Small Cigars, Tobacco Retailer, September/October 2011

t
UPDATE
CATEGORY
Sweets
Smallcigarscomein a widerangeof stylesandsizes,liketheseSwisher
(Swisher
(Exoticos
Puros)andHeaven
lnternational),
Scarface
RumCherubs
(Heavenly
CigarCo.).
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SmallCigarsAre Big Business
Though
theretailcostof a widearray
taxeshaveincreased
of smallcigars,
continues
to growitssales.
thesegment
By Mike $mith
cigi:ri:c. .,crc b,rnned.An increaseoccurredwhen the little
cisir. r'.cre nr.rde"heavier"so they would be classifiedaslarge
cig.rr. .rn.l .rcru.rllr-ta-redlessas a result.This made little cigar
..ric. gtr lq.* n but large cigarsgo up in a similar amount. To
be cl.rs.ihed"little," they haveto weigh in at lessthan three
pounds per thousand.To be consideredcigars,they have to
be all robacco,rvhich cigarettesare not. Thatt all good for the
tide ral side but the stateshave almost as many different rules
abor.rrlitrle cigarsas there arestates.Somehavehigher weight
classihcarions,some have packaging restrictions and others
don't allorv filters. Nothing is simple.
Whff::
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ilr
economy was going or, rather, not going. A.lmost a billion
little cigarswere sold last year so they are a significant part oi
the market. Machine-madeversionsof cigarsremain the bulk
of the salesat mid-90%. Salesof the little onesstill remain
far lower than they were prior to the SCHIP taxes,when the
taxesjumped to roughly 25 times what they were beforethat.
Small cigarsprovide a cheapway for peopleto samplecigar
smoking. The,vcan experiencethe tasteand try out smoking
without inhaling, as most do with cigars.If the experience
goeswell, thev n'righttr,va largerversion in the eveningwhen
there's more time to rela-r.
F
. .v 'v^r L' u. . 1 1 i t . l . . i - . p 5 f i 2 y g
r lr a
done better since favored
The 10-Minute$moke
Part of the demand comes from those seeking the
"10-minute smoke." People are just too busy during the
CATEGORY
UPDATE
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Many0f the top premiumcigarcompanies
nowalsofeaturesmallcigaroffering.
likethesefromGeneral
Cigar:CohibaPequenos,
Partagas
BlackLabelProntos,
and Macanudo
day to spend the time on a large cigar. This also keeps rhe
premium people in play since this part of the market isn'r
as sensitive to price. They may only have a few minutes bur
they still want a good cigar. Altadis, General, Ashton, CAO,
Fuente, and Torano are a few of those who have some small
cigarsfor the premium folks. \,ilZhena premium manufacrurer
has a little cigar, they are usually machine,made like most
other companies but their small varieties may be hand-made.
Many companies concentrate their products in either
mass-marketor premium. Some, like Altadis, for instance,
deals with both markets and has different sales forces for
the divisions. Then there is the difference of favored versus
natural tobacco. Many of the favored cigars come in only
small, machine-madeversionsbut exceptionsexist.
Many of the small cigars are m"di by the mass-marker
folks. Middleton with the Black and Mild brand, Muriel,
Phillies,'Vhite Owl, Backwoods,Garcia yYega,Swisherand
Panter have some of the larger sellers.SwisherInternational,
Inc., started in the 1800t, grew from a small cigar business
to one that ships billions of cigars each year. The company
has more than a dozen brands with Swisher Sweetsand King
Edward being the two best-known names. The Swisher Sweet
cigars alone have more than thirry sizesand flavors. Some of
.*i
the largest producers are European including Dannermann
and Schimmelpenninck.Theyve been around for a long time
and are very successfulin Europe. They're gaining populariry
in rhe U.S. now as well. Dannermann was once the world
leaderin cigarillo volume and may own that still.
