the category as we sell the product.”
Defend your business: Sometimes the best offense is a good defense, noted Frank Armstrong, president of NATO and president of Winston-Salem, North Carolina-
based Blue Ridge Tobacco Company, who urged retailers to be proactive about representing their businesses to legislators, particularly at the local level. “Legislation is what I consider the biggest threat to our growth, not just federal, but state and local,” he noted, encouraging retailers to meet with their congressional representatives and be active in their communities. “You don’t need everyone to love what you do; you just need more in favor than against. Showing up to the battle is 95 percent of the deal. As soon as you get behind the microphone at a city council meeting and start pushing back, you’ll see a shift. And if you don’t show up, you might go to bed on Monday night and wake up Tuesday morning to find out your business is illegal. That’s how fast it happens.”
The bottom line? Along with every challenge comes opportunity, whether in the form of a new category with growth potential or a trend that can be leveraged. “In this business you have to stay focused, work like hell and reinvest in your company, and not sleep a lot,” sums up Borysiewicz. “That is the key to your business becoming successful while others die on the vine.”
– Story by Jennifer Gelfand
This story first appeared in the March/April 2018 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.
