Amid a bevy of regulatory concerns, including the U.S. Food and Drug Administration’s (FDA) ongoing warning letters telling certain manufacturers that their cigars resemble cigarettes, the cigar segment is in continual flux. We captured a range of opinions from cigar manufacturers and retailers on major issues in the category.
FDA cigar warning letters sent to manufacturers
“It’s not so much a concern about how the regulation could potentially impact reduction of flavors, but how the state-tax implications would impact the chain, particularly in light of Massachusetts’ imposing taxation policies.”
—Anne Flint, retail purchasing manager for Cumberland Farms, Framingham, Mass.
Meeting customer expectations despite the FDA
“Swedish Match has been working for years to develop cigar products that will meet consumer needs no matter which direction FDA takes with regards to flavors. We think it’s likely people will continue to smoke cigars if FDA takes action on flavors.”
—Joe Teller, director of category management for Swedish Match North America, Richmond, Va.
The challenge of selling cigars in the commonwealth
“It is hard to say that prepriced cigars have hurt our business, but it is certainly hard to compete when neighboring cities or towns may be selling a single cigar for 69 cents.”
—Stephanie Lorance, tobacco specialist for Cumberland Farms
The implications of a potential FDA crackdown
“The question will be in asking, ‘What is the cigar market going to resemble given what you, as a brand owner, have left to work with?’ One key is making sure we have the broadest offering of flavors possible and in as many package sizes as possible.”
—Paul Marquardt, COO of Prime Time International, Phoenix
Pricing and competitive challenges
“The main challenge we face is the three-for-99 cents or four-for-99 cents cigarillo, as these downsell the customer, reducing unit sales. Premium-cigar [suggested retail prices] are often set too high for our customers, especially considering the many online store options that sell at a low margin.”
—Celeste Lucas, price book manager and product expert for Kocolene Development Corp./Fast Max, Seymour, Ind.
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