Small Sometimes Not Oflicially "Smalln
Hearher Phillips, Presidentof Heavenly Cigars Company,
'Unforrunately
savs,
for political and financial reasons,most
of the nerv "small" cigar products you will seeon store shelves
n'ill be over the weight of 3 lbs. per thousand. That is the
cutoffrveigh to be classifiedasa largecigar.In April 2009, the
US government passednew taxation guidelines for tobacco
products (CHIPRA). Ironically enough, the following year
rhere was a dramatic shift in the distribution of small cigars
from 52.5o/odown to 71.3o/o.Did all the consumers just
drop by the wayside? Of course not! Due to the way the
law was written, the tax rates are actually lower for larger
cigars. That said, many manufactures increased the weight
'large
of their products in order to have them classified as
cigars' and enjoy the benefit of a lower tax rate. As you can
see, rhis is more of a political & financial matrer and most
likely not a true reflection of consumer demand." Heather
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C A T E G O R YU P D A T E
'Heaven
the typical domestic cigar consumer is thought to enjoy larger,
adds, "\7e have seen fairly stable salesof our small
of
brand mini-cigars. That said, the national sales figures for cigars. In truth, small cigars represent approximately 50o/o
'While
these numbers have dramatically
the segment are quite a bit skewed. There will continue to thi market share!
consumers continu€ to enjoy
that
I
believe
recently,
shifted
just
weight
that
above
fall
to
geared
be many new products
in that segment. That is why
available
of
products
myriad
the
itt
a
as
example,
5"x30
is
a
great
requirement.Our petite size
Heaven brand flavors in
selling
best
our
to
offer
it
is
we
continue
though
even
smoke gearedtowards small cigar smokers
style tins."
clamshell
including
of
styles
a
variery
considered alarge cigar by classification."
at Heavenly Cigar
Manager
Operations
Burney,
George
us,
Jennifer Hunter, VP of Lil Brown Smoke Shack tells
"'\7'e
an exciting year
had
quite
ve
actually
us,
tells
"It is a tough market out there, it is still alive but the Federal Company,
'\7'e
to rePort
now
pleased
are
Co.
Cigar
and State taxesare forcing people to look for alternatives.It is at the Heavenly
Lion
Red
and
cigars
favored
of
stable, we dont think we will see it growing unless the taxes that our Heaven brand
Davidoff
by
distributed
decreaseor the manufacturers get creativewith the packaging brand of natural cigars are being
to reduce prices.The Buy 2 Get 1t in the small three packs of Geneva Distribution, Inc. \7e are the first premium
have been successful. If the Federal & State regulations favored cigar to be distributed by their organization and
decreaseor at leastbecomestable,we could seethe market are looking forward to expanding our market share in the
next 12 months. In addition, our Red Lion brand is the
grow again, but until then we cant really say."
"Filtered
cigars
only Nicaraguan cigar in the Davidoffportfolio and recently
notes,
Bill
Greiwe,
CheyenneCEO
earned a93 rating! Be on the lookout for thesepower house
Cheyenne
well.
very
as a whole continue to do
products from Heavenly."
to
grow.
is a market leader and sales continue
Our top filtered cigar line is Cheyenne. Our
other brands, Derringer and Bodyshot are Adaptingl Preferences
Dan Carr, President of General Cigar, gives us his
gaining share. Cheyenne ofFers a broad
range of filtered cigar packings. Cigars are perspectiveon the industrysegment: "Premium cigarsmokers
an important element in any store'stobacco are resilient and are committed to pursuing their passion'
set.'We will continue to be focused on qualiry, As we have seen in recent years, cigar smokers are willing
to adapt their preferencesto
comoliance and innovation.
the smoking occasion. Due
We work with our customers
to economic and legislative
to create more opportunities
factors, people have less
and successfor them."
opportunity to smoke. As
Jory Bowen, President/
r@l
a result, they are choosing
Sales & Marketing of RSB
smaller cigars when the
"Since
Tobacco,Inc., tells us,
I
occasion calls for a smoke
I
presenting The Good Stuff fl
that can be enjoyed in a
line of filter cigars in the fall
shorter amount of time.
of 2010 we have been pleased
they save large
Alternatively,
with a steady increasein sales.
they have the
for
when
cigars
\fle have exceededour monthly
enjoy them.
really
time to
salesprojections every month
their1839 lineof filtered
highlight
Growers
Tobacco
USFlue-cured
By way of example, a cigar
cigarsin a rangeof flavorsand styles.
sinceintroduction.
