Cigar Companies In Trouble
It was the best of times, it was the worst of times…and I guess it just depends on what side of the table you’re sitting on. Despite many of the hardships that the tobacco manufacturers and retailers are currently facing, there seems to be a plethora of smoking options for the consumers. Cigars are being introduced in unique sizes, utilizing special wrappers and introducing intricate blends that make it possible for the smoker to locate at least a handful a cigars they consider to be “favorites”. In large part this is due to the “boutique” cigar manufacturer who seems to be more receptive in what the everyday connoisseur would like to enjoy. They are able to do this through utilizing the internet, social media networks and hitting the B&M’s one shop, one state, at a time. So with the boutique cigar makers thriving – does this mean that the larger, more established cigar makers are suffering during this time period? Are they in danger of completely going out of business by not adapting some of the tactics used by the “smaller guys”? Are any of these companies even aware of the changes they will have to bring to their companies?
In no way is the next part of my analysis trying to single out any specific cigar maker or company but rather the top three companies I, and I think everyone else, thought would never face a “do or die” type of scenario (If the conclusion is drawn that such a scenario exists).
Padron, Fuente & General
Padron & Fuente Cigars – The creator of a few cigars that all happen to rank very highly each year in Cigar Aficionado. Padron and Fuente have done a fabulous job of introducing a cigar that is great to smoke for everyone in every price range. They like to keep their options very simple and even introduce a new limited edition, high priced, cigar every so often to keep the fan base (and I suspect Cigar Aficionado) very happy. However, considering these things, has the Padron and Fuente company structure been too inflexible in working with retailers or becoming personable with the smokers in our community?
From a retailers aspect they have always stood behind their “quality” and refused to offer any great discounts or specials that can be passed on to their patrons through the B&M. The excuse was always made that the true smoker would always be willing to pay their inflated prices for the special cigars like the Anniversary or the Opus X cigar. Furthermore, they tend to abstain from doing live events on a regular basis with the presumption that their name is a known quantity, and no further live promotion need happen .
All advertising campaigns were also primarily reliant on the ratings given to the cigars via Cigar Aficionado and other small magazine publications. Occasionally both companies will publish some full page ads through these same sources. But they have yet to reach out to any alternative methods of advertising – online magazines, blogs or cigar radio programs. On the same note Padron feels no need to interact through social networking whereas Fuente does run its own cigar forum/community but has shied away from all other mainstream social media applications.
General Cigar Company – Now this behemoth of a cigar company operates in a slightly different manner. They tend to produce multiple cigars, multiple times a year, in multiple sizes, under multiple famous names – and yet always seem to lack in quality and flavor. Their distribution is huge, but seems to rest solely on the established name of their cigars, rather than the quality of their cigars.
It does not take great explanation as to why this is unsupportive of the local Brick and Mortar establishments. General will offer some slight discounts and incentives to purchasing and carrying their products, but it never allows the retailer to price at the same level as most websites or even Generals own online retail website. However, retailers have always been stuck in a corner, almost forced to carry the products, because of the famous names behind the brand. These are the most asked for cigars by the newbie smoker or holiday shopper.
This is a direct indication as to how General Cigar Company has chosen to spend their advertising dollars. Most of the ads that are being placed cannot focus on ratings, because they don’t get any, and are forced to emphasize the “famous” names. General does this by placing most of their ads in men’s magazines or any other publication that is read by the mainstream population who might opt for a cigar during a frequent occasion. It appears as if they haven’t cared about the cigar blogs, review websites, magazines or any medium that a frequent cigar smoker would choose to follow, but rather instead bank on their “famous” name instead. This means that they have also opted out of all social media (Is this a way of hiding from the criticism?).
The Changes Across the Board
During these times of hardship the smoker has to be more specific on his choice and the retailer can be more specific in choosing cigars for his clientele. I can provide some information that the “boutique” cigar market is taking a big piece of the pie both financially and in loyalty of smokers from the large juggernauts who are resting on their laurels. Each company has displayed a change in operation as they have now realized what side of the table they are really sitting on. While none of these companies will admit that the times are harder for them – I think it is.
Padron has come to the realization that the cigar, despite how great it may be, will not be sold unless the regular consumer feels some sort of bond with the manufacturer. They have now reversed the policy on events and will start doing appearances at local B&M’s across the country.
Fuente used to have the policy of shipping whatever cigars they choose for the specific account to receive whenever Fuente felt the B&M should receive it. This has also been reversed and is starting to ship cigars/orders, even the Opus X, to accounts as they request them.
General Cigar Company tried to appeal to the “boutique” market at the 2009 IPCPR by releasing a cigar that was “not associated” with the General line of cigars. Additionally, anyone who ordered this stick would also be required to place it in the boutique section of the humidor and make a promise to retailers that it would not be sold online. The only downfall was that they again, produced a cigar for the numbers and not for taste or quality. Now General cigars is connecting with bloggers by allowing them to preview and release information on certain products to help connect General back in the cigar community.
While these changes are being made everyone of these three have yet to jump into the social media realm (In Fuente’s case any further).
Are these first steps a sign that changes will be underway on how the companies interact/market/operate? Will they, or do they even have to, transition into the social media environment? Will the big guys really be able to compete with the boutique manufacturers (moving forward)? And specifically to General Cigar Company – will they stop relying on the “famous” name and start dedicating resources into creating a truly great cigar? As we have seen there are some like Gran Habano , La Aurora, CAO, Illusione, and Tatuaje (just to name a few), who are doing this already. These companies are sizable outfits, yet dedicated to utilizing the web and word of mouth for the advancement of their product. Or to put it simply – they are transitioning into the new world of cigar smokers and enjoying sitting on the good side of the table.
So until the big three aforementioned companies decide to hop on the modern technological bandwagon, they are doomed to see diminishing funds and market share. As many articles have pointed out this year, this will be the first time in history that print media will be eclipsed by online media advertising, shouldn’t the large companies come down off of their high horses and embrace the people and online market which is the cultural nexuses of this age? Or maybe they can keep relying in their name, tradition and … well whatever it is they are banking on.
Editors Note: We here at Puffing Cigars want to assure our readership that we are fully aware that there are indeed many cigar companies on both sides of the good and bad spectrum. The companies we chose for this article are not a definitive list, but rather a few choice examples in the industry that handily illustrate our point. You can fully expect in the days to come more articles that look at specific companies in the light of these current issues. As always we appreciate your commentary, and always look forward to spirited debate when it comes to hot-button topics like this.
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