smoker who can no longer
This is happening in a
smoke a full-sized cigar in a
are
market where new brands
steakhousewill often smoke
being introduced at a steady
the very same cigar in a
rate and competition for shelf
smaller size and will enjoy
spaceis fierce.This is certainly
it while driving or walking
a sector of the industry that
home from the restaurant."
is gaining in popularity with
"Premium
adds,
He
consumers."
extremely
are
smokers
cigar
Heather at Heavenly gives
recognize
and
knowledgeable
her industry view, "Little
cigars'
value
of
small
the
cigars have always represented
of
waste
Many think itt a
a key segment of the cigar
a good cigar and a waste of
industry. Often in the US,
money to light up a large
little cigars are viewed as a
FullFlavor,
Classic,
filtered
cigars
infourstyles:
offers
Chepnnne
cigar and not have the time or
European sryle product, and
1839
Menthol
andWildCherry.
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C A T E G O R YU P D A T E
NEW!
Vision
LilBrown's
Hunter
brand
launched
a line
Cigars
of Filtered
lastyear.
is anothercompany
featuring
a lineof filteredcigarsin boxesunderlhe
RSBTobacco
GoodStuffbrand.
Inter-Continental
Trading
USArecently
launchedits lineof
styles.
0HM Filtered
Cigarsavailable
in fivedifferent
placeto properly enjoy it. This trend hascontinued to fuel the
proliferation of small cigars; therefore, we view small cigarsas
a growing segment of the market."
Dan tells us that, "GeneralCigar createdthe smallpremium
cigar trend in the 1980s, with the launch of Macanudo
Ascots. Since then, Ascots have continuously enjoyed being
the best-sellingsmall cigars in the U.S. In recent years,\1'e
have expanded our small cigar offerings into a portfolio oi
products acrossall of our major brands.Our top-sellingsmall
cigars include but are not limited to Macanudo Court and
Miniature, Cohiba Pequenos, PartagasPuritos and Panagas
Black Label Prontos, La Gloria Cubana Gloria Petit Natural
and Maduro, La Gloria Cubana Serie R Pequenos,Punch
Bolo, Excalibur Cigarillo and from CAO, Brazilia Cariocas.
Italia Picollos, Lx2 Razors and MX2 Daggers."
Heather says,"Our top selling cigar product continues to
be our world-famous Heaven vanilla cigar called Blu tboo.
'W'e
offer it in four sizestotal and recendy introduced a nerv
small size called the Shorry. This is a 4"x40 cigar and the
perfect size for lunch break getaway!"
Lil Brown Smoke Shack has the Vision Hunter, Smokers
Best, Deant, and Golden Harvest as their best sellers.New
in the last 12 months are the Cheyenne Large cigar with
the cushion tip 5 pack, SwisherBLK, and SmokersBest, all
of them launched to compete with the higher-end, higherpriced competitors.
Inter-Continental tading USA recently debuted a line of
OHM FilteredCigarsavailablein Red, Blue, Menthol, Cherry
and Vanilla versions. They are made in the USA and come in
a hard flip-top box to keep the cigars fresh and undamaged.
They are available 20 per pack, 10 packs per carton and 30
cartons per case.SuggestedRetail is $1.50-$3.00 depending
on statetax.
General has added new small items. "On the heelsof the
highlv successful launch of Macanudo Cru Royale, we're
adding a new frontmark, called Court (4 3116" x 36) to
this crirically-acclaimedcollection. Macanudo Cru Royale
Court rvill be availablebeginning in November for an SRP of
S12.99 for a tin containing 5 cigars. Macanudo Cafe Court
(4 3116" x 36) is a small premium offering that will debut in
\ovember, with an SPR of $14.99 for a tin containing five
cigars."savsDan.
Dan Carr believesin the future of the segment,"There will
alrvavsbe a place for the small cigar in the premium smoker's
repertoire becausethere will alwaysbe smoking occasionsthat
call For them. Cigar smoking is a source of enjoyment and
celebration. fu the premium cigar category leader, General
Cigar is committed to bringing new and exciting small
cigars to market. Our goal is to provide consumers with
rhe opportunity to enjoy a great, handcrafted smoke during
roday'slimited smoking occasions."
The companies and little cigars in this article are only a
pordon of the diversity in the little and small cigar segments
today. It is by no means exhaustive but representative.Thy
them and form your own opinions. The consumer ultimately
decides.TR
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